United States, and ASEAN and other Asian countries. Following Japanese customers' global expansion alone may fall short of allowing these enterprises to grow more and more amid competition from European and American forerunners and low-cost local companies.

When anticipating Japanese ICT service enterprises' global expansion potential, we can conceive two major models — “horizontal global expansion” through M&A deals to increase business sizes and “global expansion based on upstream integration” through the enhancement or launching of upper layer services including consulting.

In the future, it may be effective for Japanese ICT service enterprises to take advantage of their strengths including quality, reliability and security for supporting their Japanese and foreign customers' global expansion with the abovementioned models in mind.

## (5) Global expansion through infrastructure exports

### a. Drafting and releasing infrastructure export strategy

Under its growth strategy, Japan must proactively absorb infrastructure development demand mainly in emerging countries and take advantage of the demand for its powerful economic growth. To this end, Japan should take various business approaches including full turnkey contracts covering infrastructure engineering, construction, operation and management as well as project investment expansion. Infrastructure system exports are expected to produce composite effects including the development of overseas business bases for Japanese enterprises and the enhancement of their supply chains and to contribute to improving Japan's international position through its transfer of advanced technologies and know-how.

Given the expectations, the government created the Ministerial Meeting on Strategy relating to Infrastructure Export and Economic Cooperation chaired by the Chief Cabinet Secretary in March 2013 to support Japanese enterprises' overseas infrastructure system development and their acquisition of interests in overseas energy and mineral resources and to discuss Japan's key economic cooperation measures for their strategic and efficient implementation. In May 2013, the government

Figure 1-2-2-8 Telecommunications equipment market trends

(Source) Prepared by MIC from Gartner data

released the Infrastructure Systems Export Strategy.

### (6) Global expansion for telecommunications equipment layer a. Telecommunications equipment market trends

The telecommunications equipment market is projected to grow at an average annual rate of 4.8% against the backdrop of globally expanding communications demand even amid the commoditization of telecommunications equipment. The mobile communications infrastructure portion accounts for nearly 50% of the market and is expected to steadily expand in the future. In the fixed communications infrastructure portion, demand is projected to decline substantially for legacy network equipment while expanding for IP (Internet protocol) network equipment. Particularly, router/switch demand is predicted to continue a high average increase of 8.5% (Figure 1-2-2-8).

Among regions, the Asia-Pacific region accounted for the largest share or $12.9 billion of the mobile communications infrastructure market in 2012. Of the fixed communications infrastructure market in the year, North America commanded the largest share or $12.9 billion. Through 2017, Asia-Pacific and other emerging countries are projected to steadily expand demand for fixed communications infrastructure. The Asia-Pacific region's mobile infrastructure demand is projected to grow to $16.5 billion (Figure 1-2-2-9).

Figure 1-2-2-9 Telecommunications equipment market breakdown by region

Fixed communications infrastructure

Mobile communications infrastructure

(Source) Prepared by MIC from Gartner data