The Japanese tech innovation brand under threat

The global shift in tech innovation from corporate majors to smaller start-up operations is increasingly damaging Japan’s digital brand, which has traditionally been based on rigid, family-run hierarchies. Japanese majors are looking to buy their way out of an innovation dry-spell, increasingly relying on business transfer agents and VCs to invest in new business segments. Domestic brands, once global mainstays in new technologies, are facing a market mutiny,  being overtaken by more in-trend and smarter marketed foreign goods.

Traditional Japanese telecom superpowers such as Sony and Panasonic have been outmanoeuvred by more dynamic brands in the global touch-screen dominated telecom equipment landscape. Weak external demand for Japanese telecom goods has helped push the country’s trade deficit. A foreign influx into the Japanese market itself has also undermined local brands.

While the gradual shift away from Japanese dominance on the global ICT market has been prolonged and well-documented, it is perhaps only now that the full impact of a failing key industry is being recognised as a major factor in economic deterioration. A traditional focus on greater productivity and efficiency has come at the cost of innovation and marketing nous, as Japan’s top firms have failed to capitalise on the global trend towards touch-screen wireless handsets.

Japan’s young consumers are ignoring patriotism in favour of external trends and improved features. Apple’s iPhone has overtaken Japanese brands Fujitsu and Sharp to become the dominant smartphone. Japanese brand influence in the country’s traditionally strong markets has waned as developing nations have advanced their telecom manufacturing bases and begun selling their own products, often at a cheaper rate. South Korea’s Samsung and China’s ZTE and Huawei have increasingly pushed out Japanese firms from their respective markets.

Japan’s ICT export prospects are unlikely to improve in 2013, as key market China continues to develop its own brands while the EU, another traditionally important market, suffers from an economic slowdown. Both Sony and Panasonic are cutting jobs and selling off assets.

Nonetheless, domestic consumer demand for communications is set to continue rising, as the segment’s importance to Japanese culture will drive opportunities for innovative start-up businesses and established global players. The anticipated entrance of more competing foreign telecom manufacturers, such as Samsung and ZTE, should drive prices downwards.

The Japanese technology manufacturing market is set to undergo a transformation, as traditional and rigid former industry powerhouses give way to smaller but more flexible and enterprising niche firms. Emerging telecom companies such as Softbank, DeNA and Rakuten are leading the way, although few are prepared to push beyond Japan’s borders, fearful of repeating the mistakes of their forefathers.




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