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R&D: Japan’s intangible asset

Article - July 19, 2016

An increasing number of multinationals are choosing to set up research centers in Japan, while Japanese companies themselves are also investing heavily in R&D facilities, both at home and abroad

Japan is one of the highest spenders on research and development (R&D) in the world. In 2014 its expenditure on R&D as a percentage of GDP was 3.4%, the highest of the G7 nations, according to the Organization for Economic Co-operation and Development (OECD), which also calculates that there are 10.2 full-time researchers for every 1,000 people in Japan.

It is this commitment to R&D that has traditionally made the country a global leader in technology and innovation. It has however lost ground to the likes of the U.S., the EU, China and South Korea in recent years. Because of this, Japan has set its sights on strengthening its R&D capabilities as part of Prime Minister Shinzo Abe’s revitalization strategy launched in 2013, which calls for Japan to become the  “world’s most innovation-friendly country”.

To meet these goals, the government has set a target of at least 4% of GDP for total R&D investment by the public and private sectors, and at least 1% of GDP invested in R&D by the government.

With extensive R&D happening in both the public and private spheres, organizations such as the New Energy and Industrial Technology Development Organization (NEDO) act as a bridge between the government, academia, and corporations to promote and boost R&D measures. Established in 1980 as a semi-governmental organization to promote the development and introduction of alternative energy, it has since grown to become one of the largest R&D institutions in the world.

“We are not just limited to energy and environment; we have broadened the scope of our activities to include robotics, artificial intelligence, the internet of things and cyber-physical systems,” says Chairman of NEDO Kazuo Furukawa.
“We are also working to make Japan a stronger, more vital country. One thing that we are trying to do as a nation is to breathe some life into and support medium-sized venture-type firms similar to Silicon Valley. These kinds of corporations has not settled in Japan, and we are trying to find a way to nurture them.”

Japan has however found a way to attract an increasing number of multinationals to establish R&D facilities in the country, thanks to its reputation as an international hub for R&D and heavy investment in this area. These include several American firms, such as Apple, which will open up a research lab in Yokohama in 2017; Johnson & Johnson, whose Tokyo Science Center opened in 2014 as a research and training facility for healthcare providers; and 3M Health Care, which opened its R&D base in 2013 in Kanagawa. Under the Act for the Promotion of Japan as an Asian Business Center, which came into force in 2012, these companies can enjoy incentives such as income tax breaks, reduction of patent fees and shortened investment procedures.

Both at home and abroad, Japanese companies themselves are also investing heavily in R&D facilities. Last year Toshiba launched a new Hydrogen Energy Research & Development Center at its Fuchu complex in western Tokyo; while in Spain Fujitsu has opened a center that is focusing on research in areas as diverse as finance, healthcare, tourism and the environment.

Biomedical firm Takara Bio Inc. recently inaugurated a state-of-the-art facility for gene and cell processing in Kusatsu City. “[This center] serves as a manufacturing facility for our in-house projects relating to the development of gene and cell therapy products,” says Takara Bio President Koichi Nakao. “In Japan, we have a relatively new standard – Good Gene, Cellular, and Tissue-based Products Manufacturing Practice (GCTP) – that regulates the manufacturing of gene and cell therapy products. The Center for Gene and Cell Processing facility that we built in Shiga Prefecture meets all of the regulations from the EU, the U.S., and Japan, including the above GCTP.”

“We are not only creating a product, but we also create a place where people want to work. This innovation center is where we design, and innovators work with their full motivation”

Yasumasa Emori, President, Nicca Chemical Co.

The construction industry may not be the first industry that springs to mind when thinking about the use of robotics. But Japanese developer Asunaro Aoki Construction Co. is pioneering robotics in building, and has set up a research center at Tsukuba Science City to further develop its robotic capabilities, as well as earthquake resistance technologies.

“The institute is located about an hour from central Tokyo and we have just under thirty people working there. As a general contractor, it is not like the university research centre where they are focused more on fundamental technology. We are focusing on technology that we can actually put to work in our own applications there. One thing that we are focusing on in particular is seismic technology – earthquake countermeasures,” says President Yasunobu Ueno.

“We already have robot driven machinery out in the field that is in application. Another thing we are looking at is using drones, which is coming into wider circulation. I believe there is a lot that can be done in the area of drones.”
Nicca Chemical Co. is another Japanese firm that has recently established a new R&D facility. “Our value is not the product. Our value is product innovation, our customer support, and our human capital. Those are our value propositions. I would like this innovation center to be the value-proposition place,” explains President Yasumasa Emori.

“This concept is very clear. Forty very young, selected employees, get together, and discuss future action. Those forty meet periodically, and decide on what kind of innovation center we would like to have. We are not only creating a product, but we also create a place where people want to work. This innovation center is where we design, and innovators work with their full motivation.”

Over the past 40 years, Sakata Seed Corporation has managed to grow its global business thanks to its firm commitment to R&D. It has established 15 research facilities, five at home and ten abroad, where it is constantly developing new vegetable and flower varieties for a diverse global market. “The demand for varieties in each region in the world may be quite different, but we can provide the right products within five to ten years, by utilizing our global research and development network,” says President Hiroshi Sakata.