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April 28, 2010, 9:30 p.m. EDT

Japan Inc. Once Again Starts to Seek Growth Overseas

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By Yuka Hayashi

TOKYO—As many Japanese enjoy their annual "Golden Week" holidays starting Thursday, some of Japan's economic ministers will be traveling to the U.S. and Asia to pitch what they hope will become a new driver of the nation's growth: infrastructure exports.

Transport Minister Seiji Maehara will spend Thursday and Friday in Washington to promote Japan's superfast bullet-train system as it chases part of U.S. President Barack Obama's high-speed railway project, which has an initial $8 billion price tag. Central Japan Railway /zigman2/quotes/205638698/delayed JP:9022 +0.66% Co. is among the hopefuls on some projects.

Meanwhile, Economic Strategy Minister Yoshito Sengoku will be wooing officials in Vietnam so they will choose a consortium of Japanese nuclear-power companies over those of rivals from France and South Korea. Vietnam last year approved a resolution to build the country's first two nuclear-power plants, estimated to cost about $10.5 billion at current rates.

"In the past, Japanese ministers were too proud to go out there and cheer for our companies as they worried about failing to deliver successful results," Mr. Maehara told reporters before his departure. "I intend to play the role of the top salesman for Japanese companies as their success equals the nation's economic growth."

The government of Prime Minister Yukio Hatoyama has begun a push to help Japanese companies win multibillion-dollar infrastructure projects abroad as its domestic economy continues to slump and a population decline threatens to sink demand further. Meanwhile, rising environmental concerns in developed nations and rapid expansion of emerging economies are resulting in bumper crops of projects in areas like railways, nuclear power and clean-energy technology.

"There is no growth for Japan unless we enhance exports," says Hiroki Mitsumata, director of nuclear-energy policy at the Ministry of Economy, Trade and Industry, or METI. "No matter how superior our technology is, if it's confined within Japan, it will become obsolete like the species in the Galapagos."

The move marks a return to Tokyo's earlier role of cheerleader during its fast-growth era of the 1960s to the 1980s, when it famously pushed Japan Inc.'s export machine. To make sure that Japan's industry champions came out ahead, the government closely assisted companies' expansion while shielding the domestic market from foreign competitors. As its companies grew more competitive and trade tensions with the U.S. and Europe heightened, the government eased into a more laissez-faire attitude.

Today, Japanese companies face stiff competition from newcomers like South Korea and China, in addition to old rivals from the U.S. and Europe. Mr. Mitsumata says Japan has learned the importance of working as an "All Japan" team after losing out to a South Korean consortium in a $20 billion nuclear-power project in Abu Dhabi and to a Russian team in an initial nuclear project in Vietnam. They were both coordinated by government bodies. METI estimates projects to build and replace nuclear-power plants around the world will generate business opportunities valued at $1.9 trillion by 2025.

Mr. Hatoyama's government, which came to power in September with a promise to focus economic policies on boosting domestic demand, has quickly refined its policy to encourage more government involvement. Creating a nationwide support system for infrastructure exports will be a prominent part of the government's long-term growth strategy to be finalized in June. It comes amid criticism that the government's other policies in areas like finance and manufacturing are antigrowth.

Acting on pressure from companies hoping to get pieces of the railway bonanza in the U.S., Tokyo last week changed a statute governing the Japan Bank for International Cooperation, a government lender, which had focused on developing nations, so it now can provide financing to "railway projects in developed economies."

A handful of Japanese companies are preparing to participate in bidding for several railway projects planned throughout the U.S., part of President Obama's initiative for 10 potential high-speed intercity corridors to be funded with economic-stimulus money.

Central Japan Railway, the operator of part of Japan's bullet train network, is vying for two projects—a high-speed link between Orlando and Tampa, and a Maglev, or magnetic levitation, super-fast transport system for the Washington-Baltimore route. Others are eyeing projects in California and Chicago.

In addition to North American players like Bombardier /zigman2/quotes/208994866/delayed CA:BBD.B -3.26% Inc. and General Electric /zigman2/quotes/208495069/composite GE -1.18% Co., bids are expected to come from nations like France, Spain and China. Japan's bullet trains are fast and energy efficient with a strong safety record, but have the weakness of having been developed for their own special tracks.

"We are concerned China and Europe will join hands to make their system the standard in the U.S.," says Tadashi Maeda , head of corporate planning at the JBIC, who is helping to coordinate bids among Japanese companies. "We really can't afford to be shut out."

Mari Iwata contributed to this article.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

/zigman2/quotes/205638698/delayed
JP : Japan: Tokyo
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Market Cap
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