Yasuhiro Ezaki

This study is to review the current strategies of typical companies in the global water market and to find a way for Japanese companies to survive. Global water demand in 2025 is anticipated to increase by about 30% when compared with that in 2000, especially driven by population increases and urbanization in emerging countries. Asia has shown drastic growth in water demand, which is expected to account for about 60% of the global demands . Due to lack of water business management capability, water projects are packaged, where infrastructure, operation and maintenance are included in contracts. The scale of global water market is expected to reach 86.5 trillion yen by 2025. The global water business has a large potentiality, offering opportunities for Japanese companies, but due to differences between business models in Japan and in the world, entry barriers are expected. In the light of the above, alternatives for the success are presented and studied for Japanese companies success based on the case study of Hitachis business strategy.

This study is especially to analyze and review the business strategy of Hitachi leveraging its leadership in package-based infrastructure export business in the global railway market and to identify the best way for other Japanese electric companies seeking success in the field. Though once Japan was referred to as the "Factory of the world", the country's domination in manufacturing started to decline after the collapse of a bubble economy in the 1990's. Suffering from the business slump, the Japanese electric companies have struggled to find a way out, and the export of social infrastructure systems ("SIS") including railway, water treatment and nuclear power systems to emerging countries with strong demand is expected to have a high potential for breakthrough because the Japanese SIS is considered as highly competitive in the global market. Another advantage for the Japanese electric companies in the SIS business is that as it requires total package solutions and thus a comprehensive range of expertise including heavy electrical machinery to parts, hardware and software, only qualified companies can enter the market, as illustrated by the fact that even rapidly growing East Asian companies such as Samsung and LG have not been able to enter the market. In the SIS market, the railway infrastructure business is likely to have the highest potential for the Japanese electric companies in the light of their high technological standards, limited number of the market participants and the Fukushima accident's negative impact on nuclear power plant business. The Japanese electric companies already have technological capabilities but still lacks sufficient end to end experience and field records required in the business in emerging countries, including planning, financing, EPC (Engineering, Procurement, Construction) and O&M (Operation and Maintenance). For the Japanese electric oompanies to be successful in the business to enjoy a global share, they should therefore learn from European companies and cooperate with other domestic and overseas companies to form a team to achieve positive results.