Wednesday, October 19, 2011

No. 102: Water business in Japan and the world (21) (October 20, 2011)

Global expansion of Japanese companies
Because local governments manage most parts of the waterworks business in Japan, private companies have not accumulated enough management know-how and results in the water business. This is why general trading companies participated in projects abroad in alliance with proven foreign companies. For example, Mitsui & Co. and Sumitomo Corp. received an order for a large-scale waterworks project in Turkey in alliance with Themes Water of Great Britain in 1995. Likewise, Marubeni Corp. won a bid for a seawater desalination project in Mexico in alliance with a subsidiary of Suez Environment of France in 1997, and Mitsubishi Corp. obtained an order for a waterworks project in the Philippines with United Utilities of Great Britain in the same year.

Lately, however, Japanese companies have grown active and aggressive. Marubeni acquired a local waterworks company in Chile in 2006, and each of Mitsui & Co. and Toyo Engineering acquired a local company to participate in the waterworks business in Mexico in 2008. They are developing the business in these two countries independently of water majors. Japanese manufacturers show the same trend. Asahi Kasei producing membranes for sewage treatment and Kurita Water famous for its technology to produce ultrapure water are reportedly planning to expand the business to foreign countries including China.

You can also observe cross industrial moves. In April 2011, Ebara, Mitsubishi Corp., and JGC Corp. started to work together to promote the water business. The idea is to get a package contract from project development to maintenance in foreign countries with the power of Ebara’s know-how on water treatment, IGC’s engineering capability, and Mitsubishi’s global network. Subsequently, a group of Japanese companies acquired an Australian water business operator in May, and Bureau of Waterworks of Tokyo Metropolitan Government will extend technical assistance to the acquired company.

As described the above, Japanese companies started to grow active and aggressive, though they are a little bit late to realize the importance of the global market. They are growing more and more active rapidly in contrast to the slow move of the Japanese government. (To be continued)

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