Japan’s Opportunities for AI
Japan is offering new opportunities in digital technology and the groundbreaking tools to utilize artificial intelligence (AI), as it seeks to counter the issues of a shrinking workforce, arising from a declining birthrate and aging population. For foreign companies, there is the chance to work with domestic partners in this new “industrial revolution” to help transform Japanese society.
Experts in the field note that AI is one of the most important technological developments in modern history. However, to take advantage of AI, they say that there is a need for entrepreneurs to bring about breakthrough innovations, companies to provide financial resources and infrastructure, and for government policies that provide the appropriate environment.
Japan provides these three elements. When the nation transformed itself into an economic powerhouse, it was driven by the belief that industry and government should work together as partners, rather than viewing each other as adversaries. Japan′s breakthroughs in innovation have demonstrated the value of this approach, and the country continues to produce leadership in major industries worldwide.
The Unique Features of the Japanese Market
“I think Japan has a very good business structure. The customers in Japan are willing to pay the right price and are seeking long-term relationships with their suppliers. This kind of business practice is invaluable for any company seeking to enter the Japanese market,” said Sega Cheng, co-founder and CEO of iKala, a Taiwan-based firm that helps companies implement AI solutions.
iKala CEO Sega Cheng
With its shrinking workforce, Japan can be a leading beneficiary from the higher productivity made possible by AI. Healthcare, which is facing critical staff shortages as an aging population requires higher levels of medical care, is seen by industry experts as a key target area.
Perceptions towards AI in Japan are already changing quickly. A survey by the consulting group PwC found that in the spring of 2023, only 10% of respondents said they had used generative AI in applications such as Chat GPT. Just six months later, the number had jumped to 73%. Japan′s NEC has developed its own enterprise-focused generative AI system called cotomi, with plans for additional versions for specific industries such as manufacturing and health care. Japanese startup Preferred Networks is designing customized chips needed for the machines that will power generative AI.
In the public sector, the city of Yokosuka in Kanagawa Prefecture became the first municipality in the country to run a trial of ChatGPT for administrative operations in 2023.
Global Companies Play a Key Role
Major global players are also paying attention to the opportunities. U.S. group Nvidia, which has played a major role in the realization of AI, has announced plans to work with Japanese partners to build an AI tech-related ecosystem in Japan. As part of its efforts, Nvidia will establish a research lab and invest in local startups. Sakana AI, established in Tokyo by David Ha and Llion Jones from Google in the U.S., is engaged in the development of generative AI with NTT and others. The company is also a founding member of The AI Alliance, an international group founded by IBM and Meta that has more than 50 companies, universities and scientific organizations to help foster open software programs to develop generative AI. The alliance, which includes Keio University, Sony and the University of Tokyo, aims to improve the capabilities, safety, security and trust in AI.
Japanese government programs are helping foster an AI environment, working to ensure that Japan has the resources required for this digital transformation (dubbed DX in Japan). These include plans to introduce a national institute to ensure the safety of AI technologies.
“Given the potential of generative AI, it is essential for companies to use it not only as a tool to improve operational efficiency and productivity but also to gain a competitive advantage by transforming their products, business models, and corporate organizations,” the Ministry of Economy, Trade and Industry said in an August 2023 report on digital promotion in Japan.
In addition, the leaders of Japan and the other G7 nations launched the “Hiroshima AI Process,” which aims to create a common vision and goal of safe, secure, and trustworthy AI. The group agreed on the International Guiding Principles for AI at an online G7 Digital & Tech Ministers’ Meeting in December 2023.
G7 Hiroshima Summit
Japan′s initiatives are also built on the concept that no single company or nation can supply all the answers that will be needed in this fast-changing technology. Therefore, key parts of the government′s policies are to work with countries, corporations and entrepreneurs from around the world to bring this new industrial revolution into reality.
“Whether in terms of regulation compliance or in terms of research funding, the Japanese government is moving really, really fast,” said iKala′s Cheng.
Further Support
Government support for AI is just a part of its broader initiatives to attract international talent and investment to one of the world′s leading economies. There are a wide range of programs in place to help firms ease their way into and expand operations in Japan. These include everything from special startup visas, R&D assistance for small and medium-sized companies, tax credits for businesses, and more. All of these programs can be accessed through JETRO (the Japan External Trade Organization), a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. JETRO acts as a “one-stop” center to examine the full range of programs that can fit your needs.