Japan’s Tech Paradox: Futuristic Aesthetics vs. Outdated Realities:
In movies like “Akira” and “Ghost in the Shell,” intelligent robots and holograms populate a futuristic Japan, and neon-lit skyscrapers and the city’s famed bullet train system come to mind. But there’s a more mundane side of Japan that you won’t find anywhere in these cyberpunk films. It involves personalized ink stamps, floppy disks, and fax machines—relics that have long since disappeared in other advanced nations but have stubbornly persisted in Japan. The delay in digital technology and subsequent bureaucracy are, for everyday residents, at best inconvenient, and at worst make you want to tear your hair out. “Japanese banks are portals to hell,” one Facebook user wrote in a local expat group. A sarcastic commenter said, “Maybe sending a fax would help,”
Japan’s Digital Struggles: A Delayed Transformation
The scale of the problem became terrifyingly clear during the Covid-19 pandemic, as the Japanese government struggled to respond to a nationwide crisis with clumsy digital tools.
They have launched a dedicated effort to close that gap over the years, including a brand-new Digital Agency and numerous new initiatives. However, they are entering the technology race decades late, 36 years after the World Wide Web was launched and more than 50 years after the first email was sent. Now as the country races to transform itself, the question remains: What took them so long, and can they still catch up?
How did they get here?
This was not always the case. In the 1970s and 1980s, when companies like Sony, Toyota, Panasonic, and Nintendo became household names, Japan was admired all over the world. The Walkman and games like Donkey Kong and Mario Bros. were brought to the world by Japan. But that changed by the turn of the century with the rise of computers and the internet.
Why Japan Fell Behind in the Digital Age:
According to Daisuke Kawai, director of the University of Tokyo’s Economic Security and Policy Innovation Program, “Japan, with its strengths in hardware, was slow to adapt to software and services” as the world moved toward software-driven economies. He said that a variety of things made the problem worse. As Japan’s electronics industry declined, engineers fled to foreign firms as a result of the country’s inadequate investment in ICT. As a result, the government lacked skilled tech workers and had low digital literacy. Public services were never properly modernized and remained reliant on paper documents and hand-carved, personalized seals called hanko that are used for identity verification. Over time, various ministries and agencies adopted their own patchwork IT strategies, but there was never a unified government push. There were cultural factors, too.
Kawai stated, “Japanese companies are known for their risk-averse culture, seniority-based… hierarchical system, and a slow, consensus-driven decision-making process that hampered innovation.” And thanks to Japan’s plummeting birthrate, it has far more old people than young people. According to Kawai, this large proportion of elderly people had “relatively little demand or pressure for digital services” and a greater skepticism regarding new technologies and digital fraud.
Japan’s Digital Transformation: From Fax Machines to the Future
Jonathan Coopersmith, emeritus professor of history at Texas A&M University, stated that apathy was widespread. Small businesses and individuals didn’t feel compelled to switch from fax machines to computers: Why buy expensive new machinery and learn how to use it, when fax worked fine and everybody in Japan used it anyway?
A possible switch would have been too disruptive to everyday services, according to larger businesses and institutions like banks and hospitals. Coopersmith, who wrote a book about the fax machine in 2015 and wrote about Japan’s relationship with it, stated, “The bigger you are, the harder it is to change, especially software.” Additionally, it posed a legal problem. Any new technology necessitates new laws, as demonstrated by the introduction of electric scooters into the road or the attempts made by nations around the world to legislate against deepfakes and AI copyright following the AI boom. Digitizing Japan would have required changing thousands of regulations, Coopersmith estimates – and lawmakers simply had no incentive to do so. After all, digitization isn’t necessarily a major factor in voter turnout in elections. “Why do I want to become part of the digital world if I don’t need to?” was how he summed it up.
A hanko is stamped on a banking document in an arranged photograph taken in Tokyo, Japan
A global pandemic was ultimately necessary to bring about change. Japan’s technological gap became evident as national and local authorities became overwhelmed, without the digital tools to streamline their processes.
Japan’s health ministry launched an online portal for hospitals to report cases instead of handwritten faxes, phone calls, or emails in May 2020, months after the virus began to spread worldwide. And even then, hiccups persisted. Public broadcaster NHK reported that a contact tracing app had a system error that lasted for months but didn’t let people know they might be exposed. Many had never used file-sharing services or video tools like Zoom before, making it difficult for them to adjust to working and attending school remotely. In one mind-boggling case in 2022, a Japanese town accidentally wired the entirety of its Covid relief fund – about 46.3 million yen ($322,000) – to just one man’s bank account. The confusion stemmed from the bank being given both a floppy disk of information and a paper request form – but by the time authorities realized their error, the man had already gambled away most of the funds, according to NHK.
For anyone under 35, a floppy disk is a magnetic memory strip encased in plastic that is physically inserted into a computer. Each one typically stores up to 1.44 MB of data, which is less than the size of an average iPhone photo. The situation became so bad that Takuya Hirai, who would become the country’s Minister of Digital Transformation in 2021, once referred to the country’s response to the pandemic as a “digital defeat.” According to Coopersmith, a “combination of fear and opportunity” led to the birth of the Digital Agency, a division tasked with bringing Japan up to speed. Created in 2021, it launched a series of initiatives including rolling out a smart version of Japan’s social security card and pushing for more cloud-based infrastructure.
Last July, the Digital Agency finally declared victory in its “war on floppy disks,” eliminating the disks across all government systems – a mammoth effort that required scrapping more than 1,000 regulations governing their use.
But there were growing pains, too. Local media reported that the government once asked the public for their thoughts on the metaverse through a complicated process that required downloading an Excel spreadsheet, entering your information, and sending the document back to the ministry via email. “The (ministry) will respond properly using an (online) form from now on,” wrote then-Digital Minister Taro Kono on Twitter following the move’s social media backlash. Digitization as “a way to survive” According to Kawai, businesses rushed to follow the government’s lead, hiring consultants and contractors to assist in system overhauls. Consultant Masahiro Goto is one example. He has assisted large Japanese companies in all sectors in adapting to the digital world as part of the digital transformation team at the Nomura Research Institute (NRI), designing new business models and implementing new internal systems. He stated to CNN that these clients frequently “are eager to move forward, but they’re unsure how to go about it.” “Many are still using old systems that require a lot of maintenance, or systems that are approaching end-of-service life. In many cases, that’s when they reach out to us for help.”
According to Goto, the number of businesses seeking the services of NRI consultants “has definitely been rising year by year,” particularly over the past five years. As a result, the NRI consultants are in high demand. And for good reason: for years, Japanese companies outsourced their IT needs, meaning they now lack the in-house skills to fully digitize.
A sign for cashless payments outside a shop in the trendy Omotesando district of Tokyo.
He stated, “Fundamentally, they want to improve the efficiency of their operations, and I believe they want to actively adopt digital technologies as a means of survival.” “In the end, Japan’s population will continue to fall, so increasing productivity is essential.” According to local media, the Digital Agency’s plan to eliminate fax machines within the government received 400 formal objections from various ministries in 2021. There may be resistance in certain pockets. Things like the hanko seal – which are rooted in tradition and custom, and which some parents gift to their children when they come of age – may be harder to phase out given their cultural significance.
According to Kawai, the rate of progress is also influenced by the Digital Agency’s willingness to push for regulatory reform and the degree to which lawmakers will give digitization top priority when creating future budgets. Additionally, new technologies are advancing rapidly in other regions of the world, and Japan is playing catch-up with shifting targets. Coopersmith stated, “This is going to be an ongoing challenge because the digital technologies of 2025 will be different from those of 2030, 2035.” But experts are optimistic. Kawai projects that Japan could catch up to some Western peers in five to ten years at this rate. Finally, there is a public demand for it, as more and more businesses are offering new online services and accepting cashless payments. “People are generally eager to digitize for sure,” said Kawai. “I’m sure that young people, or the general public, prefer to digitize as fast as possible.”
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