Is Japan innovative enough to survive?

In the Western world, Japan is still viewed as a high-tech and highly innovative nation. However, upon closer examination, a different perspective arises, prompting the question of whether Japan remains sufficiently innovative to thrive in global competition.

Presentation of Prof. Schwarzenegger, University of Zurich / Picture by Martin Fritz, SCCIJ

On April 24th, 2025, I attended a luncheon hosted by the Swiss Chamber of Commerce and Industry in Japan. Prof. Dr. Christian Schwarzenegger, Vice President Faculty Affairs and Scientific Information at the University of Zurich, delivered an excellent presentation on the collaboration between the University of Zurich and Japanese universities, particularly the University of Kyoto. One of his initial slides depicted the significant shift European universities have undergone, moving from a sole focus on education and academic research to promoting entrepreneurship, spin-offs, and business foundations. He noted that this trend is still developing in Japan, with the Japanese government actively supporting these spin-offs and startup ecosystems.

But is this sufficient?

It is often stated that Japan's innovations lead the world, and, for instance, no smartphone functions without components from Japan. However, if Japan excels in this market, where are the Japanese smartphones? Indeed, Japanese companies excel in incremental R&D, as demonstrated by Murata frequently announcing the "world's smallest" capacitor, now 0.5mm smaller than before. But where are the groundbreaking innovations, the leaps towards entirely new products? This applies not only to the semiconductor or electronics industry but also to the chemical and automotive industries, which are key sectors of the Japanese economy. It was startling to read an article in Nikkei Asia after Apple revealed that the new iPhone SE (now iPhone16e) would feature an OLED display, ceasing LCD purchases from Sharp and Japan Display Inc. (JDI) - a significant loss for these firms. For any Western company, this would have been a call to innovate. But how did JDI respond? "JDI is now focusing on revamping its business strategy around LCDs for automotive applications"...

Additionally, a recent article in The Mainichi criticized the strong domestic focus of Japan Inc. The high risk aversion and lack of globalization and international perspective, especially at the senior management level, hinder Japan's ability to compete globally. Only companies that value international collaboration and leverage global inventions and innovations will ultimately succeed. In this regard, Japan Inc. has some work to do to be innovative enough to thrive and survive as a high-tech nation!

At San-Ten Consulting, we are proud to assist our international clients in delivering cutting-edge solutions and innovations to customers in Japan. Our goal is to empower Japanese companies to adopt these technologies confidently, with local support in Japanese, for the benefit of Japanese society and their customers.