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Japan: A blind spot? December 21, 2006

Posted by fukumimi in Economy & Business, Education, Japan.

Title courtesy of Shantanu, who suggested I blog my tuppence worth on this issue. (he actually suggested I comment, and I elected to do so here as I suspected that my comment was going to be rather long and boring and didn’t want to waste real estate on his blog – sorry it took several days to respond)

Shantanu’s post was triggered by a WSJ piece (advertorial actually, sponsored by METI and JETRO) on page 6 of the December 14th edition, and on page 20 of the WSJ’s Asia edition which we get here in Tokyo. [Added 12/22: I have scanned the relevant advertorial, and was going to post it (or a link to some storage in the sky) here but seeing people from METI and/or related organisations seem to be reading this, I decided I would not give their advertorial any free publicity. For people who are really interested to see the original article, drop me an email and we’ll see what we can do]

The centerpiece is a map of Japan, showing the economic sizes of Japan’s regions and comparing them with countries of similar economic size (indicator used is GDP, Japanese regional figures for 2003, national figures for 2005)

Kanto $1650B (Italy’s national GDP=$1766B)

Kinki $681B (Australia’s GDP=$708B)

Chubu $656B (The Netherlands’ GDP= 625B)

Kyushu $406B (Belgium’s GDP=$372B

Tohoku $357B (Switzerland’s GDP=$368B)

Hokkaido $168B (Thailand’s GDP=$169B)

Shikoku $116B (Singapore’s GDP=118B)

No surprises that the Kanto region (Tokyo and its peripheral prefectures) is the biggest economic engine of Japan, accounting for $1.65Trillion, out of a total of somewhere north of $4Trillion. Second comes Kinki, which includes Osaka, Kyoto and Kobe. Third, Chubu, which includes Nagoya (and, crucially, home to Toyota). Kyushu, the south island, Tohoku, the “North East”, Hokkaido, the north island, and Shikoku (the smallest of the 4 main islands – home to Nichia the world leader in white and blue LEDs and, um, sanuki udon?) bring up the rear.

Not bad for a country with an area smaller than the state of California (Japan approx 375,000sq.km, California approx 424,000 sq.km).

[Off topic, for a piece paid for by Japanese governmental institutions, I note that both Okinawa (whose numbers I assume are included in Kyushu) and the disputed northern territories are missing from the simplified map. Typical of the lack of consistency exhibited by the Japanese government on these things….]

Shantanu says:

…it is surprising that not more people pay attention to what is happening there in terms of technology and innovation.

What drives this apathy?

Some possible answers follow:

  • Rather than apathy of outside observers, it may be that there is a significant structural problem with actually seeing what is happening here. Lingustic barriers still pose a significant problem, much of the technology reporting is confined to Japanese (and (but?) there is a LOT of it if you can access the language – but not really in the marketing oriented form accessible to people unfamiliar with the specific technology at hand), and there really doesn’t appear to be much effort made to disseminate (competently) information about or from Japan more proactively to the international market.
  • The language barrier is a two way issue of course, and whilst there are more and more Japanese capable foreigners out there, the information flow asymmetry is exacerbated by the lack of J-to-E resources outside Japan. Where once Japan was the focal point for Asia strategy for global (read US and European) firms, it has been displaced for mind-share by China, India and other emerging markets exhibiting strong growth and therefore opportunities at a bite of an increasing pie. This basically comes down to the fact that Asia seems to attract attention as a market first and foremost (and cheaper resources second), and not as a source of technology or innovation as far as most US and European companies are concerned. For all of the fuss about India and China, how much is about sourcing world beating technology and how much is about the market opportunity?
  • The fact that, in Japan, much of the innovation and technology occurs inside large corporations (and is kept there) is also an issue, you get a peek at the exciting technologies from time to time, but I suspect a lot of interesting work is fades into the noise in the huge portfolio of R&D activities going on at big firms. I suspect that the corporate culture and also the culture of Japanese technologists (and corporate workers in general) is a factor in the lack of liquidity in skilled resources in most industries. Also, the large corporations tend to be big enough to not have to sell technology, only the products thereof.
  • Exactly because Japan is such a big marketplace of technology, the vast majority of Japanese technologists do not need to look beyond Japan to find a market for their technology, even if they were keen to market the technology outside of their organisation (and I don’t think that is necessarily a given). Thus, they seem to be less aggressive in getting their message out globally. Even for VC-backed companies, virtually all of them which are successful can get to an IPO exit on domestic sales alone – so why bother with the international market for which one is ill-equipped?
  • It seems the bulk of successful companies with superior technology often do not have the aggressive corporate culture which elevates their visibility globally. I certainly can’t think of many young technology companies who have really made a global impact. Even the so called success stories of Japan’s Internet economy are basically domestic players, and I would suggest they aren’t really technology companies anyway [in the sense that technology is not their key competitive advantage].
  • Whilst foreign companies embrace new corporate strategies, Japanese companies are being left behind, and the SMEs are the worst offenders, especially in embracing the web. I cannot for the life of me understand why more SMEs do not use this infrastructure -wait, I can understand, IT literacy is surprisingly low especially in the older (but still working) generations. People doing research have leveraged the web to full effect, but the flip-side is that if you aren’t on the web, you might as well not exist. And if you aren’t on the English web, you might as well not exist to the international audience. That might be as much a reflection on the evolution of our research habits as much as anything, and an indication of how reliant we all are on the web for so much of our initial research.
  • Of course, often it makes sense for companies to target local markets first, it is often a matter of priorities and resources. The fact is, for many venture businesses and SMEs, selling overseas is a daunting prospect, especially with the real lack of language skills at many of these organisations. The number of linguistically competent Japanese has grown considerably, but the reality is that many people with these valuable skills are scooped up by larger Japanese and, for the really competent, foreign corporations. Despite the widely notion that Japanese have begun embracing a change in career aspirations and become less wedded to the idea of a job for life at a “prestigious” company, the large majority of jobseekers still seem to be looking for the same thing their predecessors were, 5, 10, 20, 30 years ago. Whilst the trend is towards an increase in alternative career paths, the absolute numbers are still insignificant. Further, I believe that not all sections of society are internationalising at the same speed and Japanese technologists residing in Japan may be somewhat more conservative (as well as perhaps having had less language education). The culture both in academia and corporate environments are less flexible than in, say, the US. I would guess that technologists who have been exposed to and prefer the alternative elect not to return to Japan. There are lots of Japanese academics and corporate professionals who have indeed chosen that route. Would it be unfair to point out that the Japanese system doesn’t really do much to enhance the ability of technologists as communicators?

As for the piece itself, it seems like a poor attempt at a marketing pitch, with dodgy copywriting to boot:

The result is that the map of Japan – some of whose eight regions exceed the size of some nations in terms of economic output – is starting to bristle with clusters of foreign-invested enterprises.

The highlighted part of that sentence is utterly vacuous. And the word “cluster”, you can see the METI influence right there.

We also have statements like:

Transport facilities such as airports and seaports need to be upgraded and soft infrastructure, such as financial services, enhanced.


Which smells just like the rural pork barrel projects that the LDP and its rural and construction backers love to see doled out.

FACT: However much TAXPAYERS’ money is wasted on building unnecessarily expensive infrastructure, foreign investment (ANY investment) is NEVER going to happen evenly throughout Japan.



1. Gen Kanai - December 21, 2006

“It seems the bulk of successful companies with superior technology often do not have the aggressive corporate culture which elevates their visibility globally. I certainly can’t think of many young technology companies who have really made a global impact.”

This is a theme that I am hearing often these days in discussions in Tokyo. Numerous Japanese that I speak to point at the competitiveness of Chinese (in aggregate and in comparison to Japanese) and usually in a somewhat-dismissive or petulant tone.

In the software segment, it gets ugly.

India has the advantage of a significant base of English speakers whereas Japan, even after decades of public schooling of English, is still hopelessly incommunicado with the bulk of the rest of the world. India has created a whole segment of software programmers and engineers which are changing the rules of the game via outsourcing. Eastern Europe is quickly rising here too. Japan is nowhere near world-class wrt software programming, except perhaps in game software programming.

The lone superstar software programmer from Japan that I know of recently is Matsumoto Yukihiro-san, creator of Ruby. (As an aside, I can’t help but compare Matsumoto-san to Nakamura Shuji-san as they both seem to have been successful from outside of the mainstream of Japan.)


But even Ruby did not take off until Ruby on Rails (core team has no Japanese) was developed as a framework for Ruby.

2. Durf - December 22, 2006

Dodgy copywriting indeed . . . but it reads exactly like most government documents that I have to translate. Written by committee, and that committee also has to approve the English version that gets produced based on their droning. They make sure all the droning in J is faithfully reproduced in E.

I wonder whether this advert (is it available online anywhere?) is part of some new concerted effort to attract FDI (“So where the bloody hell is your money?!”) or just a one-off way to spend some of that budget before the end of March. JETRO recently signed a fairly hefty contract with Dentsu for various services, so this could be part of that gig . . .

3. Samad Maboudi - December 26, 2006

Please guide me about the following question.

How can the Japanese successful in literacy?

The literacy rate in Japan is 99.9 percent.

4. Samad Maboudi - December 26, 2006

Please guide me about the following question.

How can the Japanese successful in literacy?

Literacy rate in Japan is 99.9 percent.

5. びっくり - January 12, 2007

Rural pork barrel is certainly problematic. The current expressway projects through Mie Prefecture seem quite wasteful. Other than 2 million people visiting Jinguu on New Year’s, there isn’t much need for bulk travel south of Tsu.

I always tracked this trend to the Occupation keeping most of the pre-war conglomerates in place, and establishing a strong pattern of infrastructure building through the 50s. It was interesting to see your comments about the LDPs support base.

6. vokyStoks - March 18, 2010

im thinking of buying one, has anyone ever bought one of these:


7. Mikeharvey - May 14, 2010

Hey from Toronto, Canada

Just a quick hello from as I’m new to the board. I’ve seen some interesting comments so far.

To be honest I’m new to forums and computers in general 🙂


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