The “J:COM Electric Power” service is currently being utilized in conjunction with Sumitomo Corporation's condominium operations. For example, J:COM participated in developing the CLASSY HOUSE Kamikitazawa condominium complex from the product planning and design stages, leading this complex to introduce both the “J:COM Electric Power” service as well as J:COM's electricity consumption tracking service “ECOREPO,” which allows users to view the amount of electricity they have consumed. This synergistic relationship presents an opportunity for market expansion for J:COM and a chance to use the Internet and cable TV services provided by this company to boost customer satisfaction. Going forward, J:COM will step up collaboration with the Company's condominium operations to continue expanding usage of its services.
SPECIAL FEATURE 2 Initiatives under BBBO2017
1Building a Social Infrastructure Foundation by Strengthening Cross-organizational Collaborations
Providing an Integrated Electricity Supply Chain That Extends from Upstream to Downstream
Environment & Infrastructure Business Unit × Media, Network, Lifestyle Related Goods & Services Business Unit
In industrial fields, which are expected to achieve high medium-to-long-term growth, we plan to bolster existing cross-organizational collaborations and continue to push forward with initiatives that leverage our integrated strengths.
In this section, we will introduce the initiatives of “J:COM Electric Power,” which has commenced the provision of services through collaborations between the Environment & Infrastructure Business Unit's power generation business, the Media, Network, Lifestyle Related Goods & Services Business Unit's cable TV business, and housing development and sales.
Market Environment
Considered to suffer from structurally high costs, the Japanese electricity industry has been gradually reforming regulatory systems to promote participation by new power providers. One aspect of these reforms has been the deregulation of the electricity retail market. Since 2000, the restrictions for entering into the electricity industry have been sequentially lifted. Today, supply to large-scale users with electricity demand of more than 50 kW-a segment of the market accounting for approximately 60% of all electricity supplied-has been deregulated.
The complete deregulation of the electricity retail market is scheduled for April 2016. This development will lift the restrictions currently placed on small-scale users, such as stand-alone households and small condominium complexes, allowing electricity sales targeting these users to be conducted freely.
Response to Electricity Regulatory System Reforms by Summit Energy and J:COM
Wholly owned subsidiary Summit Energy Corporation is engaged in power generation and retail operations in the Japanese market. The company provides users with electricity from an ideal mix of power from its three thermal power plants in Japan and power procured from other generators as well as companies possessing in-house generation facilities and the Japan Electric Power Exchange. In addition, Summit Energy is in the process of constructing a new biomass-fired thermal power plant, which will be among the largest in Japan upon its scheduled completion in 2017.
At the same time, Jupiter Telecommunications Co., Ltd. (J:COM), a Cable TV and system operator in which the Company holds a 50% stake, is taking advantage of the aforementioned electricity regulatory system reforms to start an electricity retail business targeting medium-to-large-sized condominium complexes. J:COM conducts its cable TV operations in five areas throughout Japan: the Kanto and Kansai regions and the Sapporo, Sendai, and Kyushu areas. In these areas, a total of approximately 19 million households are equipped with the cables and other necessary infrastructure for receiving cable TV services. Of these households, roughly 5 million households were subscribed to J:COM's services as of March 31, 2015, indicating that J:COM provides these services, which are a central fixture in the lives of customers, as the industry share leader.
With cable TV operations that link it to communities and households, J:COM aims to become an indispensable part of its customers' lives. This quest is guided by the concept of “J:COM Everywhere” that inspires this company to provide enjoyable, useful, and reliable services that can be accessed anywhere. Through collaboration with Summit Energy, which possesses its own generation capabilities and the ability to procure power from outside sources, J:COM arrived at the possibility of creating electricity retail operations.
The Handa Biomass Power Plant (Aichi Prefecture)
J:COM, boasting the largest share of Cable TV subscribing households in Japan
Birth of “J:COM Electric Power”
In December 2012, the “J:COM Electric Power” batch-electricity provision service for condominium complexes was created. This service was set up through an alliance between Summit Energy, which possesses its own generation capabilities and the ability to procure power from outside sources, and J:COM, which has cultivated a massive customer database and accumulated extensive know-how regarding billing systems and retail activities aimed at residential households. Through the “J:COM Electric Power” service, electricity procured by Summit Energy, with volume adjusted based on supply and demand circumstances, will pass through transformation facilities operated by J:COM and then be sold to individual households in medium-to-large-sized condominium complexes. Not only will “J:COM Electric Power” offer electricity at lower rates than regional power companies, further discounts will be provided to users that bundle this service with other existing J:COM services, such as an Internet connection.
Currently, there are approximately 1 million households in medium-to-large-sized condominium complexes and other facilities classified as large-scale users in J:COM's service area, and only these are potential targets for the “J:COM Electric Power” batch-electricity provision service at the moment. However, after the complete deregulation of the electricity retail market, J:COM will be able to provide this service to stand-alone houses and small condominium complexes in its service area. With this influx of new potential users, the number of households able to take advantage of “J:COM Electric Power” will rise to roughly 19 million, representing a substantial expansion of the market for this service.
CLASSY HOUSE Kamikitazawa
Creation of Social Infrastructure
Guided by the concept of “J:COM Everywhere,” J:COM strives to provide a diverse range of services that enrich the lives of customers in local communities. Centered around broadcasting and communications, J:COM offers such services on a one-stop basis. With the new offering of electricity, an indispensable lifeline, J:COM will strengthen contact points with customers and develop services that are even more closely tied to local communities and households.
Going forward, Sumitomo Corporation will continue to foster internal collaboration of this nature to muster its collective strength in advancing initiatives in fields expected to grow over the medium-to-long term. In this manner, we aim to contribute to the creation of the social infrastructure that supports people's everyday lives.
2Expanding Retail Businesses in Asia
Contributing to the Advancement of Emerging Countries by Leveraging the Knowledge and Know-How That We Have Nurtured over Many Years in Business
Strategic Industrial and Regional Focus Initiatives
Going forward, we will continue to strengthen our existing strategic industrial and regional focus initiatives as part of our medium-to-long-term development framework for businesses in fields and regions with high potential for growth.
From page 30, we will introduce the initiatives of our retail businesses in Asia, which include a TV shopping business in Thailand, automotive retail financing operations and investment in a commercial bank in Indonesia, and a telecommunications business in Myanmar.
- MyanmarTelecommunications Business in MyanmarView details
- ThailandShop Channel in ThailandView details
- IndonesiaAutomotive Retail Finance Businesses
Investment in Commercial Bank BTPNView details
Myanmar
Telecommunications Business in Myanmar
Myanmar has a population of approximately 50 million people. The government of this country has declared its intention to raise the penetration rate of mobile phones, which was approximately 30% on December 31, 2014, to 80% by 2016, a move that has resulted in the rapid proliferation of mobile phones. Together with KDDI Corporation, Sumitomo Corporation concluded an agreement with Myanma Posts & Telecommunications (MPT) in July 2014 to jointly undertake telecommunications operations in this country, and these operations have since commenced. We are now expanding this business by constructing telecommunication networks and improving communications quality.
Leveraging the telecommunications business expertise gained through operations in Mongolia, Guam, and other parts of the world, Sumitomo Corporation aims to help spread mobile phone usage in Myanmar. We will also contribute to growing the country's economy and improving the quality of life of its people by providing telecommunications services of impeccable quality.
The first directly operated store and MPT employees in Yangon
Thailand
Shop Channel in Thailand
Sumitomo Corporation established Jupiter Shop Channel Co., Ltd. (JSC), which is currently Japan's largest TV shopping company, in 1996, and has pursued this business since that time. After its founding, JSC was successful in providing live broadcasts on a 24-hour-a-day, 365-day-a-year basis, a feat that was revolutionary at the time. Leveraging its strengths in creating and broadcasting TV shopping programs and its ability to procure unique products, this company was a major pioneer in expanding Japan's TV shopping market. While growing the market, JSC has continued to broaden, simultaneously cementing its position as the industry leader.
In consideration of this success, Sumitomo Corporation has continued to examine the possibility of further expanding JSC's business foundations by commencing TV shopping operations in Asia and other rapidly growing emerging markets. In particular, we turned our focus to Thailand, which was ripe with business opportunities and possessed both the broadcasting infrastructure necessary for stable TV program transmissions and product tastes similar to those in Japan. Partnering with Central Department Store Limited, a core retail company in one of Southeast Asia's largest conglomerations, and I.C.C. International Public Company Ltd., a central consumer goods wholesaler of the major Thai conglomerate the SAHA Group, JSC established SHOP Global (Thailand) Co., Ltd., in February 2013. SHOP Global draws on the wealth of expertise and experience these partners offer with regard to the consumer market in Thailand as well as their operating facilities, equipment, and other infrastructure. At the same time, SHOP Global has access to the program creation and product procurement know-how that JSC has accumulated in Japan. Leveraging these assets, SHOP Global is pushing forward with the development of its TV shopping operations in Thailand, which is one of Southeast Asia's leading TV shopping markets.
Sales at SHOP Global have continued to grow smoothly since broadcasts commenced in November 2013, and this company aims to conduct broadcasts on a 24-hour-a-day, 365-day-a-year basis, similar to those of JSC in the future. Immensely capable of supplying unique products and conducting live broadcasts, SHOP Global is work toward becoming Thailand's largest TV shopping company. At the same time, this company is stimulating activity in the TV shopping market in Thailand and helping provide consumers with more rewarding experiences through its business.
Creating a TV program that includes guests
Supporting staff for live broadcasts
Indonesia
Automotive Retail Finance Businesses
With a population of more than 240 million people, Indonesia has become a major automotive and motorcycle market among ASEAN countries. Sales of new automobiles and motorcycles reached more than one million and eight million, respectively, as the market has grown more than 10% each year since the turn of the century.
In Indonesia, Group companies P.T. Oto Multiartha and P.T. Summit Oto Finance.jointly referred to as the Oto Group-are conducting automotive retail finance businesses. The Oto Group has more than 200 branches located across Indonesia, mainly on the islands of Java and Sumatra. Through this network, we have provided service to more than six million customers to date. Looking ahead, the middle-income bracket in Indonesia is anticipated to grow to 200 million people by 2020, and it can therefore be expected that the markets for automobiles and motorcycles will continue to expand going forward. Through the retail services offered by the Oto Group, we will keep working to achieve prosperity and realize the dreams of our customers.
Investment in Commercial Bank BTPN
In order to tap the voracious consumer demands of the growing middle classes in emerging countries, Sumitomo Corporation is commencing various initiatives. As part of these initiatives, we have invested in the financial sector of Indonesia. Indonesia is an extremely important market where a wide range of businesses are being developed, and we are anticipating high levels of growth particularly in the financial sector. We have focused our investments in the sector primarily on PT. Bank Tabungan Pensiunan Nasional Tbk (BTPN), a commercial bank that possesses strengths in the retail field. These investments were made from a long-term point of view. By producing synergies with BTPN, Sumitomo Corporation will continue to expanding its business portfolio and thereby make large contributions to economic growth in Indonesia and other Asian countries going forward.
Customer-oriented services at a BTPN Branch Office
