Focus industries
The Tokyo Metropolitan Government worked to attract foreign companies to establish new value-added locations (operational headquarters for the Asian region or research and development sites) within the Special Zone for Asian Headquarters up until the end of FY2016, successfully attracting a total of over 80 companies.
The government will continue proactively working to attract companies from FY2017 until the end of FY2020, setting targets such as over 40 companies establishing headquarters for the Asian region or research and development sites in the Industry 4.0 domain (e.g. IoT, AI, etc.), and over 40 financial companies in the FinTech and asset management domains.
IoT
The expenditures of the IoT market in Japan reached 5.027 trillion yen in 2016, and the Compound
Annual Growth Rate (CAGR) from 2016 to 2021 is predicted to be 17.0%, resulting in predicted expenditures of 11 trillion yen in 2021.
Manufacturing is currently the industry that has made the most progress in adopting IoT technologies because of its high applicability to manufacturing improvement activities such as increasing productivity and quality, and the hardware market for component technologies such as sensors and modules is also getting a head start. However, in the midterm, the service industry is expected to become the largest market in terms of leveraging IoT to secure labour capacity considering the declining population.
Sources: IDC “Per Technology Forecast for the Domestic IoT Market”, MM Research Institute “Domestic IoT Market Survey”.
AI
AI related business in Japan reached a level of 150 billion yen in 2015. The industry is expected to continue to grow rapidly at an average growth rate of 46% to reach approximately 1 trillion yen by 2020.
As language and video recognition and analytical accuracy rises, the subsequent widening of the range of AI applications is expected to cause the market to grow further. Practical applications in the areas of education, secretarial tasks, and knowledge worker support are expected in the future.
Broken down by industry, applications in the financial world are currently in the lead, but progress is expected in the adoption of AI in other fields such as public and social infrastructure, logistics and services, and information and communications.
Sources: Fuji Chimera Research Institute “General Survey on AI Business 2016”, Project Design April 2017 issue.
Robotics
Robotics related business in Japan reached a level of 1.6 trillion yen in 2015. The industry is expected to continue to grow steadily at an average growth rate of 12% to reach approximately 3 trillion yen by 2020.
Drivers for robotics demand in Japan include the reduction of labor capacity and associated increase in workload due to the declining birthrate and aging population. Broken down by industry, applications in the manufacturing industry had long been in the lead, but with the service industry facing a labor shortage, the market for robotics in the service industry alone is expected to exceed 1 trillion yen in 2020.
Sources: Ministry of Economy, Trade and Industry “Results of the Survey on Robotics Industry Market Trends”, Statistics Bureau, Ministry of Internal Affairs and Communications, “Japan Statistical Yearbook”.
FinTech
FinTech investment in Japan reached nearly 152 million dollars (17 billion yen) in 2016, an annual average growth rate of 68% over the approximately 3 billion yen of investment in 2013.
The overall scale of the domestic financial IT industry in 2017 was 18.3 billion dollars (2.517 trillion yen) with predicted growth of 1.1% over the previous year. Other measures to strengthen the industry include support from national and local government, the revision of banking laws, the spread of APIs (application programming interfaces), the establishment of the FinTech Support Desk and Financial Market Entry Consultation Desk at the Financial Services Agency, and the establishment of the Financial One-Stop Support Service by the Tokyo Metropolitan Government.
Financial Market Entry Consultation Desk at the Financial Services Agency
https://www.fsa.go.jp/en/policy/marketentry/index.html
Financial One-Stop Support Service by the Tokyo Metropolitan Government
https://www.seisakukikaku.metro.tokyo.jp/bdc_tokyo/english/support/index.html
Sources: Accenture analysis based on data from CB Insights, resources from the Financial Services Agency, Bank of Japan
resources, YANO Research “InsurTech Market for Life Insurance 2017”.
Asset management industry
While Japan possesses the third largest GDP in the world at 4.7 trillion dollars (530 trillion yen) with the backing of its continuingly strong economic scale, the portion of the GDP comprised by the asset management industry is small, leaving some room for growth.
As household assets in Japan are primarily in the form of cash and deposits, there is a massive untapped investment capacity of 13 trillion dollars (approximately 1,456 trillion yen), and the national government is aiming for a shift from savings to asset creation.
While domestic institutional investors had primarily been engaged in domestic investment and traditional management approaches, the ratio of investment in overseas assets and alternative management approaches is beginning to increase.
However, the need for a risk money supply continues to be high, particularly among small to mid-sized companies and startup companies. Regarding investment management approaches, there is growing interest in ESG investment, and the advantages of entering the Japanese market for foreign investment management firms that focus on these approaches is growing.
Sources: Bank of Japan “Flow of Funds”, Bank of Japan “Flow of Funds - Overview of Japan, US, and the Euro Area”, Statistics Bureau, Ministry of Internal Affairs and Communications “World GDP”
