No. 104: Water business in Japan and the world (23) (October 22, 2011)

Japanese efforts are lacking in strategy

Japanese local governments with accumulated management know-how of the waterworks business dispatch engineers to developing countries and accept trainees from them, but they do not seem serious about promoting business through these efforts. The central government is involved in the development of water facilities in foreign countries though official development aid programs, but Japanese companies rarely participate in the management of the facilities. This is the reality caused by the lack of strategy. A water purification plant constructed in Cambodia as part of a Japanese ODA program was about to be sold to a foreign company in 2006, partly because the plant was too sophisticated for the local staffs to manage.

In foreign countries, Japanese companies are often not awarded a contract because the projects they offer need a high initial investment, even though their technology and competitive edge are evaluated highly. It is vital to provide both hardware and software for stable and secure water supply in foreign countries. Japan has to realize the importance of understanding the needs of a target country, having its competitive edge understood by the target government, and getting involved in the project from the very beginning to materialize business.

The Japanese government is discussing a new type of public-private partnership project with the Vietnamese government, in which the governments approve a project proposal submitted by a private company. Metawater submitted a proposal for the water project in Hanoi, and the project may be implemented as part of Japan’s ODA should it be approved. This system benefits Japanese companies whose technologies are not in a favorable position in a price competition.

As you have observed in this series articles, France and Great Britain excel in developing foreign markets in the water business. The key is the support from the central government. It is urgent for Japan to increase its presence in the world market with the support from the central government that includes sales activities of high-ranking government officials and submission of project proposals in the government-level negotiations, placing emphasis on the technological advantage and product differentiation. (To be continued)