Since 2014, NRI has been building a structure for providing company-wide, cross-sectional support for Japanese companies in their overseas business operations. We asked Satoru Matsumoto, the general manager overseeing this initiative known as the Global Practice Group (“GPG”), about what a global strategy for the Japanese infrastructure industry should look like.
“Infrastructure exports” hold business opportunities
――What types of work have you done in your career?
I’ve been involved in the energy infrastructure industry sector, most notably in the areas of electricity, gas, and petroleum, where I’ve helped formulate and implement management reforms and global strategies for clients including leading Japanese electricity and gas companies, plant manufacturers, trading companies, construction companies, real estate agencies, and home builders. The energy infrastructure sector is closely connected with Japan’s energy policies, liberalization policies, and global warming countermeasures, and thus I’ve been active in making policy recommendations to government agencies, and putting together business models or corporate strategies based on policies issued by such agencies.
Currently, energy infrastructure-related enterprises in Japan are looking to make inroads overseas and expand globally, especially in Asia and the U.S. This involves making “infrastructure exports”, which include not only electricity, LNG, and petroleum refining but also things like renewable energy, energy conservation, nuclear energy, and smart city and smart grid development, which are areas where Japan excels, as well as railway and water systems. Infrastructure exports are one of Japan’s strengths, and constitute an area that holds significant business opportunities. We also have been ramping up our support of Japanese and Asian companies that are pursuing global business operations.
A platform for supporting overseas business
――NRI is said to have launched the GPG initiative. What is GPG all about?
Put simply, it’s a platform for helping companies to conduct business overseas. It provides a foundation which allows us to comprehensively focus NRI’s knowledge, human resources, networking, and solutions on certain projects or themes in cross-sectional ways both inside and outside the company. It isn’t a specific organization or team. It currently follows a two-pronged approach focusing on supporting the global expansion of auto manufacturers and energy infrastructure-related companies.
――Why was GPG started?
NRI provides consulting support in a wide variety of fields including energy, electricity, the environment, transportation, and public policy. It also provides solutions with regard to information systems and the digital domain for a range of industry types. Moreover, NRI has bases in China, Korea, Taiwan, the U.S., Thailand, Singapore, the Philippines, India, Russia, and other countries. At NRI, the relevant departments and bases have supported companies in their global business efforts, both individually and collaboratively, in keeping with those companies’ overseas business needs.
However, we’ve reached a limit in terms of how much support these departments or bases can provide on their own to help companies globalize. It’s become necessary to strategically develop and utilize the respective knowledge, capabilities, personnel, and solutions possessed by NRI’s departments depending on the company’s needs or challenges.
Project Domains in NRI’s Development Areas/Real Estate and Social Infrastructure Sectors
Measures for energizing countries
――Can you provide any examples?
For instance, the “high-quality infrastructure exports” touted by Japanese Abe administration involve proposals and measures that are concerned with figuring out how to raise a country’s GDP and revitalize the country. This requires comprehensively grasping that country’s topography, history, relations with neighboring countries and major powers, and appropriate industrial and technological pursuits, and taking its industrial policies into account. Furthermore, you also need to build relationships with its national government, local municipalities, and other political organs. So you see, this is not the sort of thing that can be handled by overseas bases or the relevant business departments alone, as was conventionally the case.
Meanwhile, NRI has experience in drafting industrial policies together with government agencies in Japan, and in working with private companies to flesh out the details of their policy measures. Also, by linking up with NRI’s various business departments and overseas bases in other regions, we can leverage the necessary know-how and resources to provide comprehensive support. This is the GPG’s system. Company-wide, cross-sectional involvement will enable us to give even stronger support to these infrastructure exports, I believe.
Economic activity driven by political leadership
――Please tell us what the critical points will be with regard to global strategies for the infrastructure sector going forward.
First, the economies of the future will be driven by the political leadership of their respective countries. I think it will become even more important to develop strategies for how companies will be able to create and expand businesses in states and markets that were previously closed to them.
For example, in the U.S., the Trump administration is looking to create jobs by spending an additional one trillion dollars on infrastructure investments over the next ten years. It has said it will focus on several areas of infrastructure including waterlines, railways, crude oil, gas, and roads. However, what will that mean specifically? No one knows when and where it will start, and what the budget will be. Collecting this kind of information, forging connections with the federal government and the country’s policy apparatus, and establishing business strategies will be key in terms of global competition, and will be where a competitive edge can be gained. We are working to adapt our support structure accordingly.
In addition, services in the infrastructure sector will be growing gradually together with national development. At present this growth is happening most rapidly in Europe and the U.S., followed by Japan, with China in third place, India in fourth, and so on. In terms of deregulation and system design approaches as well, Europe and the U.S. are in the lead, with Japan right behind them, followed by Southeast Asia. It is crucial to grasp that growth is occurring at these different paces, and to get a handle to some extent on the industry trends and the direction in which development is headed in these regions.
Here’s one example. Let’s say a certain company is looking to deploy infrastructure equipment services in Southeast Asia. We at GPG will work together not only with NRI’s bases in Southeast Asia but with its bases and other companies in the U.S. as well, to get a better understanding of what steps to take going forward and to provide the appropriate advice.
Taking a leading role in the IoT field
――What are GPG’s strengths when it comes to NRI’s overseas business support?
NRI has a proven record of involvement in supporting companies’ business activities and providing policy support to government agencies. Of course, the circumstances are different for each country, but the ways we network with a country’s political apparatus and the approaches we take are where we excel. I think that will enable us to more concretely support the business growth of global companies.
I should mention one more thing. NRI originally specialized in information systems and the digital domain. No matter the fields in which companies do overseas business going forward, IoT and digitalization will be integral parts. In NRI’s case, I think the Consulting sector will be able to fully exhibit its strengths at a leader in IoT in everything from strategy to execution.
Nomura Research Institute, Ltd.
Corporate Communications Department