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About inclusive business

BOP

As the definition of inclusive business, there are some vision and variety of opinions on the subject. Here, we define that the inclusive business is mainly intended for the sustainable business in which people at “BOP” (Base Of the economic Pyramid*1) in developing countries are involved as consumers, producers, distributors, or any combination thereof. The inclusive business is also expected to resolve the various problems for developing countries which include water supply, commodities, (supply of) service, poverty reduction, etc. As a result, the inclusive business is the new type of business models. *2

  1. *1 The income bracket for those earning USD 3,000 per year or less in terms of 2002 purchasing power-equivalent to 4.0 billion people, or around 70% of the world’s population.
  2. *2 The specific definition and range of support for Inclusive business must be considered in order to be appropriate to Individual support structures and other frameworks.
  3. *3 About 72% of the world’s population
  4. *4 On par with Japan’s real GDP

Source: Created by METI based on THE NEXT 4 BILLION (2007 World Resource Institute, International Finance Corporation)


Background/context

The developed markets have been shrinking relatively, it is necessary for Japanese companies with the advantage in high-end segments to recognize BOP including the middle-income market in developing countries (the “volume zone”) as “the new markets in the global economy”. Population of BOP is around 4.0 billion-makes up around 72% of the world’s population-and BOP market is an enormous potential market of five trillion dollars. At the same time, there is heavy demand for economic cooperation that contributes to the resolution of the many social issues facing developing countries. These include the poverty that stems from low incomes as well as the health and sanitation problems that come from inadequate basic infrastructure and social programs.

Values and opportunities in inclusive business for various players

Efforts by Japanese companies and other organizations to promote inclusive business through unified public-private initiatives are considered a new frontier for various parties such as the government and companies of Japan, the governments and BOP in developing countries, NGOs/NPOs, social entrepreneurs, and international aid organizations. Putting innovation to work to conquer this frontier can create a mutually beneficial win-win-win situation for all players. More specifically, inclusive business has the potential to bring the following specific opportunities and benefits to the players listed below.

Japan
For the Japanese government
  • Achieve sustained, effective economic cooperation through public-private alliances
  • Vitalize Japan’s economy through higher standards of living and reduced poverty in developing countries, as well as by encouraging economic progress in Asia and elsewhere
  • Boost the presence and awareness of Japan’s economic cooperation efforts
  • Support Japanese companies to enter into overseas markets
  • Support corporate and general economic development through the creation and expansion of overseas markets
For Japanese companies
*NPOs/NGOs, social entrepreneurs, and others may be key players in implementation
  • Access to new markets (or foothold in future new markets)
  • Create new standards
  • Develop products and services that could generate reciprocal growth in the domestic market
  • Create opportunities for small and medium enterprise to make inroads overseas markets
  • Build momentum for their own business innovations
    (Create new products, services, sales routes, or partnerships)
  • Create more lasting and efficient business activities through reciprocal alliances with other companies, governments, aid organizations, NGOs/NPOs, and social entrepreneurs*
Developing countries

For governments

  • Economic development through vitalized markets, employment, direct inward investment, and greater exports
  • Reduction in poverty, improved standard of living

For BOP

  • Generate and expand opportunities to get needed products and services
  • Alleviation of BOP penalty (e.g. forced by poverty to purchase low quality, relatively expensive products, little or no access to goods and services)
  • Escape from poverty with new employment opportunities
Aid groups and organizations

For NGOs/NPOs

  • New support needs for BOP can be uncovered with the help of corporations
  • Sustained, efficient support can be implemented with the help of corporations

For aid organizations

  • Social issues facing developing countries (including Millennium Development Goals) can be efficiently resolved with private funding, products, services, and networks

What is inclusive business

About the Japan Inclusive Business Support Center