TOKYO -- Japanese companies will have to pursue new business models if they want to take advantage of the opportunities presented by developing and emerging markets.
According to the World Bank, 1.2 billion people were living on less than $1.25 a day in 2010, most of them in developing countries. How can Japan's companies help the poor in developing countries while also opening up new markets for business?
In September, Japanese Prime Minister Shinzo Abe visited Bangladesh, one of the poorest nations in the world. He was accompanied by a business delegation. At a forum sponsored by public institutions of the two countries, one member of the delegation drew particularly strong attention as the "magician of water."
Kanetoshi Oda, chairman of Nippon Poly-Glu, a modestly sized company based in Osaka, received much applause when he turned dirty water into clean, drinkable water in a matter of seconds. The secret was the use of a material that also makes natto, fermented soybeans, sticky. Nippon Poly-Glu has created a water purification agent made from this material and seashells.
Mixing the powdered solution in dirty water pulls pollutants out quickly. Add a touch of chlorine, and the water is made potable.
This is not state-of-the-art technology. Inspired by a thesis on the water-purifying component in natto, Oda, a former machine control engineer, worked on developing the powder.
Nippon Poly-Glu spent seven years getting the material to a near mass-production level. The company can now produce enough of the agent to treat 300 liters of water for $1 per month.
In Bangladesh, the company has received orders to treat about 100 million liters.
Yoshihiro Oishi, a professor at Meiji University, said cutting-edge technologies are not needed in developing countries and that companies need to pursue new business models in these countries that are different from those in the rich world.
One key to success in developing countries is being small.
Pupils at a school in the Pacific island nation of Palau celebrated when they extracted oil from plastic waste they collected using a small device on a table. The school uses the oil to generate its own electricity.
The oil-extracting system was developed by Blest, a company founded in 2001 in Hiratsuka, Kanagawa Prefecture, south of Tokyo.
The technology to turn waste plastic into oil is not new. But many companies have tried and given up on commercializing the technology due to the high cost of the equipment and the difficulty of waste collection.
Blest developed a system that allows for the extraction of oil from plastic waste using a small, inexpensive device. "The system is best for developing countries plagued by waste and fuel shortages," Blest CEO Akinori Ito said.
Sony Computer Science Laboratories is following a similar path. The company, a Sony subsidiary, is conducting a demonstration test of a microgrid in Okinawa Prefecture. A microgrid collects electricity converted by solar panels on the roofs of a group of houses, which then share the power.
The company chose the southernmost Japanese prefecture as the test site since it wants to target countries in the rest of Asia and Africa that have small settlements and climates similar to those of Okinawa.
Companies from other developed nations are also moving quickly to seize business opportunities presented by developing countries' need for water, energy, food and other resources.
French energy giant GDF Suez has acquired an equity stake in a solar cell venture company in Tanzania. U.S.-based General Electric is working on tie-ups with companies and organizations in India and other emerging markets.
These moves are mostly aimed at understanding the needs of emerging markets.
"Japanese companies tend to do everything on their own," said Tamako Watanabe, a manager at the Japan Research Institute. "They should work with companies operating in developing countries."