Japan's chemical companies must change - KPMG

10 June 2011 13:29  [Source: ICIS news]

LONDON (ICIS)--Japan’s chemical industry can regain competitive advantage but only if companies are committed to change, business advisers KPMG said on Friday.

“After decades of brilliant achievements and growth, the Japanese chemical industry now struggles to maintain its competitive position in the market place,” the firm’s Chemicals and Performance Technologies practice says in a report. “To say that the Japanese chemical industry is at a crossroads is not an understatement,” it adds.

Japanese chemical companies are in an increasingly precarious position, KPMG says, because they are “dependent on sluggish domestic markets, weighed down by overcapacity and over-diversification, impeded by traditional business culture and faced with increased competition from China and the Middle East".

Firms need to make “swift and radical change affecting their very culture and long-term strategies”, it adds.

The report says companies need to push more strongly into overseas operations, particularly through joint ventures in emerging markets. A continued commitment to research and development (R&D) and innovation is needed to support new growth areas, it adds.

The response of Japanese chemical manufacturers to the 11 March earthquake attests to the resilience of the industry, KPMG says in a pre-amble to the report. The medium-term domestic demand situation is highly uncertain, it adds, but there are likely to be longer-term opportunities for chemical producers to play a central role in reconstruction.

By: Nigel Davis
+44 20 8652 3214

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