Tokyo lends hand in pushing satellite sales in emerging economies

The government is trying to help satellite manufacturers win contracts in emerging economies and hopefully establish a foothold in the lucrative and expanding international market long dominated by U.S. and European companies.
 
Director of the Ministry of Economy, Trade and Industry's Space Industry Office, Shuichi Kaneko, said that the government cooperation is indispensable for satellite manufacturers to win contracts overseas.

 
Japan views satellites as lucrative infrastructure projects along with nuclear power plants and Shinkansen bullet trains.
 
In addition, it was a Japanese government decision in 1990 that hindered the efforts of Japanese satellite companies to make names for themselves in the business.
 
In February 2010, Japan sent its first public-private mission to promote overseas satellite sales to Egypt and South Africa.
 
Its 15 members were drawn from the trade ministry and Mitsubishi Electric Corp. and NEC Corp., two Japanese satellite manufacturers.
 
Egypt is expected to place a launch order for a new Earth-observation satellite this year for flood control and other purposes. Egyptian officials told the Japanese mission that they expect Japan to join the project, according to sources.
 
Japan plans to send similar public-private missions to Brazil, Argentina and Peru in August, with a goal of winning orders for five to 10 satellites a year.
 
The global market for Earth-observation satellites, excluding those for military purposes, is expected to more than double from the 101 launched over the 10 years through 2008 to 206 in the decade starting in 2009, according to the trade ministry.
 
Japanese officials expect demand for satellites will rise in emerging and developing countries because of the increasing need for data on water resources, agriculture, disaster prevention and mineral resource exploration.
 
The prices of satellites range from 5 billion yen ($56 million) to 10 billion yen. The overall projects range from 10 billion yen to 15 billion yen if the contracts include signal reception equipment on the ground and data analysis services.
 
In addition, a single satellite uses as many as 700,000 parts, so a large number of manufacturers are involved in production.
 
Although observation equipment, such as radar, sensors, transmitters and signal reception devices, produced by Mitsubishi Electric and NEC are highly evaluated, five Western companies, including Boeing Co. of the United States and the Thales Group of France, control nearly 90 percent of the world's satellite market.
 
Mitsubishi Electric and NEC effectively lost domestic satellite projects to overseas rivals as well as the chance to improve their technologies through participation in commercial projects after a 1990 Japan-U.S. agreement to resolve trade friction.
 
The agreement required Japan to hold international competitive bidding for projects ordered by the government or government-affiliated organizations.
 
In the satellite business, a manufacturer's track record largely determines the chances of winning new contracts.
 
But Japanese manufacturers have also lagged in cost competitiveness.
 
Western rivals can procure satellite parts and components more cheaply because they are produced for the aircraft manufacturing industry, which is more developed in the United States and Europe than in Japan.
 
As a result, Mitsubishi Electric and NEC had only been able to supply observation and communications equipment to Western satellite manufacturers.
 
The situation began to change after Mitsubishi Electric won a contract in 2005 to build a communications satellite for Space Communication Corp., now known as Sky Perfect JSAT Corp.
 
In 2008, the company received an order for the communications satellite ST-2 from a Singaporean company. It was Mitsubishi Electric's first overseas contract for a satellite whose core portions are manufactured by the company.
 
Mitsubishi Electric, which used to spend four to seven years to develop, manufacture and test its satellites, has shortened the delivery time to two years, roughly the same as U.S. and European companies. The company has also lowered production costs. Mitsubishi Electric plans to double annual sales in its space business from the current level of 70 billion to 80 billion yen by 2020.