Global interest in Japan is very strong: investors enjoy good returns with the Nikkei 225 Index at an all-time high — substantially higher than at the peak of Japan’s bubble economy in December 1989, when the Nikkei 225 peaked at 38,115. Inbound tourism is breaking all records: tourists are fascinated by Japan’s safe and clean society, fast and reliable trains, exceptional food, and can enjoy it all at low prices due to the cheap yen. Silicon Valley funds invest in Japan’s growing venture eco-system.
On the other side of the coin, Japan’s population is decreasing and aging, and while Japan’s GDP expressed in US$ grew rapidly until 1995, it has essentially stagnated since then – for 30 years now Japan’s economy has not grown, and although it has remained at a high level, it is falling back compared to the growth in most other countries. Japan’s government is, of course, putting much thought into the question of why Japan’s economy essentially stopped growing 30 years ago, and many steps are being taken to increase Japan’s competitive power.
Change has been fast: from mainframe computers with custom made software, to cloud services and Software as a Service (SaaS), to AI. Japan’s Industry Ministry, METI, worries that Japan’s traditional large companies, which create about 47% of the value added in Japan’s GDP, are losing global competitiveness and miss out on value creation because their outdated management practices lead to outdated information technology management. Japan has pioneered many aspects of modern infrastructure. For example, Japan was about 8 years ahead in creating the first mobile internet services with Docomo’s I-Mode.
This report looks at Japan’s digital transformation (DX) from various perspectives. We introduce several of Japan’s outstanding success stories, for example SoftBank – which a Korean immigrant to Japan, Masayoshi Son, with his Midas touch, started in a dormitory room at the University of California Berkeley, and then, mainly from Japan, built into one of the most important internet and IT investment groups globally.
The views, conclusions and recommendations expressed in this report are solely those of its author(s) and do not reflect the view of the Konrad-Adenauer-Stiftung, or its employees.