SMC's Strategy to Win in Generic Markets with a 100 Billion Yen Investment in Rapid Delivery

SMC Corporation, a global leader in automation with compressed air, with a market capitalization exceeding 20 billion Euro faces increased competition.

The response to this is to further improve the responsiveness to customer orders. Fast delivery and speedy response to customer requests has been one of the fundamentals of the success and development of the company. Today SMC is world market leader in its field.

Expansion in Europe

To further its presence in Europe, SMC hosted, in September this year, its first distributor conference in Germany. During the event, SMC President Yoshiki Takada, shared a video message, encouraging closer collaboration with some 30 local distributors. SMC’s emphasis on relationship-building and responsiveness to customers requests was exemplified by the fact that German distributors are prepared to ship products on the same day if orders are received by 21:00, something that enhances service reliability in the region. SMC aims to raise its global revenue from 5 billion Euro to over 6 billion Euro by March 2027, with Europe as a primary target.

Strengths and Adaptation

One of SMC’s key strength lies in its capability for ultra-short delivery times, despite the risks associated with maintaining extensive inventory. With around 7,000 own sales personnel globally, SMC achieves rapid fulfilment. Some 70 % the products sold are delivered within three days—a performance level unmatched in the industry.

The company has also adapted to market shifts, relocating its high-volume production base from China to Vietnam. The reasons for this are to reduce export risks and labour costs. In fiscal year 2025, SMC plans to invest 750 million Euro in Vietnam, aligning production with supply chain demands.

Future Investments

SMC is also boosting its R&D capabilities, by constructing a new R&D facility in Kashiwa, Chiba, with a budget of 750 million Euro. The new technical development centre is expected to be completed in September 2025. This move is part of a larger initiative to streamline its global R&D operations, creating a 24-hour relay-based product development cycle.

Competition and Growth

Despite facing fierce competition, especially from low-price companies in the far East, SMC continues its focus on high-quality. Fast deliveries and speedy customer responses have allowed SMC to maintain competitive pricing control and profitability. As it navigates challenges in the semiconductor market, a typically cyclic market, SMC is making significant investments aimed at achieving its ambitious growth targets.