Friday
January 29
2010

shino tsuchiya

At the Dawn of Japanese BoP Business

I am a BoP researcher based in London, with experience as a SRI analyst in the Tokyo stock market, researching business development in emerging / developing countries. I had a good chance to post here (thanks to Duncan Duke and Rob Katz) and introduce what is happening in Japan, as most of Japanese BoP movements are written in Japanese and will never be disclosed to the world without any will of opening information.

While I spent years and years researching BoP related business, there had been a lot of small changes in Japanese business and aid society, but last year, 2009, was totally different. It was surprising that BoP related seminars and meetings have been held almost every 2 weeks in Tokyo or somewhere else, although only few knew the word of “BoP” a year ago.

2009 was the year of a “Social Business” big boom, as domestic social business individual entrepreneurs are featured in many contexts by media and also by governmental policy makers. These include Mr. Komazaki from Florence (English URL: http://www.florence.or.jp/english/index.html ), who is helping working mothers with care of sick children; Ms. Murata from Kamonohashi project (English URL: http://www.kamonohashi-project.net/english/ ), who is tackling with child labor in sex industries in Cambodia; and Ms. Yamaguchi from Motherhouse (http://www.mother-house.jp/en/ ), who has a high end handicrafts business operating in Bangladesh. Like anywhere else in the developed world, social business had been a hot issue during last year amongst young generation, and many related conference and students’ meetings (such as in Keio University) were held.

(ex. Skoll centre Keio Symposium: http://skollforum.jp/en/index.html , Social Venture Partners Tokyo: http://www.sv-tokyo.org/ , Social Innovation Japan: http://www.socialinnovationjapan.org/c000011/ )

And 2009 was the big dawn of “BoP business” for Japan. Especially soon after the Ministry of Economic, Trade and Industry (METI) invited tenders for feasibility studies in developing countries for BoP related business, the media and private enterprises began to look at this as a new kind of business, just after suffering from credit crisis and the big depression in developed countries’ market. This is because the budget of METI for this project was relatively huge, 2.8 million dollars (280 mil JPY) in total.

The METI had been researching BoP related business in the contexts of PPP (Public Private Partnerships) for a few years, and in September 2009, 10 companies were selected to conduct feasibility studies. This scheme is similar to the USAID or UNDP model.

(The result of selection is here available in Japanese: http://www.nri.co.jp/opinion/r_report/meti/090911_kekka.pdf)

Some are the projects that will be undertaken include:

  • Ajinomoto (Food industry) will explore nutrition improvement business targeting BoP in Ghana, based on their strength of amino acid technology. (http://www.ajinomoto.com/csr/achievement2/index.html )
  • Sanyo (Electronics) will collaborate together with Gaia Initiative (Japanese NGO) on a solar lantern business targeting rural India, based on their strength of solar panel production. (http://www.gaiainitiative.org/en/ )
  • Sumitomo Chemical (Chemical) is already famous in BoP circles for their work with Exxon Mobil, PSI, and Acumen Fund, who have collaborated to help start a company in Tanzania that manufactures long-lasting insecticide treated bed nets. Sumitomo will pursue a new business line, tackling tropical infectious diseases in Kenya. (The press release related to their product “Olyset® net” : http://www.sumitomo-chem.co.jp/english/gnews/news_pdf/20090721_1.pdf )
  • Sony (Electronics) is researching a business in rural India for decentralized power generation based on a battery storage system. (Sony’s activities in Ghana: http://www.sony.co.jp/SonyInfo/News/Press/200907/09-0717/ only in Japanese)
  • Termo (Healthcare Electronics) is working on a business in blood packaging for blood transfusion, which may be used in Zambia, Tanzania, and Mozambique. (http://www.terumo.co.jp/English/ )
  • Toyota Tsusho (Wholesale & Trading) will collaborate with Planet Finance (Microfinance NGO) to produce and sell bio-diesel energy generation systems for plants like Jatropha in Kenya and Uganda.
  • Nipro (Healthcare Electronics) is working on a diagnosis kit for tuberculosis in South East Asia.
  • Hitachi (Electronics) targets rural Indonesia with their solar power generation products.
  • Yamaha (Motors and Electronics) had received recognition for their GSB project, and they continue to work on building the business eco-system around a decentralized water purification facility. (http://www.yamaha-motor.co.jp/global/area-marketing/csr/clean-water-project/index.html and only in Japanese, their ambitious entrepreneurship can be read here: http://www.yamaha-motor.co.jp/profile/craftsmanship/technical/publish/no41/pdf/ts_06.pdf )
  • Japan Poly-Glu is a relatively small to medium sized company in Osaka, whose strength is in purification technology. They have already spread their business selling arsenic removal purification products in Thailand, Mexico, and many developing countries, with a lot of help from volunteers and NGOs. They will scale up to more countries with this project, together with Poly-Glu Techno Japan, Yukawa Iron Casting Works Co, Ltd. (Japan Poly-Glu CEO Mr. Oda’s comment here in Japanese: http://www.poly-glu.com/pdf/BoP20090915.pdf )

Most of the selected are big multinational entities, in very early stages of feasibility study, but some of them such as Japan Poly-Glu or Sumitomo Chemical are in the stage of improvement and scaling up. The feasibility study survey is now being conducted from through December 2009.

There also seems to be some parallel surveys on 5 issues (Healthcare, Nutrition, Education, Agriculture & Timber, Energy) simultaneously held by METI with JETRO (Japan External Trade Organization) in worldwide perspectives.

We can see here that the business sector is quite keen on entering the BoP market, and most of the aid agencies have taken considerable steps. This will impact Japan BoP related issues, as many of them seek a new target of consumers with “doing good business” products.

As a starting point, this may be enough at this time, but in my opinion, these businesses must go beyond their own hands and consider giving some ownership to the community itself in longer term, or at least ensure the value created from the business will be shared among those who engaged in the projects. It is not “trading” the benefit of good product; it has to be “co-creating” the benefit locally.

And there is also an interesting case happening with Japanese SMEs. They might have potential to bring huge impact on poverty issues, but it is quite hard to find leadership. An exception is Mr. Oda at Japan Poly-Glue, who fuses passion and business mind together.

Like other MNCs worldwide, most of the intrapreneurs working inside Japanese MNCs who are eager to get involved in “Business that matters to the poor” are now struggling a lot because they cannot be adequately recognized in their own organizations and by CEOs. In-house support is greatly needed to push forward their idea to get more involved with community development and poverty alleviation with their possible product and service, but they spend most of time explaining to CEOs and stakeholders the social business benefits and mission, and another way of thinking about profitability.

But in 2010, this should change. Some authorities, including METI, JETRO, and JICA (Japan International Corporation Agency) have plans to support BoP projects, and UNDP’s Growing Inclusive Markets initiative in Tokyo will be a big influence to CEOs. Recognition from outside will be a good help for intrapreneurs.

JICA had announced in their public seminar last week that they will support MNCs or SMEs to work with local NGOs or SHGs and build up the sustainable business model within the community. They are providing 50 million yen at maximum for each projects in the early stage, with longer-term commitment for 3 years. This promotion policy will stimulate Japanese companies to apply their skills and technologies to social business in developing countries.

Apart from the side of policies, a bottom-up approach by individuals across various organizations and companies is also happening, from my own view. There will be soon some broad BoP networks among individuals, and those will connect to the rural/urban poor community to kick start their ideas and businesses.

Actually, we had launched the networking website in ning.com, at the beginning of January 2010. It’s only in Japanese language but anyone can sign up.

Please visit here: http://boplabjp.ning.com

For launching, we had a casual meeting together with BoP related individual entrepreneurs, working very actively in Japan. Our guests were: Mr. Ashir Ahmed in Kyushu University with Grameen foundation for ICT technology development on banking card with healthcare information, Mr. Kanehira, working as a McKinsey consultant in his daily life, trying to connect EV car technology with Grameen foundation, Mr. Kono from Arun LLC, social investment fund for Cambodia, and so on.

2010 will be the kick-starting year for Japanese BoP related entrepreneurs, and I hope this will bring the variety of ideas and concepts understanding BoP business discussion sphere worldwide. For example, for some Japanese, education or awareness-raising means something very different when you sell a product to the community. Moreover, we feel very different about the word of “inclusive” business. I suppose those concepts originated from East Asian Chinese literature and philosophy contexts (affected by Confucianism and Buddhism) will give some hints to some point of understanding BoP community. Variety and mixtures of races and cultures who engaged in this projects will probably bring about innovative and sustainable, next generation business.

Further contact:

Shino Tsuchiya, email: tsuchiya.shino@gmail.com / JRI Europe (London)

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