JETRO Invest Japan Report 2017 (Summary) 3. New Trend in Inward FDI in Japan

– Age of the Fourth Industrial Revolution – Contributing to Solving Problems Japan Faces and Expanding Overseas Markets for Japanese Companies

Age of the Fourth Industrial Revolution – contributing to solving Japan’s problems through introduction of IoT and AI technologies

  • Existence of Japanese companies and research institutes with advanced technologies and infrastructure favorable for R&D has been appreciated in recent years. Establishment of R&D centers by foreign capital has become one of the recent FDI trends in Japan.
  • Foreign companies are actively working to promote innovation in Japan by fusing their technologies with Japanese companies’ technologies in the field of IoT and AI in the midst of rapid progress seen in the Fourth Industrial Revolution.
  • Foreign companies are finding commercial opportunities in Japan, which is referred to as a “frontrunner in overcoming global challenges,” and are contributing to solutions of various problems.

Examples of foreign-affiliated companies contributing to solving problems through introduction of technologies of the Fourth Industrial Revolution

Examples of foreign-affiliated companies contributing to solving problems through introduction of technologies of the Fourth Industrial Revolution
Fields Company Outline
Countermeasures for medical specialist shortage, improvement of labor productivity, promotion of regional cooperation among hospitals and quality improvement in healthcare Philips Japan (Netherlands) Set up an R&D center in Showa University Hospital in February 2017, and started researching a “remote management program for intensive care patients” to create a network connecting ICUs of multiple hospitals. The system enables remote monitoring of conditions, bio-information, medication history, etc. of ICU patients through the network.
GE Healthcare Japan (US) Works on the “Brilliant Hospital” project which connects people, things and information in hospitals through the Internet and analyzes collected data to identify operational issues and improve management efficiency. Aims to provide a solution for Japan’s medical practice where improvement of productivity and quality in medical care through efficient use of medical equipment, asset optimization and improvement of work efficiency of medical practitioners are needed.
Pfizer (US) Works to develop a new digital health business of diagnostic aid based on clinical trial data and analysis know-how the company has accumulated. By analyzing the data obtained from medical equipment through its unique algorithm, it aims to apply the system to disease prevention and diagnostic aid.
Improvement of farm work efficiency and succession of know-how in farm households Analog Devices (US) Carried out an experimental study on smart farm work jointly with a Japanese company and a strawberry farm in Ibaraki. They installed sensors that automatically measured temperature, humidity, illumination, carbon dioxide concentration and other environmental data, and enabled remote monitoring. Aims to efficiently increase yield and further improve the quality of the strawberries by visualizing the optimal production process and analyzing the growth data for production forecasting.
Bosch (Germany) Started sales of disease prediction system for greenhouse tomatoes using AI in Japan. The company aims to contribute to prediction of crop diseases.
Productivity improvement and man-hour reduction in manufacturing sites GE Healthcare Japan (US) Works on the project for production optimization at manufacturing sites. Data obtained from beacons attached to workers, equipment, facilities, etc. are analyzed and the traffic lines and operation processes are displayed on a large screen to discover opportunities for improvement to contribute to reduction of man-hours.
Laboratory of Hi-Think (China) Parent company is software developer Dalian Hi-Think Computer Technology. Opened a new R&D site in Kyoto in February 2017. Started R&D of solutions for manufacturing sites using machine learning by AI and IoT technologies to detect defects such as malfunctions.
CENIT Japan (Germany) Worked on an experimental study of a digital factory (virtual factory) of a weld line for auto body products jointly with an auto parts manufacturer of Hiroshima. It was an attempt for 3D simulation by collecting data from equipment such as robots and jigs to enable study of responses to possible trouble and failure prediction.  
Efforts to solve problems in other sectors such as finance, tourism and communications infrastructure Skymind (US) Works on joint research on detection of illegal money transfers with Japanese financial institutions and software application developing companies by using AI-based software used for detection of unauthorized use of access to credit cards and mobile networks abroad.
LOOP Japan (Canada) Works on experimental studies of sharing services for electric scooters and bicycles equipped with a dashboard in Okinawa and Kamakura targeting foreign tourists. Aims to use user information and travel data obtained from the system as big data for the tourism strategy of local governments.
Ericsson Japan (Sweden) As an attempt to strengthen the infrastructure development of IoT in Japan, it started a demonstration experiment of street lights with built-in radios and antennas in Hiroshima, with an eye to the next generation ultrahigh speed network (5G).

Cross-border EC – contributing to expansion of overseas markets for Japanese companies

  • A major attraction in terms of FDI in Japan is Japan’s huge and sophisticated market and its position as a “trendsetter” in Asia.
  • Demand for Japanese products is expanding as they have enhanced their added value and brands by satisfying Japanese consumers who demand high quality. They are highly trusted by overseas consumers whose desire to buy is expanding.
  • Purchase of Japanese brand products using so-called cross-border EC is surging. Foreign companies operating cross-border EC sites are entering the Japanese market one after another.
  • The total amount of China’s cross-border EC purchases from Japan was over 1 trillion yen in 2016, for the first time exceeding the purchase amount of Chinese tourists visiting Japan.

Comparison of the total purchase amount of Chinese tourist visiting Japan and that of China’s cross-border EC from Japan

While the purchase amount by tourists decreased from 808.8 billion yen in 2015 to 783.2 billion yen in 2016, the purchase amount through China’s Cross-border EC from Japan increased from 795.6 billion yen in 2015 to 1,036.6 billion yen in 2016.

[Source] "Consumption Trend Survey for Foreigners Visiting Japan" (Japan Tourism Agency), “Infrastructure Development pertaining to a Data-driven Society in Japan (a market survey on e-commerce)” Ministry of Economy, Trade and Industry

Recent moves by foreign-affiliated EC companies in Japan

Recent moves by foreign-affiliated EC companies in Japan
Company Parent country Outline
vip. com China To be a part of the value chain of Japanese companies through direct sourcing
  • Established a Japanese corporation in Tokyo in January 2016.
  • Established a system to directly handle the entire process from product procurement to sales to distribution to ensure a steady supply of Japanese brand products to Chinese consumers, by sourcing products directly from makers and exclusive agents. China Partnering with Japanese companies for development of overseas markets of fresh produce
  • Established a Japanese corporation in Tokyo in order to strengthen sourcing of Japanese products and direct transaction with Japanese companies.
  • The company has expanded its business through partnerships with Japanese companies and also puts effort into support for Japanese companies when they open their stores and offers products and high-speed delivery services with reduced time from order to delivery.

Contact Us

Investing in Japan

JETRO Worldwide