On the other hand, since the start of 2019, the global economic slowdown, repeated disasters, unfavorable weather events, trade issues, and uncertainties in overseas economies have made an impact on corporate earnings and investment, especially in the manufacturing field. Additionally, the spread of the novel coronavirus pandemic since January 2020 is exacerbating the uncertainty, making it difficult for the manufacturing industry to formulate a future outlook.
As per the White Paper on Monodzukuri (Manufacturing) 2020, published jointly by the Ministry of Economy, Trade and Industry (METI), the Ministry of Health, Labor and Welfare (MHLW), and the Ministry of Education, Culture, Sports, Science and Technology (MEXT), companies must adapt and transform as the environment and global conditions change in unpredictable ways. Further, digitalization is also considered an effective way to enhance the dynamic capability of the manufacturing industry. It is also a recommended way to cope with the shortage of human resources, which has been a pressing issue for the manufacturing industry.
In this context, digitalization is being promoted not only in the manufacturing industry but also in social infrastructure. In 2016, the Japanese government approved the 5th Science and Technology Basic Plan setting forth "Society 5.0." Society 5.0 refers to a new society where advanced technologies (IoT, robotics, artificial intelligence, and big data) are incorporated in all industries and social life to realize economic development and resolve social issues.
In 2017, Japan also introduced the concept of "Connected Industries", which aims to create new added value and resolve social issues by connecting various things such as machines, technologies, and people through data. In light of the above, the size of the factory IoT market in Japan continues to expand, and an increasing number of manufacturers are actively introducing digital technologies (See Figure 3).