Singapore

Details

  • Service: Advisory
  • Industry: Industrial Markets, Chemicals and Pharmaceuticals
  • Type: Business and industry issue
  • Date: 6/15/2011

The Japanese Chemical Industry 

Finding the Right Path

After decades of brilliant achievements and growth, the Japanese chemical industry now struggles to maintain its position in the marketplace. Dependent on sluggish domestic markets, weighed down by overcapacity and over-diversification, impeded by a traditional business culture, and faced with increased competition from China and the Middle East, today's Japanese chemical companies find themselves in an increasingly precarious position.

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Indeed, to say that the Japanese chemical industry is at a crossroads is not an understatement. Change is required by Japanese companies; not cautious, incremental change but swift and radical change affecting their very structure, culture, and long-term strategies. This will not be easy or straightforward. With their eyes on the future, Japanese company leaders must make tough decisions that include:

  • A rigorous process of rationalization to eliminate unprofitable facilities and business units
  • Asset swapping to generate scale
  • Consolidation through mergers and acquisitions (M&A) to drive a new focus on core business
  • A stronger push into overseas operations, especially through joint ventures in emerging markets
  • A continued commitment to research and development (R&D) and innovation to support new growth areas.