Japan's Slow AI Adoption

Japanese companies are being slow to adopt artificial intelligence (AI) technology, despite the country's need for productivity gains.

Facing acute labour shortages, ageing demographics and chronic productivity problems, Japan should be fertile ground for the take-up of AI. However, data suggests that Japan has fallen behind in AI adoption.

According to a report by the Organisation for Economic Co-operation and Development (OECD), just 8.4% of Japanese workers use AI as part of their job. In contrast, the US has a much higher adoption rate, with 50% of workers using AI, while the UK has 32%.

A report by the OECD also highlights the differences in AI adoption between countries.

Austin Xu, co-founder of US start-up Kuse AI, attributes Japan's slow adoption to the country's conservative and risk-averse business culture. He notes that Japanese companies are hesitant to adopt AI due to the fear of mistakes and the need for consensus.

Parrisa Haghirian, professor of international management at the Kyoto University of Advanced Science, agrees that many Japanese companies are too risk-averse to adopt AI. She notes that the challenges of adopting AI are similar to adopting any change in Japanese firms, which is why AI use is still limited and cautious.

The Japanese government is aware of the problem and is trying to encourage businesses to adopt AI through the AI Promotion Act, which aims to use light-touch regulation to encourage businesses to invest in AI.

However, critics argue that the government's efforts may not be enough to address the issue. Prof Yasushi Ogasawara, an expert on Japan's social system and technology at Meiji University, notes that there aren't enough tech-savvy people in the workforce, and that many companies struggle with out-of-date computer systems.

Despite the challenges, there are some signs of change. Some companies, such as Kanematsu, a major general trading company, are now prioritising "AI literacy" in their new graduate hiring. Uta Yamaguchi, a graduate who joined Kanematsu in April, uses AI quite often at work, but notes that AI systems that can autonomously handle multi-step work are still virtually unheard of in Japan.

However, change in Japan is limited, and drastic reform is difficult, according to Ogasawara. Without disruption, the productivity gains the country needs could remain elusive.