New business trends in Japan prove that it could become a world leader in tech

There is no better place in the world right now for AI than Japan.

The barriers to entry that AI faces in most developed countries out of the fear that AI will take over jobs is simply not an issue in Japan. Quite the opposite, actually — the automation that AI provides would be more than welcome in this economy hungry to boost its waning workforce.

Between the aging population and decreasing birth rate in Japan, its workforce is shrinking, and rapidly. According to an article published in January 2019 by the Financial Times, Japan’s workforce is estimated to fall by 13 million workers in the next 20 years. In this dire situation, businesses are scrambling to develop strategies to offset such a huge loss.

Yet Japan continues to lag behind its peers in the majority of technologies that are central to the fast-approaching fourth industrial revolution, namely AI, big data, and the Internet of Things (IoT). The country has no unicorn startups, nor do they boast tech companies that rival the United States’ mighty tech conglomerates GAFA (Google, Amazon, Facebook, and Apple) or China’s strong BAT (Baidu, Alibaba, and Tencent).

When it comes to AI, Japan’s distinct working culture may be its largest barrier to implementing these cutting-edge technologies. The country has a long history of rewarding employees based on how long they’ve worked in the company in a seniority system, rather than based on their actual business results.

However, signs are pointing to this working system starting to fall out of favor. As reported by Bloomberg in January this year, Nomura Holdings, Inc. — parent company of Japanese securities firm Nomura Securities Co., Ltd. — will introduce a merit-based pay structure to replace its age-based one starting in 2020. With such positive, efficiency-improving change on the horizon, now is the ideal timing for new firms to disrupt the Japanese economy that has long been stagnant in adopting advanced technologies like AI and big data.

One such company is bitgrit, a Japanese startup that works with companies around the world, but with special attention on Japanese firms seeking practical applications of AI and data. Their latest client is a major Japanese telecoms firm looking for AI algorithms to predict future rates in the foreign exchange market. By hosting an online competition where top data scientists from around the world can submit their answers to this challenging prompt, bitgrit is paving the way for Japan to join other developed countries in innovative technological development.

Japan is starting to trend towards more efficient work practices where AI has real potential to introduce improvements. And with big Japanese corporations like Nomura shedding the shackles of seniority-based rewards systems, combined with disruptor startups like bitgrit stepping in to provide data-based answers to business problems, the future of cutting-edge technologies in Japan looks bright.

To learn more about bitgrit and their AI competitions, click here.