The key to Japan’s global ambitions lies within

Published February 18th, 2010

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Insight from Christopher Gasson, GWI publisher

The Japanese government is putting serious effort behind promoting its water industry to the international market. I know because I have spent this week in Tokyo at a conference organized by Japan’s export development institute, NEDO. The event was packed out with nearly 1,000 attendees who wanted to be part of this new push into international markets.

It is a big challenge. A few equipment suppliers like Toray, Nitto Denko, and Torishima have a global reputation, but very few EPC contractors are active internationally, and there are no private water operators. The result is that nobody outside Japan knows what Japanese technology can do for them.

It is difficult to know what the best advice is. On the one hand, Japanese water equipment suppliers have a comfortable home market which is more or less out of bounds to foreigners. On the other hand, with unaccounted-for water down to 4.2% in Tokyo, there is not much left to do. Any growth is going to have to come from overseas.

My suspicion is that some Japanese technologies – like MetaWater’s ceramic UF membranes – will take over the world anyway because they offer a strong unique selling point. Others will struggle to get their message across when they have to contend with the strong yen as well as customer indifference.

The obvious solution is to use the strength of the yen to buy foreign companies that might help establish distribution channels in overseas markets. Such a strategy would require a lot of commitment, and my guess is that most would prefer to avoid such entanglements. The problem is that most of the companies active in the Japanese water sector are negligible subsidiaries of giants such as Toshiba, Mitsubishi, and Hitachi. Water is simply not an important enough part of their business for them to make the investment and take the risks necessary to make an impact on the global water scene. Taking part in a “national strategy” which is developed and paid for by NEDO is probably a convenient alternative to action.

Japan is not the only country that feels that it ought to promote its water sector to the wider world. The water sector promotion organizations in Singapore, Israel, and the Netherlands have the highest profile. In Britain, we have an organization called British Water that promotes “British” companies abroad. This year the president is Michael Froud. He works for GLV (a Canadian company), lives in Australia, and has been spending most of his time in Switzerland recently sorting out the Christ Water Technology acquisition. This situation says something about the openness of the British economy that Japan could learn from.

If Japan really wants to encourage its water companies to get serious about going overseas, the fastest route to achieving it would be to open up the market for foreigners. It would spur the locals out of their indolence, and either get them serious about being global, or force them out of the market.