West Group at the forefront of the green revolution

We have witnessed an economic and energy transformation that goes from the 1^st Industrial Revolution that was UK-led and coal-based to the oil and gas energy revolution spearheaded by the US. Today we are witnessing a green tech sustainable revolution. What do you think will be the role of Japan in this context?

Renewable energy is not the only goal, we also need to tackle CO2 emissions. These are the global conditions to succeed in this green revolution. There are two main factors that need to be considered: green energy use and reduction of global energy use. These two points are essential to shape new solutions for energy saving and Japan is a top runner, very well positioned to produce sustainable energy.

Japan has leading technology in the use of IoT and AI, which allows us to improve energy-saving dynamics. It is also worth noting that Japan is willing to share this trend in a more global scale. For instance, we started our energy policies with residential houses; then we moved into industrial usage and expanded to regional energy management. Bringing together smart grids, green energy and energy savings, we have used IoT and AI to optimize energy management and promote businesses. Japan has the most advanced technology in renewable energies and energy savings, our country is determined to lead other countries in the world to reduce CO2 emissions.

If we look at the national policy, the re-election of PM Shinzo Abe and his push for Abenomics has certainly introduced a jolt in the economy along with a shifting paradigm towards more environmentally sustainable economic growth. What is your personal opinion about the regulatory policies and framework that the Ministry of Environment has put in place in order to promote the use of renewable energy?

The trend that the Japanese government is setting is acceptable on an industrial level but for the individuals it is not an easy transition to process. One of the reasons for that is that there are still government-related institutions that haven’t democratized this trend yet. In the long run, we believe this will be applicable, but we need more consistency.

Over the years, Japanese administrations have changed a lot and the government policies changed accordingly, making it hard to sustain one common vision and strategy. Therefore, the arrival of Prime Minister Abe, who is the first PM staying for a relatively long period in office, might allow our country to follow a political vision that could bring results in the long run.

Could you please give us more details about your local involvement in Akitakata as a model of technology integration to develop a smart city?

We are in the process of helping Akitakata become a smart city, and planning to making it fully functional in 2 years. For now, our focus lies on helping private companies in local areas, spreading our experience to optimize energy use for companies and local institutions.

As founder and Chairman of West Holdings Corporation, could you please tell us a little bit more about the source of inspiration to establish the company?

I was working as a salary man, which I did not like, that is what made me want to become independent. Unfortunately sometimes it happens that if one shows initiative in the company, other workers may try to block him. This is a Japanese custom, if one person shows difference he will not succeed.  We come from an agricultural society where the work is done in groups of people, not individually. Conversely, Western countries have grown more with a hunter mentality; that is why you do better by yourself. Here in Japan we need work in group to be successful.

There are two sides to see the Japanese way of doing things in terms of group behavior, positive and negative but that is the reason that made me want to become independent. The tendency for this conformism is even stronger in local regions where I come from and which is a lot more conservative than the innovative Tokyo. Although by going back and forth from one city to another, I managed to pick the best of both.

If we look at other areas, outside of Tokyo Osaka or Kyoto, West Holdings Corporation has been a key contributor in terms of regional revitalization. Could you give us more details about your approach and how you contribute to the socio-economic development of these areas? And how does your business model help to strike a positive balance between achieving economic growth, energy efficiency and protection of the environment at the same time?

Japan’s population is decreasing mostly in rural areas. There are 1,700 municipalities over the country; and 500 of these local governments are having a hard time surviving. Therefore, we are focusing our business outside Tokyo and Osaka, in more rural areas. Although from our point of view, most of the resources in terms of human capital, information and product development are concentrated and easier to pick-up in urban areas such as Tokyo. That is why we have our headquarters based in Tokyo even though our business focus is outside while keeping our original headquarters in Hiroshima.

That being said, we are aware that also local regional banks are facing challenges. Therefore, our business approach serves regional banks, local governments, and local companies. By combining our energy management model in these three sectors in the local areas, we help public and private institutions to cope with the aging population, infrastructure problems, water supply shortage and so on.

In order to revitalize these areas, we need to create a virtuous circle to allow local companies to be more active, otherwise the local governments cannot collect taxes from them, which are necessary to maintain the region; which turns into higher prospects of growth that can be supported by financial institutions by lending their funds to boost both economy and consumption. We support fulfilling this mission by selling our energy products and services to private and public sectors by co-working with financial institutions.

We have interviewed many regional banks and it is true that they are focusing on finding ways to reduce their operational cost, as they are facing a competitive consolidation process. So, what are the most innovative products and services that you provide not only to corporate but also to individual residents?

I believe that we develop innovative products, but that it is our whole system and business model that is very special. We have contracts with 53 regional banks all over Japan and asked them to introduce us to their customers and developed what we call multilayered alliances platform. Those banks have their own customers and we are the first power producer supplier to reduce energy costs of those customers.

There is another model, rather American which is ESCO (Energy Service Companies), in which we provide the companies with lightning and air conditioning equipment that we own and allow them to reduce their energy expenses. We remunerate ourselves from their savings, thereby creating a win-win situation. It is a long-term business vision that includes 53 banks working with more than 2 million companies, which are customers of them.

We offer the same business model in terms of energy management and saving policies to local governments as well. They receive less address tax income these days due to decreasing number of corporations and population and do not have budgets to invest into new infrastructure to provide public lightening for the roads, for instance. Therefore, we provide them with the adequate equipment and competitive prices for their power consumption through our PPS. 

We are now exporting this business model to Thailand where we established an affiliated company this year, and work to involve local banks through the introduction of their customer base to replicate this system. We also feel the need to develop a plant there to be able to provide proper drinkable water supply and energy solutions. We are currently negotiating with local conglomerates that want to get involved in the project. I visited Thailand three times this year and we believe that our type of business fits the needs of countries in South East Asia.

As you mentioned Thailand and looking at this internationalization trend, do you have any plan to create strategic alliances maybe also to penetrate the American market?

We visited the US many times. There is an investor in Texas to whom we visited in order to potentially develop business in the USA and with whom we hope to develop a joint venture with a solar manufacturer in China as well as in the USA.

We have 20-year history in restoring houses. This was our original branch of activity. Even though we have diminished this segment, we are involved in the management of 760,000 houses. We initially started through the wholesale of construction material for houses and buildings and then moved to the renovation business.

In this context, we visited New York, where we met a Japanese professor at Columbia University who helped us. As you know, we have a lot of earthquakes in Japan and we specialized in building houses in a new way, in order for them to be earthquake-proof. We exported our earthquake-proof house technology and obtained our licence in the US; and then we imported it back to Japan so we could also sell them here. Therefore, there are definitely business opportunities to look at and partnerships to develop also in the earthquake sensitive area of California.