Study On The Development Process Of Japanese Environmental Equipment Industry And Factors To Grow Global Competitive Power

How to grow environmental industry? This question is becoming more and more important for all countries in recent years. The more complex and the larger scale the environmental protection project becomes, the more money goes to providers of environmental solutions. If a country cannot provide solution by itself, then huge amount of money flows to foreign suppliers, but if it can supply solution with domestic companies, the money on environmental protection circulate within its domestic economy and environmental industry becomes the industry to support domestic economy. Environmental equipment(EE) takes an important part in environmental industry, and Japan’s EE industry was evaluated to be at the world’s top level. However few researches have been done on the mechanism of the development of EE industry before.This research focuses on the three primary sectors of environment; water, air and solid waste, and it analyzes them from various perspectives such as market demand, industrial organization, market competition, technological development, global competitive power and policy. Through the analysis, this study answers the research questions such as how it has developed, which sector in EE industry has global competitive power, and what factors have positive effect on growing long-term global competitive power.About the development process, Japan’s EE industry went through the two steps process of “expansion” and “natural selection”. In the 1970’s and the 1990’s, market expanded due to tightening of regulations and aggressive environmental investment, and then after the 2000’s the weeding out of less efficient companies happened due to the market shrink. The driving forces of market expansion in the 1990’s were the enhancement and diversification of demanded quality and the fiscal stimulation policy to recover from economic recession. EE industry in China is in the expansion period caused by the enhancement and diversification of demand and fiscal stimulation policy after economic crisis in 2008. China’s EE industry needs to improve their ability to develop own technology to survive the following “natural selection” phase.This research identified the segments which have global competitive power. The industrial wastewater treatment, gas DeNOx, exhaust gas treatment, and municipal waste disposal segment have kept their international competitive power until now. On the other hand, the domestic wastewater, excreta, sludge, dust collector and gas DeSOx segments lost global competitive power over time. The factors that influence the longterm global competitive power were examined in terms of technology, industry, policy and company. Diversity of demand, diversity of technology, and technological complexity increase the possibility of product differentiation and help industry to keep profitability for long time. Environmental policies to lead demand growth and industrial policies that promote proactive R&D of companies enhanced the technological level of EE industry. R&D ability of company to provide needed solutions to market quickly and sustainably is important for building long-term competitive power.