Yahoo Finance Japan vies to be 'number one again through web3 innovation' | The Crypto Mile
Watch: Japan vies to be 'number one again through web3 innovation' | The Crypto Mile
Japan aspires to be "number one again through web3 innovation", but must first overcome ingrained domestic obstacles, a key advisor to the Japanese government's national strategy tells Yahoo Finance UK.
Once recognised as a global leader in car manufacturing and electronic goods, Japan's economy has been stagnating in recent years.
Now, the Japanese government has outlined a national strategy aimed at reclaiming its top position through web3 innovation, the third generation of internet services that leverages blockchain technology for peer-to-peer transactions and the creation of digital assets.
In February, Japanese prime minister Fumio Kishida expressed his support for the potential of blockchain technology in addressing the nation's economic challenges.
On this week's episode of The Crypto Mile, Yahoo Finance UK spoke to Sota Watanabe, the founder of Astar Network and a previous task force member of the Japanese government. Watanabe outlined Japan's new initiative to become "number one again", though web3 innovations.
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He said: "A lot of the Japanese companies, such as Toyota (TYT.L) and Sony (6758.T), would like to work in web3 and the Japanese government made web3 a national strategy back in September and published a web3 whitepaper.
"So, we are now in the age of web3 and Japan needs to create the Sony of this era, but if we cannot do this, our economy is going to shrink."
I am honored to be on the cover of the latest issue of Forbes Japan! Thanks for the Christmas gift @forbesjapan 🎁
Astar is getting a lot of tractions and recognition in Japan. We keep building and try to lead web3 in Japan. pic.twitter.com/5lnIQcsHju— Sota Watanabe (@WatanabeSota) December 23, 2022
The entrepreneur, who was on the cover of Forbes Japan's December edition, said that because "Japanese people are conservative compared to Americans and Europeans, a Japanese company needs to make one successful web3 use-case, so the other companies will feel confident to follow this lead".
Watanabe said Japan missed out on the web2, lacking its own versions of Google (GOOG), Meta (META), and Amazon (AMZN), unlike China, which boasts Tencent (0700.HK), WeChat, and Alibaba (BABA).
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"At one stage Japan was number one, but we are losing right now, and web3 is an opportunity for Japanese companies and as a country," Watanabe said.
Investment in software design
Watanabe said Japan is heavily involved in hardware and electronic goods manufacturing, but less in world-leading software design.
He said: "As a country Japanese people and Japanese companies need to invest more in software, such as creating web3 platforms on blockchains and with digital wallets."
However, he added that Japanese companies are still fixated on domestic markets.
"Although the Japanese market is big many companies only provide products and services available in Japan," he said.
Because Japan is the fastest ageing population in the world, with almost 29% of the population over 65-years-old, the domestic market will keep contracting.
"Because of the ageing demographic, Japan needs a company, founder or product that makes money outside of Japan to grow the economy, this is what the entire country needs to focus on," Watanabe added.
Japan's rapidly aging population, driven by a declining fertility rate and increasing life expectancy, is having significant economic implications, according to an IMF report.
It is predicted that by 2030, one in three Japanese people will be 65 or older. This demographic shift is impacting economic growth by increasing the social security burden and reducing the labour force.
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Involvement in the web3 sector ownership is still heavily skewed towards younger age groups, older audiences are underrepresented. Japanese companies wishing to diversify into the web3 sector may need to look elsewhere.
According to a report by DataPortal, internationally, fewer than one in 20 internet users aged 55 to 64 own any cryptocurrency, and the majority of users of web3 products such as Defi, digital wallets and non-fungible tokens (NFTs) are members of the Generation Z demographic.
Although Japan has yet to launch a competitive web2 social networking application that resonates on a worldwide level, Ibrahim Ipek, global expansion lead of Japanese company Syfu, believes that there are indications that Japan is moving in the right direction for web3.
"Regarding regulation, the Kishida government has shown a keen interest in web3 development in Japan.
"While regulatory flexibility may not be immediately visible in Japan, there is a positive sentiment that prime minister Kishida will establish a sandbox regulatory framework at the very least.
"Furthermore, Japanese conglomerates have already begun investing in the Japanese web3 ecosystem, which is noteworthy given the downturn in venture capital)investments in other parts of the world", he told Yahoo Finance.
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