Japan was for decades the world leader in consumer technology. This is the story of his fall

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There is no empire that lasts a thousand years and the technological arena is no exception. The best example may be left by Japan. Decades ago, the country of the rising sun was the great focus of the tech sector at an international level, the one that amazed half the world with its momentum, home to large multinationals, such as Sony, Panasonic or Sharp, and the cradle of pocket calculators or the Sony Walkman, gadgets that marked an entire generation. Today the situation is quite different.

It’s not just that Japan’s place has receded on the global tech map; it is that the very implantation of the technology is there, in the companies and institutions of the once great innovative nation of the globe, far behind what is handled in other nations.

How is the change explained?

First things first: what does the data tell us? Well, Japan is far, very far, from leading the world rankings of digital implantation. It arrives with a look at the main metrics to verify it. Among OECD countries, Japan ranks rank 27 in digital competence.

According to the data handled by Statista, last year the IMD placed it as 28th in the ranking of digital competition, behind other nations, such as South Korea or Malaysia. The data does not correspond to what could be expected from the third richest nation of the world.

The reflection in the administration and companies. This reality leaves a mark on the digitization of the administration and companies. Although Japan launched its first digital initiative two decades ago, in 2018 only 7.3% of citizens requested some online procedure, far from the data of other nations with, a priori, a less pronounced technological profile, such as Iceland or Slovakia. That same year the UN placed it as the tenth country in digital government.

The situation is not very different in the private sector. In a statement issued this monththe International Monetary Fund (IMF) put its finger on the yaga and slipped the advantages that delving into digitalization would have for the country, especially after the lessons that COVID has left.

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The lesson of the pandemic. The IMF’s conclusion is very clear. And leaves an eloquent conclusion. “The pandemic has underscored the uneven adoption of technology in Japan. Even though it is one of the largest users of industrial robots and home to a major electronics industry, it still lags behind other economies in the adoption of digitization by business, government and the financial sector.” warns the international body.

As an example, its technicians point out the “structural weakness” that companies found when they wanted to implement teleworking. “It reduced economic output and undermined productivity at a crucial time. Paper-based procedures hampered government responses to the outbreak, delaying the 2020 emergency cash program.”

Beyond percentages and reports. What do the percentages and reports translate into? Basically in almost, almost surreal realities. Roland Kelts tells it well in an article of rest of world in which he analyzes precisely why Japan has lost its pulse after leading global technological innovation, with realities that he even dismisses as Kafkaesque. When teleworking was implemented, most Japanese corporations found, for example, that they lacked contingency plans to operate remotely. Some had no experience with Zoom.

The result is that, in the midst of a pandemic, when trying to minimize contacts as much as possible, there were employees who, after a day of remote work, had to take the subway to go to the office in person and stamp. The state of the Japanese administration was also made clear last summer during the Tokyo Games, when the athletes themselves complained about the amount of forms in Japanese that they had to cover and the chaos with the apps that had to be downloaded.

Shortly after, the country’s government launched an initiative to finally achieve a “Digital Agency”.

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A reality that is measured in unicorns. That’s how it is. Another way to see the phenomenon that Japan is registering is to analyze its panorama of unicorns, young startups that exceed a valuation of over 1,000 million dollars even before going public. The CB Insights Listwhich identifies 1,170 unicorns globally, recognizes only six in Japan: Opn, Playco, Spiber, SmartHR, SmartNews and Preferred Networks, framed in areas such as Fintech, telecommunications and mobile devices or artificial intelligence.

It is far from the data from the United States, the United Kingdom, China or India. Neighboring South Korea added 14 that same year and Singapore had another 13. In any case, the data does not mean that, in the ranking of the 100 technological referents prepared by Thomson Reuters, 13 Japanese firms appear among the leaders of the sector; but it is certainly significant.

What are the reasons? The change in trend is not new in Japan. A decade ago, in 2012, there were already experts who warned that the country was losing its dominant position in consumer electronics or even the complex scene that opened up to its big tech firms.

The reasons? In rest of world point as one of the keys, the very structure that in its day favored the technological takeoff of the nation, an alliance between the public and private sectors that gave great results; but it proved incapable of responding swiftly to the competition posed by a new generation of entrepreneurs pushing hard from other parts of the world. As Kelts defines it, the “iron triangle” that in the past encouraged the development of the country, ended up “ossifying” or rather resembling a martial arts immobilizer key.

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Currency, change of scenery and investment. It is not the only factor, of course. Experts point to a combination of elements including the strength of the yenwhich could complicate the transfer of innovations to a mass market or a change of scenery in Asia itself, in which China and South Korea have gained strength over the years.

Another key is financial support for innovative projects. Of course, the country has promotion programs, including J-Startup, which seeks to generate an ecosystem that supports new innovative projects. The reality, however, is that in 2019 newborn startups, between one and three years old, received an average of $91,000 of financing compared to just over 2.5 million of those who already had a track record of between five and seven years behind them.

Competition and company culture. The last decades have also been marked by the impulse of large foreign competitors, such as Apple, Amazon, Meta or even the South Korean Samsung, which have been able to gain a significant market share coinciding with the years in which Japanese firms, such as Sony, Panasonic or Sharp, they went through low hours.

In the complex equation that explains the change of scenery there is also, in a certain way, a factor of corporate culture. “Japanese companies, very engineering and focused on the product, have not been able to make the leap to the era of experience. They continue to make products that are very good technically but without the user experience that companies like Apple or Samsung” already scored in 2012 the analyst Jaime García to 5 days.

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hit the spotlight. There are those who point to other facets, such as fixation on the monozukuri, the art of manufacturing and the commitment to the advancement of hardware. “This concept, a source of national pride, pushed companies to try to make the products that were often the thinnest or smallest, but ignored factors that users considered important, such as design and ease of use” , notes Daisuke Wakabayashi in New York Times.

A clear example is the electronic reader with a digital ink screen. Sony designed the book, fundamental in its development; but while the Japanese multinational focused its efforts on marketing the device, another competitor, Amazon, focused on the sale of content, books. The reality, today, is that the Kindle rests in the suitcases and bedside tables of a good number of users all over the world while hardly anyone remembers Librie anymore.

Images | Marc Veraart (Flickr) Y Luca Sartoni (Flickr)

There is no empire that lasts a thousand years and the technological arena is no exception. The best example may…

There is no empire that lasts a thousand years and the technological arena is no exception. The best example may…

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