What is the key to successful overseas expansion of the ever-growing "water business"?Kobelco Eco-Solu / JFE Engineering Strategy | New Switch by Nikkan Kogyo Shimbun

In order for Japan to expand its superior water business technology overseas, it is important to be involved in the business from the perspective of the partner country and make optimal proposals. Through the good practices of Kobelco Eco-Solutions and JFE Engineering, which develops water business in potential markets in Southeast Asia, we will seek hints for Japanese companies to succeed in expanding their water business overseas.

Entering the water supply business in Cambodia

Kobelco Eco-Solutions Co., Ltd. jointly invested with SOMA in Cambodia to establish a local corporate community (JV), and acquired exclusive water supply business rights for 20 years in the Kodak district of Phnom Penh and the Kook Nhatei district of Kandal Province. Since December 2019, tap water has been supplied to approximately 20,000 residents and commercial facilities. This is the first case of a Japanese company investing in a water supply business in Cambodia. To do. We spoke with Susumu Ohno, general manager of the overseas sales department of the sales division.

Achieves stable water purification with a low initial cost

— Please tell us how you started the water business in Cambodia.

"Partner SOMA uses our water purification system to run a water system in Takeo and has strengths in its local network. They also differentiate themselves from other operators in a water system that incorporates international standards. There was a corporate strategy of wanting to do so. Our company has technical strengths such as water purification treatment, and the two companies agreed to establish a JV with a 50% stake. Also, ODA and the International Cooperation Organization for the Cambodian water supply field. (JICA), based on the track record of technical cooperation by Kitakyushu City, the high reliability of Japanese products also helped to acquire the exclusive water supply business right. "

-It seems that there was no water supply in both districts, but two years after the start of water supply supply, the contract rate has been 0 to 50%, which is good. The occupancy rate is also above the target.

"Both the Kodak and Kook Nyatei districts are close to where we reside and are small but profitable. We have simplified the water purification equipment to reduce initial costs and use our unique technology for water purification. Adopted an automatic siphon filter. It eliminates the need for operators, cleaning pumps, and power during backwashing, and can reduce maintenance costs compared to other types of filtration equipment. Reduces initial and maintenance costs. We provide a stable supply of tap water. "

— Do you have any difficulties in running your business?

"The heavy rain caused the planned construction site of the water purification plant to be submerged, and the accuracy of the locally processed products was low, so the test run was delayed for several days. The excavation of the road causes damage to the water pipes every month. We are alerting the residents, but it is the biggest problem at present because it causes loss and water distribution is delayed. "

— Why did you proceed with localization?

"Cambodia's private water system operates with a full-cost recovery method that covers only the water charges from the residents. Therefore, we have to consider the balance of the budget, where to spend money and where to cut. For example, pumps, stirrers, water meters, etc. should be manufactured by Japanese companies as much as possible from the viewpoint of improving maintenance efficiency. Instead, tanks and concrete should be procured locally to reduce costs. Fortunately, I was able to find a local company such as a vendor or an agency that I could have a long-term relationship with by utilizing SOMA's local network. "

—Are there any countries or regions where you would like to develop a water business in the future?

"In Siem Reap, which is famous for Angkor Wat, package 3 (water purification plant + mechanical and electrical work of water intake equipment) of the yen loan project" Siem Reap Water Supply Expansion Project "is the largest scale of construction by a Japanese company (processing capacity 60,000). Water purification plant construction work is underway. In local cities such as Siem Reap, I would like to carry out a comprehensive water supply business like this one and contribute to the water supply business in Cambodia through both facility maintenance and maintenance. We also plan to expand our business in Vietnam, where we have a local subsidiary. In addition, there are areas in Thailand and Laos where water services are not installed, so I would like to work with local partner companies to find new investment destinations. "

Acquired large-scale water infrastructure development in the Philippines

JFE Engineering is a corporate community (JV) with Santa Clara of the Philippines, and in 2017, La Mesa No. 1 Water Purification Plant (hereinafter referred to as La), which is one of the largest in the country (processing capacity 1.5 million m3 / day, for about 6 million people).・ We received an order from Manila, a local water service company, for the renewal work of Mesa). We asked Mr. Keiichi Nagaya, General Manager of the Overseas Business Department of the Environment Division, about the outlook and issues of the business.

-I heard that you have received 32 orders in the Philippines.

"Our company was created by integrating Nippon Kokan and Kawasaki Steel, but Kawasaki Steel originally received an order for civil engineering work in Metro Manila (Metro Manila) in the Philippines for more than 20 years. This is the water business. As a starting point, the country has by far the largest number of projects in overseas business. In addition to the Philippines, we are promoting business alliances with local company BIWASE in Vietnam, as well as expanding to Malaysia, Sri Lanka, etc. "

-Why is the business in the Philippines so successful?

"We, EPC contractors, accept orders either by the Employer design method, in which the orderer formulates specifications and constructs according to the specifications, or by the design-build method, which is proposed from the design, but in the Philippines, there are many design-build methods. The former has a fixed specification, so cost is important and it is difficult to make a difference with the competition. The latter has a degree of freedom and can demonstrate our ingenuity. Based on the request of the orderer, such as "This is the quantity and quality of raw water. I want you to make this water quality in the end." I can do it"

-It will be possible to achieve both the standards required by the partner country and high-quality proposals that incorporate the superiority of Japanese technology. What kind of points did you devise?

"Cost reduction by space-saving design and utilization of domestic construction experience. For example, even in a water purification plant with the same capacity, the smaller the equipment, the smaller the amount of civil engineering work, which leads to cost reduction.・ In the case of Mesa, we will renew the equipment while continuing to operate the existing water purification plant. For that purpose, it is essential to understand the current water purification process and to have a detailed construction plan. "

The "interestingness" of the water infrastructure business is to be involved in the operation.

— Was there any impact of the prolonged Korona-ka?

“La Mesa's construction period has also been extended due to delays in the transportation of goods and restrictions on workers' behavior due to local lockdowns. I'm worried that capital investment will slow down. I'm still watching the impact, but in the medium to long term, I think it will return to normal once the corona wreck subsides. "

"Given the unexpected risks such as Korona-ka, we should foster a business that we can interact with locally for a long time. Finally, we will be involved in the business operation of water purification and sewage treatment, and sustainable management with the ingenuity of private companies. It can be said that the realization of this is the “fruit” of the water infrastructure business, and I find it interesting. We would like to be involved not only in the equipment supply in design build but also in the “upstream”. increase. And when a local company becomes independent, it is necessary to think about how to carry out group governance as a Japanese company. It will take 10 years to get there. "

— That is the future outlook.

"Yes. I would like to contribute to regional development by creating as many local subsidiaries as possible to handle water supply, water treatment, wastewater treatment, and local water infrastructure. As people say," JFE Engineering is working hard in this area. " I want to be