With exports of AI processors rising to record levels, the monthly balance of payments deficit in online services has more than doubled to about 5.5 trillion ($ 34 billion ) in Japan, which is a phrase. Amazon, Apple, Facebook, Google and Microsoft dominate the net- based businesses, while Nvidia and other overseas companies provide Japan with superior computing- related logic ICs.
Digital services include e- commerce and online advertising, social media, conceptual AI, email, search and other digital services, bright phone and computer operating systems, application software and subscriptions, cloud computing and data storage and associated consulting services.
High business stocks are a result of new market research findings.
- Amazon in e- commerce ( 48.6 % ) versus Japan’s Rakuten ( 32.4 % ),
- Apple in cell phones (60.2 % ) versus Samsung ( 7.5 % ) and Sony ( 4.6 % ),
- Microsoft Windows ( 43.3 % ) versus Apple iOS ( 23.8 % ) and Google Android ( 16.3 % ), and
- Google Search ( 78 % ) versus Microsoft Bing ( 11 % ) and Yahoo! Search ( 10 % ).
Rakuten is the only Chinese company in these markets with a considerable presence, and Amazon has been its rival.
Japan’s complete trade deficit for goods and services was$ 6. 0 trillion in March 2024, which is almost twice as large as its electronic deficit. Due to the end of the Covid crisis and the loss of the yen, it has increased in size than outbound tourism profits, which has increased.
Japan’s Digital Agency has developed a thorough “priority policy system for realizing modern society” in an effort to address this issue. In order to improve the nation’s industrial base and reverse the decline in employee productivity, the program aims to encourage the use of data, conceptual AI, and other modern technologies.
The company would also like to increase the now lower level of satisfaction with the government’s online services, including My Number individual identification, by making them more convenient and reliable.
Digitalization is also used to address Japan’s increasing natural disasters, reduce the impact of waste disposal, and improve health care.
Japan’s declining population and persistently worsening labor shortage make all of these issues even more pressing.
In addition, as digitalization proceeds, so does the need for cyber security. By the end of the decade, the Japanese government intends to increase the number of certified information security specialists from 20 000 to 50 000. In doing so, it wants to make sure that government offices, at the regional and local levels as well as the national level, can access the specialists ‘ expertise to small and medium-sized businesses, not just large corporations.
The looming retirement of the majority of the employees in charge of keeping them running also poses a problem. It is also a problem. This is being called the” 2025 digital cliff”. Japan’s Ministry of Economy, Trade and Industry ( METI ) estimates potential losses at ¥12 trillion ($ 75 billion ).
Smaller businesses typically run into this risk because they lack the resources to find, train, or pay for the digital systems and services they require. Japan’s large multinational companies do not have this problem. In this regard, Hitachi and NEC stand out as two recognizable examples of businesses that are ahead of METI and the Digital Agency.
NEC, Japan’s largest provider of telecommunications equipment and social infrastructure software and services, bases its long- term growth strategy on the transition from 5G to 6G, digital government, smart cities and digital finance. It supports cloud computing from Microsoft Azure and Amazon Web Services. Additionally, NEC offers facial recognition systems for use at airports in Japan and some other countries.
Hitachi, Japan’s largest industrial conglomerate, now gets nearly 30 % of its sales from the digital transformations in national and local government, finance, telecommunications and media, energy, transport and logistics, healthcare and, of course, manufacturing.
This was largely achieved by GlobalLogic’s acquisition of US-based Digital Engineering Services for$ 9.6 billion in 2021. GlobalLogic, which is now growing at a rate of more than 15 % per year, is forecast to provide 22 % of Hitachi’s consolidated revenue this fiscal year.
These and other Japanese companies are pursuing digitalization in cooperation, not competition, with US companies, and the digital deficit is partially offset by direct foreign investment. Google and Microsoft both have data centers in Japan, while Amazon has several logistics centers.
Another example: KDDI, Japan’s second ranking mobile telecom carrier, is in discussions with US server provider Supermicro to acquire space in Japan for a large new data center using Nvidia AI processors.
Taro Kono, Japan’s minister for digital transformation, told reporters last week that the key metric is “how many of the]digital ] systems and programs that everyone uses are made in Japan”.
That may be true, but from an overall economic perspective, it is not in line with the Digital Agency’s efforts to increase productivity and address the labor shortage. In 2023, Japan’s overall trade surplus with the US ( in both goods and services ) was$ 63 billion, or more than 10 times its digital deficit, which is mostly with the US. Based on their comparative advantages, the two nations have complementary trade relationships.
In contrast, China is building its own, increasingly autonomous digital economy. Japan has no corporate equivalents of Alibaba, Baidu or Huawei, but as things stand now, it does n’t need them. Follow this writer on , X: @ScottFo83517667