Is Japan back?

By Ned Donovan on October 10th, 2013

In the Smithsonian, two fax machines sit gathering dust in a glass cabinet. In Japan, 1.7 million fax machines are still used every day. In fact, almost every business in the ancient island nation uses them, and in homes they have a close to 50 per cent penetration rate. The fax machine is the simple embodiment of the stagnation that now faces Japan. In a culture where technology is lauded, many companies only have one computer in the entire office.

Apple, the vanguard of the second web boom, is successful across the developed world, with one major exception: Japan. Apple’s Mac sales in Japan have remained flat throughout the last 15 years and the latest Apple Store in Japan was opened in 2005.

While the country leads the world in revolutionary developments in fields such as robotics, consumer technology designed and produced in Japan often fails to trickle down to its own population. In fact, several studies have indicated that around half of the Japanese population would consider themselves high-level technophobes, surprising given the image granted to Japan in popular culture.

In an article for the New York Times earlier this year, a Japanese business that delivers lunches found that less than 5 per cent of their orders came in online, the rest came in by telephone or faxed, hand-written notes.

It’s possible that Japan’s unwillingness to embrace technology is linked to the complexity of its written language. It can be difficult to write fluently, even on modern keyboards. Among the current student generation, 71 per cent describe themselves as having average or lower computer literacy. Only 5.2 per cent of students use email every day, preferring to use the message function on their phones, and a staggering 50 per cent of students have never used an online chat service.

It isn’t just technology. Over the past decade, Japan has been losing competitiveness in manufacturing to nations such as South Korea and China. Many argue this is the result of “1980s arrogance” whereby the Japanese simply believe their products are better. With an attitude sometimes described as xenophobic, free trade is still challenging.

Companies would rather adopt ethnically Japanese men into the business than hire superior skilled outsiders. In fact an entire website, Date, has been set up to allow Japanese businessmen to offer themselves to family-run business who are looking for home-grown talent above all else.

There is, however, a part of Japanese culture that is both intriguing but also quite frightening. The “Otaku” are a sub-culture of the Japanese, which literally translated becomes “Nerd” or “Geek”, however the most extreme of them are a far cry from your typical Trekkie or comic book nerd. The level of interest for the Otaku isolates them from the majority of Japanese culture. In 1989 the “Otaku murderer” Tsutomu Myazaki, who had a collection of almost 6,000 video tapes of Anime, murdered four random girls in Tokyo. Myazaki is considered to be to blame for the negative attention that the Otaku receive in Japan, but the fact that they in themselves self isolate with their obsession with anime and the culture around it, going as far as to go to shops designed like those in anime, has not helped the integration of technology into Japan as a whole.

One step forward, two steps back

It is notoriously difficult to withdraw money with an international card if you’re visiting Japan. ATMs are even usually turned off on Sundays and in the evenings. This year, Japan announced it would no longer take MasterCard, Maestro or Cirrus. It can sometimes appear that Japan is advancing in leaps and bounds in technology, especially when they wow audiences with their automotive developments or robotic breakthroughs, yet at the most basic level they are stepping backward.

Yet perhaps things are beginning to change. Apple is looking to open a new store in Tokyo in 2014, and for the first time ever Japan’s largest phone network NTT Docomo has agreed to launch the iPhone, which is incredible considering the Apple mobile first launched in 2007. Tim Cook, in Apple’s latest earning review, indicated a change beginning to take effect. iPhone sales had increased on the island by 66 per cent.

But the delay in the country’s approach to Apple and other consumer technology is likely to have a knock-on effect on Japan’s future competitiveness in the global market. South Korea has been catching up recently and is likely to overtake Japan in terms of internet penetration in the coming future. Where Sharp and Panasonic used to stand tall, Samsung has taken their place.

With Panasonic backing away entirely from consumer electronics, it does not look good for the once-mighty technology companies of Japan. The demise of these former giants is visible even in London’s Piccadilly Circus, where the flashing neon lights of Sanyo are replaced by South Korean automotive manufacturers Hyundai.

On 26 September 2013, the Prime Minister of Japan compared his country to Gordon Gekko, which is apt. Shinzo Abe stated at a talk to the New York Stock Exchange: “Today, I have come to tell you that Japan will once again be a country where there is money to be made, and that just as Gordon Gekko made a comeback in the financial world … so too can we now say that ‘Japan is Back’.”

In 1854, Japan was forced to open its markets by the United States, and in August of this year, the US once again said that Japan had to open its automotive and insurance markets further. Perhaps the call from the US will serve as a wake-up call for the country.

Is Japan back? Only time will tell. But it seems obvious that free trade and a welcoming attitude to foreign consumers and suppliers is the only way to proceed in a globalised world economy.