Ja­panese Com­pa­nies Ide­ally Po­si­tioned to Power a B2C Re­vival in 2018.


Ja­panese com­pa­nies face a unique and en­vyin­duc­ing op­por­tu­nity in 2018. Those that are pre­pared to take on more risk in the markets while chan­nel­ing fund stock­piles to­wards work­ers have the chance to kick-start the busi­ness-to-con­sumer (B2C) sec­tor, af­ter years of re­ly­ing on ex­ports and the busi­ness-to-busi­ness (B2B) mar­ket. At the same time, ar­ti­fi­cial in­tel­li­gence (AI) and ro­bot­ics are play­ing an in­creas­ingly im­por­tant role in the work­place, and com­pa­nies with the fore­sight to adapt to un­fold­ing tech­no­log­i­cal de­vel­op­ments will be in the driv­ing seat when it comes to cheaper unit-per-cost man­u­fac­tur­ing.

Ja­panese com­pa­nies have built up in­house fund stock­piles to lev­els now es­ti­mated to out­strip gross do­mes­tic prod­uct (GDP) by as much as a mul­ti­ple of three. Those funds have been pro­gres­sively squir­reled away since the global fi­nan­cial cri­sis, mir­ror­ing moves by risk-averse in­di­vid­u­als to re­move funds from the markets and keep them in low-in­ter­est bank ac­counts.

Fresh In­cen­tives

But Ja­pan now stands at a cross­roads. The risk-off stance of both com­pa­nies and in­di­vid­u­als will be dif­fi­cult to main­tain amid a shrink­ing la­bor mar­ket, which has also seen a de­ple­tion of ex­pe­ri­ence and tal­ent as skilled la­bor re­tires with­out im­me­di­ate re­place­ment.

Ja­panese com­pa­nies that em­power younger work­ers with greater up­front re­turns, in terms of higher wages, can help fuel a self­per­pet­u­at­ing con­sumer boom.

This move would en­tail com­pa­nies shift­ing away from the long­stand­ing ex­port and B2B­driven eco­nomic model that has sus­tained Ja­pan for decades, and rein­vent­ing them­selves in a do­mes­tic-de­mand-driven B2C mar­ket. The en­su­ing mul­ti­plier ef­fect would not only un­der­pin statis­tics such as GDP but also boost loan de­mand and drive in­ter­est rates out of the de­fla­tion­ary zone.

Rise of the Robots

AI and ro­bot­ics will also play a greater and more in­flu­en­tial role go­ing for­ward. Gone is the idea of robots as slave ma­chines in pro­duc­tion plants. CEOs in­ter­viewed for this spe­cial edi­tion agree that robots of the fu­ture will be more in­tel­li­gent, more adapt­able, and even­tu­ally able to an­tic­i­pate hu­man needs more rapidly and more se­lec­tively than hu­mans can.

Com­pa­nies that de­velop and har­ness the ef­fec­tive use of such robots will be at the cut­ting edge of man­u­fac­tur­ing by the end of the first quar­ter of the 21st cen­tury, par­tic­u­larly as they take in more young work­ers im­bued with the val­ues of the new mil­len­nium.

In­dus­try lead­ers will be those that not only ef­fec­tively uti­lize AI and robotic power but also pre­pare their staff for the emerg­ing re­al­i­ties of this new world. Com­pa­nies that de­velop man­agers and skilled la­bor ca­pa­ble of us­ing robots as their ser­vants, and not as their work­place masters, will also avoid the pos­si­ble po­lar­iza­tion in the work­place, where low-end la­bor may be forced to com­pete with robots for jobs.

2018 marks 10 years since the on­set of the global fi­nan­cial cri­sis. Ja­panese com­pa­nies have put this decade to good use, re­build­ing bal­ance sheets, cre­at­ing new over­seas markets, and re­plac­ing ob­so­lete plants and equip­ment. It is now time to re­open the flood­gates and power the po­ten­tial of do­mes­tic growth.

AI-equipped ro­bots such as Pep­per (above) will have a huge role to play in driv­ing growth over the next decade.

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