Japan Echo Web

Striving to Be Number One in Batteries

Japan’s Strength Lies in the Value Chain

ITOH Korean companies are now aggressively putting up factories in China. Will it not be difficult to compete with them by doing the same thing as them?

HOMMA You are right in that we cannot win just by doing that. I cannot stress enough the importance of technological capability. Korean manufacturers are already approaching the level of the Japanese for lithium-ion batteries. We have to stay one step, even two steps ahead of them.

ITOH What about solar-generated power?

HOMMA The reason why Japan is playing second fiddle to China and Europe is that they have specialized manufacturers, and these firms are receiving help from their governments. It is a waste of time to try and win out over them on price by reducing the cost of materials. What is important is to create a value chain by building a power management system that includes solar power generation and storage and adding controllers, so as to win with this total package.

ITOH What sort of thing would that be in concrete terms?

HOMMA We are currently building a factory for automotive-use lithium-ion batteries in the city of Kasai, in Hyōgo Prefecture, and are putting in the Sanyo Electric “Smart Energy System.” This is a system that combines solar cells and large-scale storage batteries for efficient, no-waste energy. We can expect to save energy and make optimum use of energy through the efficient control of consumption in the factory as a whole by storing both solar power and low-cost night-rate electric power.

ITOH Is that where the “black box” technology comes into play?

HOMMA Yes, there is a lot of that. Controlling the battery is in itself entirely a black box matter. We have installed massive batteries and have to thoroughly inspect the temperature, state of charge, and resistance of each one of them, so that we have control equipment that’s even more high-performance than systems for car batteries. The ability to put together such value chains is a strong point for Japanese electronics manufacturers. Even when they offer value-added services, the Chinese and Europeans don’t go beyond installation and maintenance.

ITOH The ultimate needs of users are not just low prices for panels and batteries but an energy environment that offers greater efficiency, is more environment-friendly, and is also reliable. Japan’s potential victory lies in delving into this, doesn’t it? But isn’t Samsung also thinking along the same lines?

HOMMA There’s no doubt that companies like Samsung will quickly move toward putting in place value chains. However, even the Korean manufacturers are not yet in a position to supply their customers easily with the most appropriate solar batteries for the scale of the facility and integrate it with various other equipment to create a system. We need to already be thinking of the next step up by the time they have caught up with us.

ITOH We keep hearing nowadays that even IT companies like Google are aggressively moving into smart grids. There is a possibility that, rather than the closed-value-chain business model that you were talking about just now, there will possibly be a move toward a more open model. Is there not the fear that, with Korean and Chinese manufacturers supplying components, there will be competition between “All Japan” and a world alliance, and we will lose after all?

HOMMA But, as I mentioned earlier, we have a number of black boxes on our side when it comes to operating electric power systems, and I think that we can more than stand up to them by digging deep into these. It will, however, be important to anticipate future trends and decide which companies to work with. The fact is that if you don’t have the technological lead, nobody will buy from you. Looking at Japan in recent times, I think that we have totally lost our sense of purpose in terms of technology and business. I feel that this is also connected to being too lax in our standards for deciding on investments. Japan will be left behind unless we regain a sense of urgency and take the lead aggressively. For batteries in particular, we must be global leaders; if we’re number two, we can’t possibly make profits and survive in the face of global competition.

Translated from “Denchi wa sekai ichi de nakereba mōkaranai,” Voice, August 2010, pp. 62–69. (Courtesy of PHP Institute) [August 2010]