From Sony to Panasonic, Japanese brands dominated the tech world before the mobile internet era. China and India previously looked to Japan when fostering their practices over the past decade. But Japan itself is now seeking a tech innovation revival, and China could become an essential partner in its efforts.

The Japanese economy is still highly focused on the manufacturing industry, with over half of the top 500 local companies coming from the manufacturing sector. In contrast, Japan is home to only three unicorn startups, or private firms with a valuation of $1 billion, according to a long list of 415 such firms globally from CrunchBase Insights.

Unlike in China and the US, where startups mainly drive tech entrepreneurialism, Japanese corporations are taking a more prominent role in pushing tech innovations, according to Shimizu Kenji, director general at the Japan External Trade Organization (JETRO).

“There are fewer startups in Japan now, but big corporations are very proactive in pushing innovations,” he said during a panel at TechCrunch Shenzhen 2019 on Monday.

Inazuka Tetsu, the senior associated officer of air conditioner maker Daikin Industries, echoed Shimizu Kenji’s sentiments, pointing out that corporate innovation has been picking up momentum gradually, especially in the last few years. Corporate innovation aims to push in-house projects and work with startups, as well as overseas partners.

Governments from both countries are pushing for cooperation in innovation to build stronger innovation links. Shimizu Kenji, head of JETRO’s Guangzhou office, says Japan is known for its manufacturing industry and Shenzhen for its hardware manufacturing capabilities. This scenario leaves much room for cooperation between the pair.

At the same time, Japanese firms, generally considered risk-averse, are joining the global digitalization drive and adopting a more open attitude to tech-enabled solutions.

“Daikin is a company with over one hundred years of history and known for its manufacturing business. With the arrival of the digital era, however, we do feel it’s a pressing problem to digitalize our operations. Closer tie-up with Chinese companies, which are moving ahead in this area, could help us to keep up with the trend more quickly,” said Inazuka Tetsu from Daikin.

Although the global innovation center is shifting to Asia, Kenji and Tetsu agreed that it may still take time for Japan to become part of the movement because there are still lots of barriers to growth for startup innovations in Japan.

Given the circumstances, China, home to a vibrant startup environment, could be a suitable place for Japanese entrepreneurs to nurture their ideas and kick off projects, said Naruse Koichi, vice-president at Samurai Incubate, a Japanse startup hub that has invested in more than 160 small businesses to date.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.

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