Remanufacturing and the 3Rs in Japan: Lessons for Thailand

Abstract

This survey first illustrates that policies making waste disposal relatively expensive have been key determinants of the benefits of remanufacturing and the closely related activities of waste reduction, reuse, and recycling (the 3Rs) in Japan. These policies have generally been product specific and sought to compensate for the failure of private markets to force polluters to bear the costs of negative externalities (costs) imposed or reward those who impart positive externalities (benefits) by reducing pollution through the 3Rs or remanufacturing. Notably they have not discriminated much among different types of firms. Second, the profitability of remanufacturing or more general reuse is found to vary among industries or products, depending on the technologies and consumer preferences involved. Original equipment manufacturers (OEMs) in agricultural and construction machinery and of copiers and related office equipment and services are examples of firms that find narrowly defined remanufacturing relatively profitable. In contrast, other OEMs in non-metallic minerals find that reuse or remanufacturing is not generally possible, largely because of the nature of their products but they have substantial and increasing recycling activities. In contrast to OEMs, who are by definition manufacturers, trading is the main activity of most independent business reuse companies (IBRCs). Some IBRCs, for example in used motorcycles, find substantial remanufacturing to be profitable, while reuse (e.g., clothing, books, software, personal computers) or recycling (e.g., automobile parts) are more efficient for other products. As resources become scarcer and more expensive, markets will gradually reinforce the incentives created by Japan’s policies. There are already substantial opportunities for developing economies like Thailand to benefit from emulation of the principles underlying Japan’s policies. Japan’s national and local governments, as well as its firms, recognize this fact and are actively disseminating knowledge related to their experience with remanufacturing and the 3Rs to neighboring Asian economies such as Thailand.