EDITORIAL: Helping the world's poor

More companies are using their business operations to make active contributions in solving problems in developing countries, such as poverty and pollution. A growing wave of interest in the new business model known as BOP deserves attention.

BOP stands for the "bottom of the pyramid." It refers to the lowest rung of the economic pyramid or the poorest people of the world in terms of income.

The bottom of the pyramid consists of an estimated 4 billion people who live on annual incomes of less than $3,000 (252,000 yen).

A BOP business is essentially a social business aimed at promoting public interest through profitable operations, instead of social contributions like donations.

The trend has been led by Western global companies, but now an increasing number of Japanese companies are trying to join.

These companies view the BOP not only as a market crucial for their management strategy, but also as an arena where they can widen the scope of their businesses.

Fast Retailing Co., which operates the Uniqlo stores of casual clothes, plans to set up a joint BOP venture with the Grameen Bank group, led by Muhammad Yunus, the Bangladeshi microfinance pioneer who has received the Nobel Peace Prize.

The joint venture will provide clothes priced at around $1, an affordable level for local people.

The business will use locally procured materials and create jobs through local production. It will mobilize women receiving small loans from the Grameen Bank to build up a sales network.

Profits will be reinvested to increase job and income growth in Bangladesh instead of being paid out to shareholders as dividends.

In similar joint ventures, Grameen created a yogurt factory with Groupe Danone, a French food giant, and a shoe plant with Adidas, a German maker of sports gear.

With their business strategies focused mainly on markets in industrial nations, Japanese companies have generally kept a low profile in the area of BOP.

Yet some Japanese companies have become notable BOP players. Sumitomo Chemical Co., for instance, has been supplying mosquito nets treated with insecticides in Africa. Osaka-based Nippon Poly-Glu Co. has been trying to spread the use of water purification agents in Bangladesh.

Recently, Japanese manufacturers of such products as water purifiers, small power generators and dietary supplements have been exploring possibilities to enter the BOP market by using their competitive technologies and products.

Essential for the success of a BOP business is gaining support and cooperation from local residents. This requires a deep understanding of the local problems and needs.

Since there are limits on what individual companies can do on their own, it is also vital to build a network of parties concerned, including nongovernmental organizations and public aid agencies.

Such efforts could also help Japanese companies cure their traditional propensity to do everything on their own.

If tapped successfully, the BOP market offers more opportunities than any other to realize the business ideal of sampo yoshi (good for the seller, good for the buyer and good for society) espoused by many excellent Japanese companies.

In Japan, information about developing countries is said to be scattered around various organizations, including government aid agencies.

In an attempt to fix the situation, the Ministry of Economy, Trade and Industry is working on a system to consolidate such information and make it available to the public.

We hope this project will help improve the environment for Japanese companies to enter the BOP market.

--The Asahi Shimbun, Aug. 26