Japan’s Emerging Sectors: New Opportunities in Procurement

Japan, known for its technological innovation and strong economy, is continuously evolving, with new sectors emerging that offer fresh opportunities for procurement. Particularly noteworthy are sectors like renewable energy and advanced materials, where Japan has shown significant advancements.

Yoshihiro Muragaki (left) and Jun Okamoto (right) of Tokyo Women’s Medical University’s Institute of Advanced Biomedical Engineering and Science pose in a version of the Smart Cyber Operating Theater (SCOT). Photo credit of Forbes.com

Renewable Energy

Japan’s renewable energy sector has seen substantial growth, particularly following the Fukushima nuclear disaster in 2011. This event triggered a national reevaluation of energy policies, leading to increased investments in renewable sources like solar, wind, and hydroelectric power. The Japanese government’s commitment to reducing greenhouse gas emissions has further strengthened this sector. The procurement opportunities in renewable energy are vast with a growing demand for solar panels, wind turbines, and related components. Additionally, the development of smart grid technologies to efficiently manage energy distribution offers substantial procurement potential. One example is the Solar Ark, an architectural wonder by Sanyo, which is not only a symbol of renewable energy but also a testament to Japan’s commitment to green technology. Moreover, the Japanese government’s feed-in-tariff scheme has incentivized private investment in renewable energy. Companies like SoftBank have ventured into large-scale solar projects, e.g SoftBank Tomatoh Abira Solar Park, one of the largest solar power plants in Japan. Offshore wind farms are gaining traction, led by firms like Mitsubishi Heavy Industries and Hitachi. These developments have created a surge in demand for procurement services, from sourcing materials for solar panels to logistics support for wind farm installations. . The development of offshore wind farms can have a positive impact on local economies, especially in coastal regions. This includes opportunities in local procurement, services, and logistics.

Advanced Materials

Another area where Japan excels is in the development of advanced materials. Japanese companies are at the forefront of creating materials that are lighter, stronger, and more adaptable than ever before. For instance, Toray Industries’ development of carbon fiber, used in everything from aircraft to sports equipment, is revolutionary. These materials are not only high in demand due to their superior qualities but also due to their applications across various industries, including automotive, aerospace, and sports. Shin-Etsu, known for its innovative silicone products used in various fields like electronics and cosmetics, focuses on ensuring a reliable supply of rare earth materials crucial for their products. They use advanced technologies to separate and refine these materials. Additionally, Shin-Etsu recycles rare earth materials from used magnets and magnet powder, a process known as “urban mining.” With the increasing demand for these materials, driven by the growth of electric vehicles, renewable energy, and energy-efficient appliances, Shin-Etsu is enhancing its supply chain. This effort includes expanding their facilities in Japan and Vietnam to increase their ability to process and recycle rare earth magnets.

Healthcare and Biotechnology

Japan’s aging population has spurred growth in healthcare and biotechnology. Companies like Takeda and Otsuka are leading the way in pharmaceutical innovations, while startups like Spiber are exploring synthetic biology to create new biomaterials. Takeda, for example, has made significant strides in oncology and neurology, while Otsuka is known for its psychiatric and neurological drugs. These developments necessitate a robust procurement strategy for acquiring rare and high-quality pharmaceutical ingredients, state-of-the-art lab equipment, and cutting-edge research tools. Spiber’s work in synthetic biology to produce artificial spider silk is just one example of how biotech startups are revolutionizing material science. The procurement needs in this sector are diverse, covering advanced medical equipment, pharmaceutical ingredients, and innovative materials for biotech applications.

Robotics and Automation

Japan is a global leader in robotics and automation. The country’s expertise in this field is not limited to industrial robots but extends to service robots, which are being increasingly used in healthcare, retail, and hospitality. Japan’s industrial robotics sector, led by companies like Fanuc, Kawasaki Robotics, and Yaskawa Electric, is known for its high-quality, precision manufacturing robots. These companies supply robots for tasks like welding, assembly, painting, and material handling. Procurement in this area often involves sourcing sophisticated components such as sensors, actuators, and advanced control systems. Additionally, there’s a growing market for software that enables these robots to perform complex tasks with greater efficiency and adaptability. Companies like SoftBank Robotics and Toyota are making strides in developing robots for both industrial and personal use, like humanoid robots for societal issues and to tackle labour shortage. This sector presents procurement opportunities in high-tech components, software, and systems integration services. Healthcare robotics is an area where Japan is making significant advancements. Robots are being developed for a range of applications, from assisting surgeons in the operating room to providing support for elderly care. Cyberdyne’s HAL exoskeleton, for instance, is a revolutionary product assisting in rehabilitation and physical therapy. Procurement in this sector involves sourcing high-tech medical-grade materials, precision motors, and sensors, as well as software for health data analysis and patient management.

Key Strategies for Effective Procurement in New Markets

Successful procurement in these emerging sectors requires an all-round approach. Forming and sustaining solid supplier relationships is essential. This requires a thorough understanding of their strengths, maintaining high quality standards, and working together on innovative solutions. Simultaneously, harnessing the power of technology is key to efficient procurement. By employing digital tools for insights into market trends and managing suppliers, efficiency is greatly enhanced. Moreover, with a global emphasis on sustainability, it’s important to ensure that procurement practices are both environmentally sound and ethically responsible. This approach to sustainable and ethical sourcing not only meets international norms but also upholds the integrity of the procurement process.

The evolution of Japan’s renewable energy and advanced materials sectors is creating a wealth of opportunities for foreign companies in procurement. Japan’s renewable energy landscape, highlighted by initiatives like SoftBank’s solar projects and Orsted’s offshore wind farms, offers vast potential for collaboration and investment, particularly in solar farm construction and wind turbine supply. Simultaneously, the growth in advanced materials, led by giants like Toray Industries and Shin-Etsu Chemical, is paving the way for foreign firms to integrate into Japanese supply chains, providing chances for technology transfer and consultancy. These sectors not only enable foreign companies to penetrate the Japanese market but also to expand into broader Asian markets, thanks to Japan’s economic connections. Additionally, government policies like the feed-in tariff system amplify these investment opportunities, while the advanced materials sector’s innovative response to global supply chain challenges underscores the importance of adaptability in the international market.

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