Japan Bets on a Wired World to Win Back Its Global Niche
by SHERYL WuDUNN
The New York Times
August 30, 1999KATSURAO, Japan -- A bit nervously, Haruo Saito faced his doctor. Saito, 78, short and slow-moving since his stroke a few years ago, had already had a blood-pressure check and an electrocardiogram, and now he reported that he had been dizzy lately.
The doctor, Shuichi Shigetomi, listened politely, but he was a bit stiff and showed no warmth in his bedside manner -- which was not entirely surprising, since he was 30 miles away.
Stuart Isett/Sygma,
for The New York TimesIn Matsushita's model home, the screen at left displays health figures, including weight and body fat, collected by sensors on the high-tech toilet.
The consultation took place over a videophone and a small electronic monitoring box put in Saito's home in Katsurao, a tiny town in the hills about 160 miles northeast of Tokyo. The checkup demonstrated that even after a decade of humiliating recession and stagnation, Japan has a knack for turning up unexpected ways to harness technology and create surprising new ways to pamper the consumer.
Mention Japan these days, and one thinks of tumbling property prices and tumbling egos, a struggling stock market and rigid regulation, bad bank loans and caterpillar-like consensus management. But the overall economic and financial catastrophe in Japan is obscuring a metamorphosis that is slowly taking shape here in mood and method, particularly in technologies that make life more convenient and alter the way companies do business.
Take the new mobile videophone from Kyocera. Or the new microwave from Sharp that automatically cooks from recipes found on the Internet. Or the new washing machine with an 18-minute cycle that scrubs people instead of clothes. Or the nifty personal locators that fit into a pocket and use satellite data to generate a map showing one's whereabouts.
Global positioning systems may be an American invention, but many Japanese mothers use them as locators that fax maps to them showing the whereabouts of their children or elderly parents.
Japan's last wave of successes was with cars and audiovisual products and, in the 1970s and '80s, with Walkmans and sedans and compact-disc players. That wave has largely run its course, and now Japanese companies are scrambling to race ahead of the rest of the world by reaching into millions of homes and transforming their kitchens, bathrooms, televisions and every other aspect of life in an aging society.
There is, of course, no guarantee that these futuristic devices will catch on with consumers or that technology or the market will not shift in other, unanticipated directions. But Japan has always been a king in new gadgetry, even though it has lagged in the Internet and in information technology and is struggling to catch up to the United States.
In the process of recapturing its technological prowess, experts say, Japan is coming up with original applications and snazzy designs that may once again captivate the world.
Along the way, the experts say, executives are taking on more risk, dancing around bureaucrats and becoming increasingly entrepreneurial, as the government unfetters industries ranging from finance to telecommunications. If the momentum grows, it might help cultivate the spirit of creation that will help Japan reinvent an economy that is threatening to wind down in the 21st century.
"What the U.S. saw five years ago is around the corner," said Kenichi Ohmae, an author and business consultant, referring to the shift in spirit and a growing surge in technologies. "I can even hear the roar of the tidal wave."
The Dynamics: Video Prescriptions and Robotic Pets
There is no country like Japan when it comes to fusing and cross-fertilizing technologies to create something new, and as a country, it often gains the largest bounty of patents each year. The United States almost always invents the new paradigms, but Japan often transforms them into popular new products.
Take toilet technology, for instance. Japan took the mundane American toilet and added bells and whistles, not to mention water sprays and hot-air jets. Japanese companies took videophones and electrocardiogram technology, also spearheaded in the United States, and twisted them into a special new form of telemedicine in the village of Katsurao. They are also miniaturizing their own robotic technology to produce robotic dogs and cats, especially as companions for the elderly.
Now, imagine marrying the playfulness of Japan's three-dimensional video games with the convenience and commercial opportunity of online shopping. It is still on the drawing board, but Ohmae says that instead of clicking and shooting down the enemy, consumers will be clicking and putting the bread into a shopping cart.
Already, Japan dominates some key electronics businesses, like household appliances, where much change is poised to take place, and Japanese companies are forging alliances with American companies like Microsoft and Sun Microsystems to secure leadership roles in the next generation of technologies.
Some economists also believe that Japan is now moving more resolutely to deregulate its economy, by liberalizing brokerage commissions, easing the way for new entrants in some industries and eliminating some licensing rules. Alongside the new technologies, they say, these moves will usher in an era of greater dynamism, innovation, and profitability in many sectors of the Japanese economy.
"Those innovations come out of a process of a lot of people beating on you to make sure you're using your capital efficiently," said Robert Alan Feldman, chief economist at Morgan Stanley Dean Witter in Tokyo. "As you deregulate markets, the return to a good invention goes up and so people start having more good inventions."
The Uncertain Road: Playing Catch-up for High Stakes
Still, even experts disagree on how far Japan will go, and critics say it has a great deal of catching up to do. Moreover, there is no guarantee that these new technologies can help restore Japan's faded economic prowess, and no one today sees Japan as a colossus ready to take over the world, a view that was common just a decade ago. In fact Japan's record in technology has been embarrassing lately.
It invested enormous sums in high-definition television, in an advanced "fifth-generation computer" project, in small-scale industrial robotics and other areas, with few of these huge investments proving commercially successful.
Moreover, Japan has yet to find its niche in the world's new Internet framework, and in recent years it has lagged in the hottest new advances in information, biotechnology and environmental technologies.
"We have been totally defeated by U.S. technologies," said Nobuhiro Muroya, a deputy director of strategy at the Science and Technology Agency. "But we want to find the possibility of a big win the next time around."
Still, Japan remains the world's largest net exporter, and many of the goods it exports are the product of clever manufacturing by Japanese companies that have usually paid for 80 percent of the cost of research and development in new technologies, on the theory that the market knows best where to invest.
While the government does not expect to alter that balance dramatically, its last five-year plan for science and technology, which runs to the year 2000, set aside about $150 billion for scientific projects. And bureaucrats are pressing to pour still more money into key areas like genetics, information and the environment. Taking a cue from the United States, the government is also trying to build bridges between companies and universities, where many original ideas are generated.
But the market is still likely to drive technology better and faster than Japan's bureaucrats. A good place to see what is brewing in the marketplace is the house of the future built by Matsushita Electric Industrial Co., a showroom for its cutting-edge technologies. This model house has devices that are now very expensive but that Matsushita expects to become affordable soon, perhaps in a couple of years.
At the front door, the moving picture of a visitor is sent to screens in each room, and if no one is home, the image is recorded and dropped into a home server, a storage center for the computerized, Internet-linked home. In the living room, a 50-inch plasma-display television is a miniature theater-style screen offering video-on-demand, electronic shopping and travel booking, and family-calendar planning.
In the children's bedroom, online education allows children to participate in classroom discussions and view themselves and other students asking questions.
In the bathroom, a health-monitoring toilet seat can measure a person's weight and body-fat ratio, and it examines the urine and automatically sends the results to the local hospital by Internet.
In the kitchen, one can choose a menu, order the ingredients for a meal and send the instructions to the microwave oven through the Internet. A refrigerator can register each item, so that at the supermarket one can call up the refrigerator's Internet address and check its contents to see what food is needed.
The Rising Stars: New Under the Sun, a Few Entrepreneurs
While Japan has long been dominated by big government and big business -- by five-year plans and companies like Matsushita -- in the last year or so there have been growing signs of sprouting entrepreneurship in high-tech start-ups.
Japan has had entrepreneurial fads before, and the tiny sums of venture capital newly trickling into start-up ventures have not yet changed any major corner of the world, but the mood seems to be shifting. Last month, for example, a rising star at the Finance Ministry quit his job to join a small start-up company. Resumes from elite-trained bureaucrats throughout the government are also pouring into the offices of headhunters.
"This country is an agricultural people and it takes a long time to change, but once it changes, they rush," said Sachio Semmoto, a professor of business at Keio University.
Venture capital funds are forming like wildfire, perhaps faster than the entrepreneurs can soak up the funds. Even someone like Yoji Kawake, who used to have to beg small companies in Kyoto to take his venture capital, because he is not a traditional banker, is having an easier time. "I think the entrepreneurial spirit is on the rise," he said.
A handful of companies are blazing a new trail, led by young energetic people like Hiroshi Mikitani, 34, who four years ago left his job as an investment banker at the Industrial Bank of Japan. He called a few of his buddies in America -- he attended Harvard Business School -- and raised money to start Rakuten Market, an online market that is becoming one of the hottest sites for electronic shopping in Japan.
Rakuten has 700 virtual stores, auction platforms and customer bulletin boards, and it sells everything from fish to books. After many months of recruiting engineers to write software and making some 2,000 phone calls to find clients, Mikitani is generating sales of $2 million a month and attracts 80,000 shoppers to his site each day.
"One of the most important things for an entrepreneur is that you feel everything as a challenge, not as a obstacle," he said.
Still, the obstacles are many -- like high taxes, mounds of regulation, difficulties in hiring, and expensive telecommunications charges that have stifled the growth of the Internet. Japan is also still largely a hierarchical, status-conscious society, though e-mail is threatening to turn everything upside down.
"Does the emperor use e-mail? Once you can say yes, then this breaks down the social boundaries," said Ray Tsuchiyama, a director at Analog Devices and a former representative in Japan for the Massachusetts Institute of Technology.
In that case, Japan may still have to wait a bit. Makoto Watanabe, a spokesman for the imperial household, said that neither the emperor nor the empress currently uses e-mail, nor do they plan to start.
The Plugged-in Future: Laboratory Tests of the Easy Life
For now, most of the innovation in Japan is hidden in the corners of Big Business, which is still Japan's best big bet in technology.
That's how Saito, the man on the videophone, got his machines. In the first experiment of its kind, the long-distance medical trial in Katsurao was launched this spring by Nippon Telephone and Telegraph, which poured in 50 million yen ($449,236) and was able to attract a remarkable 75 million yen ($673,854) in central and local government funds.
Though a sleepy little place, Katsurao is one of Japan's most plugged-in villages thanks to some aggressive local officials, and it has become a laboratory for the kind of devices that will make life easier for the elderly people who make up 27 percent of its 1,900 inhabitants.
Each of Katsurao's 500 households now has its own videophone, courtesy of Nippon Telephone, and soon 300 households will have electronic units from NEC to measure vital health signs like blood pressure and heartbeats.
Katsurao has no pharmacies of its own, and the only medical care is a part-time clinic open two afternoons a week. But the hospital in the next village is linked to Katsurao villagers, and pharmacies have agreed to send medicine by mail. Soon the university will set up teleclasses.
Ensconced in her home in front of drawings by her grandchildren, Toshiko Yamada, a 62-year-old retiree, can rest assured that specialists are monitoring her health from the hospital. All she has to do is punch in yes-or-no answers to questions like "Have you eaten?" or "Have you had vertigo?" or "Do you have a problem breathing?"
She can then order an electrocardiogram, whose results will be automatically sent to specialists by the machine. Every month, she gets a report summarizing her daily condition and any abnormalities.
"One time the rate of my heartbeat went above 100, and the public health official got worried and gave me a call," said Mrs. Yamada, as she sat on a floor cushion beside the telehealth machine. "Then I realized that I had measured my heartbeat right after I had finished upstairs hanging up the laundry to dry."
Not everyone, though, is as overjoyed as Mrs. Yamada by such conveniences. Indeed, her husband, Isao, 66, staunchly resists giving in to home technologies. When he answers the videophone, he stands far enough away that the camera cannot capture him in full view.
His hesitancy, however, appears tied mostly to anxiety over the unfamiliar. "For now, I'm not using it," he says. "But maybe I might someday."
