Some Issues of Urban Export Businessthrough Public-Private Partnership

18th February 2021
Graduate School of Environmental Information
StudiesTokyo City University
Professor, Ph.DMasaaki UTO

Urban development market potential

The United States, EU, China and MENA have urban development potential of about$ 1 trillion annually. The global market is concentrated in 11 countries / regions.
Evaluations of major countries / regions

Urban development potential of major countries / regions（Mill USD）

Country

Investment amount per city

180,000

2010-20

160,000

140,000

120,000

100,000

USA

Australia
80,000

CanadaEU60,000

40,000TurkeyMexico20,000

MENA

India
China

-

-50,000

Urban
Investment
population amountgrowthper city

Brazil-50,000

ASEAN

100,000

150,000

200,000-20,000（Thousand people）-40,000

Copyright（C） Prof. Masaaki UTO, Tokyo City University All rights reserved.

Evaluation

2010-20

Thousand people

Mill USDMill USD

USA

32,35789,294

9,631,089

EU

18,84567,787

4,521,597

China

150,9226,856

3,448,956

MENA

54,785

13,608ASEAN

58,502

5,992

2,248,732 Over $ 10 trillion
955,263Brazil

18,007

14,876

892,917

Canada3,117

75,402783,445

India

98,8691,986

654,372

Australia

2,290

80,717616,078

Mexico10,445

15,459538,215

Turkey9,305

16,203

502,561

Japan

973

76,087

246,669

Korea

2,127

31,628224,227

Norway442

147,454

217,117◎○
Over $ 5 trillion

South Africa

3,905

10,835141,039△

Switzerland

331

127,141

140,097

Over $ 1 trillion

1,708

17,021

96,886

New Zealand

348

48,74856,565

Iceland42

70,896

9,860

Russian(1,810)17,061-ChileUrban population growthMarketSize×Less than
$ 1 trillion

Source：UN、IMF

1What is issue of Japanese Smart City Business ?

We understand strategic theory, but the problem is that we cannot carry it out well.
◼The smart city market is concentrated in 11 countries / regions⚫Demand for urban development projects overseas is four countries / regions ofdeveloped countries, the United States, EU, Canada, and Australia, and seven countries/ regions of emerging countries, China, MENA, ASEAN, Brazil, India, Mexico, and Turkey.

◼Regional entry strategy is the key⚫If the demand area is limited and the market size is large enough, it is important toindividually consider the entry strategies for these 11 countries / regions.

◼Constitution of Japanese companies⚫Although we understand this point, I think that the issue of smart city business inJapanese companies lies in the place where it cannot be implementing well.

Copyright（C） Prof. Masaaki UTO, Tokyo City University All rights reserved.

2

The Change of Business Model on Smart City

There are three changes in overseas smart city business◼ Smart cities are means for realizing "financial difficulties (cost reduction)", "realization of a low-carbon society","efficiency of energy use", "improvement of living quality, safety and security (crime prevention / disaster preventionmeasures)", etc. It is not the purpose.

Changes inbusiness model

Changes inordering structure

Changes inindustry structure◼ From "hard selling (product quality, cost)" to "proposing solutions forurban problems"◼ From "Urban development, equipment sales / EPC profit" to "Profit fromprovided services"◼ In order to receive orders, it is important to have a concept, direct sales to
the government and achievements.
◼ The key is whether you can get a prime position◼ From split ordering by field / technology to batch ordering◼ Leader profits may increase and barriers to entry for latecomers mayincrease

Copyright（C） Prof. Masaaki UTO, Tokyo City University All rights reserved.

3

Some Issues for commercializing smart cities

Japanese companies are also trying to enter the smart city market, but through myresearch and consulting experience, I have seen three issues.
◼Products and solutions have not been standardized⚫ There is no package such as products and solutions according to the development stage ofthe city.
⚫ Although the market is concentrated, the product axis is the main rather than the regionalaxis.

◼Proper consortium formation is not possible⚫ Manufacturers are mainly EPC and short-term oriented, developers are long-term oriented
with development risk, and business models are different.
⚫ No company can receive prime Smart City Projects ⇒ Integrator function required.

◼The sales system for long-term business is not established⚫ It is a medium- to long-term business, and it takes time to recover profits.
⚫ There is no sense of speed unless the organization that crosses multiple business divisions
functions effectively.

Copyright（C） Prof. Masaaki UTO, Tokyo City University All rights reserved.

4Contact Information
Masaaki UTO, Ph.D, Professor
Department of Urban life Studies
Tokyo City University

Mail to mauto@tcu.ac.jp
Lab. web site https://sites.google.com/site/masaakiuto/