NRI Papers
No.158 October 1, 2010
  Japan's Strategy for Global Water Business to Boost Its Growth
-Building a Japanese-style export model combining economic cooperation and business-
 
Fumihiko KAMIO

The growing shortage of usable water is a major concern for many countries. In view of increasing demand for water, the Japanese government and industries are jointly working to develop water businesses in emerging countries in Asia and other regions where water infrastructure is underdeveloped. These efforts aim to expand the opportunities for participating in overseas projects by drawing on technology, experience and expertise that Japan has accumulated over a long time, thereby helping to revitalize Japan's economy.

The global water market is projected to be worth about ¥90 trillion by 2025. In any attempt to pursue a greater market share, it is essential to participate in the fields of operation and maintenance (O&M) in overseas markets so that the water business can be continued for a long time and in a stable manner.

The water business is nothing more or less than public services for the participating country. While the culture, society and customs of the participating country must be fully comprehended in moving into its markets, Japan unfortunately has only limited experience and achievements. Because each municipal government bureau that is offering water services to the Japanese market individually has such experience and achievements, a system that enables water service operations in overseas markets in response to the needs of a particular participating country is yet to be established. In order for Japan, which is a latecomer in the international water market, to win a competition with major, well-experienced water service companies in Europe and other countries, it is essential to build a Japanese-style business model. This model should be established while providing solutions to various water-related issues (e.g., infrastructure, management and attitude) that face the participating countries in Asia and other regions.

At the first step, upon strategically identifying a country, city or area where Japanese companies should operate a mid- and long-term water business, an organization must be urgently established that can consolidate the business expertise that is dispersed among the public and private sectors and that can take the lead in moving into overseas markets. In addition, tie-ups with a financial scheme that supports stable business operations in the participating country should be promoted. At the same time, policy dialogs should be continued with municipal governments and other concerned entities in the participating country so that Japan's technology and expertise can be fully utilized.

The Japanese government should take the initiative in promoting these actions by combining all the efforts of Japan's ministries and agencies regardless of which one has jurisdiction over a specific matter.

Contents
I Approaches to International Water Business, which is Attracting Increased Attention
II Global Water Business Market and Its Characteristics
III Challenges Facing Japan in Promoting International Development of the Water Business
IV Global Strategy of World's Leading Water Service Companies
V Specific Measures to Promote Japan's Global Water Business
VI Efforts towards International Development

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