World Economy

Japan’s Robot Revolution

Japan’s Robot RevolutionJapan’s Robot Revolution

Robots are serving customers in Japanese department stores and banks, as well as building advanced machines for the nation’s manufacturers. Has the future already arrived in Japan, or is the “robot revolution” sought by Prime Minister Shinzo Abe an impossible dream?

Opening Japan’s official Robot Revolution Initiative Council on May 15, Abe called on the nation’s corporate sector to “spread the use of robotics from large-scale factories to every corner of our economy and society,” The Diplomat reported.

Backed by 200 companies and universities and chaired by Mitsubishi Electric’s Tamotsu Nomakuchi, the council aims to expand robotics throughout Japanese industry, with a goal of growing sales from 600 billion yen ($4.9 billion) a year to 2.4 trillion yen by 2020.

According to the council, robot technologies “possess the potential for solving social challenges, such as resolving labor shortages, releasing people from overwork, and improving productivity in a variety of sectors, ranging from production in the manufacturing industry, to medical services and nursing care, and to agriculture, construction and infrastructure maintenance.”

Japan’s robot revolution is evident at such places as Mitsukoshi department store in central Tokyo, where a kimono-clad greeter, “Aiko Chihira” made by Toshiba welcomes visitors. Also in Tokyo, Mitsubishi Tokyo UFJ recently unveiled a robot assistant to provide basic customer service, while the PARO baby seal robot has been deployed in nursing homes overseas to support dementia patients.

Industrial Robots' Earning

According to Japan’s Ministry of Economy, Trade and Industry, the nation is the world’s top supplier of industrial robots, earning sales of 340 billion yen in 2012 and accounting for around half the market, as well as having a 90% market share in key robotics elements such as precision reduction gears and force sensors.

Yet despite its market-leading position, METI has highlighted the risk that Japan’s robotics industry, like other domestic industries, becomes another “Galapagos” where “craftsmanship enjoys a victory but business suffers a defeat.”

METI notes a growing international challenge, including the US government’s multi-million dollar “National Robotics Initiative” and moves by companies such as Google to investing in driverless cars and other technologies. Europe is also seeking to catch up, launching last year its “EU SPARC Project” aimed at fostering private-public collaboration.

Competitive Threat

Yet the bigger competitive threat may come from China, which according to METI is already employing more robots than Japan, with some 37,000 in operation as of 2013. Beijing is targeting domestic sales of industrial robots of 3 trillion yuan ($500 billion) by 2020, a tenfold rise on the current level.

Elsewhere in Asia, South Korea has doubled robot sales since 2009 to reach 2.1 trillion won ($1.8 billion) in 2012, with the government targeting 7 trillion won worth by 2018. “Robot Land,” a $660 million government-subsidized theme park, is due to open next year, while Seoul is also investing 1.1 trillion won to help promote its robotics industry, currently ranked fourth worldwide in deployment of industrial robots.

Japan sees robots as a potential solution to its rapidly aging society, with the number of citizens aged 65 and above hitting a record-high 32 million in October 2013, a quarter of the populace, with social security costs also reaching a record high of 108 trillion yen in fiscal 2012.

Mechanizing Production

Unemployment is currently at an 18-year low of 3.3%, and with unfilled jobs at a two-decade high, manufacturers like food maker Ajinomoto are reportedly increasingly mechanizing production due to their inability to find staff.

“Shortage of labor is a structural problem Japan faces in the long run, given the aging society,” Kyuuichiro Sano, director of a METI division in charge of state-of-the-art technology, told Reuters. “They could be the answer,” he said.

Japan’s confidence in robots contrasts with alarmist reports in western media about the potential threat to jobs. According to Australian research, nearly half of all current jobs could be automated by 2020, with even traditional white-collar jobs such as accountants, bank tellers and secretaries reportedly at risk of elimination.

For Japan, deploying intelligent machines and increasing automation could deliver an enormous economic boost. According to Boston Consulting Group, Japan’s robots could help slash 25% off factory labor costs by 2025, while big gains could result from improving productivity in the service sector, estimated at only 60% as productive as the US level.