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Ubiquitous Networking by“International Symbiosis”

No. 126 March 1, 2008

Teruyasu MURAKAMI

Copyright 2008 by Nomura Research Institute, Ltd. 1

NRI Papers No. 126March 1, 2008

Ubiquitous Networking by“International Symbiosis”

Teruyasu MURAKAMI

The moves to develop the ubiquitous network that started at the turn of the century have facili-

tated the development of the ubiquitous network infrastructure, emergence of clusters of

related solutions and the establishment of a safe and secure usage environment. Currently, these

moves are steadily penetrating Japan’s ICT (information and communications technology) envi-

ronment. At the same time, “Galapagosization” is emerging as the new issue, which is the phenom-

enon in which efforts to develop the latest technologies and products/services within the Japanese

market are not well reflected in Japan’s international competitiveness.

The competitive environment surrounding Japan in the global market is undergoing a major

change with the emergence of “MegaGrowth countries.” While having large populations of 40 mil-

lion or more, these countries, such as China, India, Korea and Vietnam, are on the way to achiev-

ing high economic growth. While China and India are expected to take the lead as major players in

world economy, MegaGrowth countries may grow to become equivalent to Japan, the US and

Europe in terms of market size. The “flying geese type” of growth that was seen in the past will

disappear and, instead, the “simultaneous and multiple emergence type” of economic growth will

occur outside the Japanese market, i.e., mostly in MegaGrowth countries.

In the future world market, the most advanced products will not necessarily become the products

earning the largest sales and profits. What is required of Japan’s ICT industry under such an envi-

ronment is that in addition to strengthening the international evolution of the ubiquitous network

industry in the high-end market where Japanese industry is likely to become highly competitive,

the industry must also exist together with the diversity seen in the middle-tier and low-end markets.

To become competitive in the global market, the industry should pursue the improvement of “inter-

national symbiosis” by actively utilizing the first-rate management resources available in these

countries.

I Ubiquitous Networking Faces New Issues

II Changing World Market and Conversion of Growth Mechanism

III International Competitiveness and “International Symbiosis”


I Ubiquitous NetworkingFaces New Issues

1 Ubiquitous Networking Has Taken Rootin Japan’s ICT Environment

Eight years have already passed since Nomura ResearchInstitute (NRI) started to address the theme of the ubiq-uitous network at the turn of the century. During thisperiod, progress in efforts to achieve ubiquitous net-working has been activated among the industries, acade-mia and governments of Japan and Korea. Through theseefforts, ubiquitous networking has become firmly rootedin Japan’s ICT (information and communications tech-nology) environment.

This paper outlines the recent situation of ubiquitousnetworking in Japan, which can be expressed as the cur-rent level of achievements related to ubiquitous network-ing in Japan. Following this overview, consideration willbe given to the international competitiveness of Japan’sICT industry that is now emerging as new issues basedon the studies and deliberations of multiple committeesorganized by the Ministry of Internal Affairs and Com-munications of Japan in which the author participated asa member. By considering the drastic changes in such aninternational competitive environment from the long-term perspective, the concept of “international symbio-sis” will be used for further contemplation of the issues.

First, the following sections describe the recent situa-tion of ubiquitous networking from the aspects of threepolicy directions taken under the “u-Japan Policy:” (1)development of the ubiquitous network infrastructure,(2) ICT utilization to resolve the emerging economic andsocial problems Japan will face as it moves towards the2010s and (3) establishment of a safe and secure usageenvironment.

(1) Development of the ubiquitous networkinfrastructure

In e-Japan Strategy II (the national IT strategy), theubiquitous network was defined as a “network that canbe connected at any time, anywhere and with anything.”As examples that can provide a close image of the ubiq-uitous network, services such as i-Mode that was devel-oped as a gigantic closed network that connects mobilephones with the Internet were first offered to consumers.

However, the major objectives pursued by the ubiqui-tous network are to ensure interconnectivity and interop-erability to the maximum extent possible among fivedifferent types of networks. Specifically, these are (1)wired broadband networks such as ADSL (asymmetricdigital subscriber line) and FTTH (fiber to the home),(2) wireless networks such as mobile phone Internet(Internet connections by mobile phones) and wirelessLANs, (3) broadcasting networks that have steadilyshifted to a digital format, (4) traffic networks such as

ETC (electronic toll collection system) and ITS (intelli-gent transport systems) and (5) real object networks suchas RFID (radio frequency identification), sensor net-works and network robots.

Currently, in Japan, each of these five different typesof networks is steadily being developed.

For wired networks, plans are underway to eliminatebroadband zero areas by 2010. For wireless networks,active moves are seen for the development of WiMAX(worldwide interoperability for microwave access; aradio communications system covering a radius of about50 km) and the next-generation PHS (personal handy-phone system). A detailed road map is being formulatedfor the digitization of terrestrial waves for broadcastingsystems in preparation for the cessation of the use ofanalog signals by 2011. Traffic systems focus on theconnection of car navigation systems to the Internet, thedevelopment of multiple ETC functions and the develop-ment of an automatic driving system to ensure safety.For real object networks, increased expectations arebeing given to the practical use of network robots inaddition to RFIDs and sensor networks.

Because there are players who are already deeplyinterested in each of these five types of networks, andpolicy-making authorities are highly motivated for thedevelopment of these networks, steady progress will bemade in the development of these five network types inthe future.

The realization of the ubiquitous network infrastruc-ture requires not only the development of each of thesefive network types, but also the establishment of inter-connectivity and interoperability among them to themaximum extent possible.

In this respect, as described in NRI Papers No. 113(January 1, 2007), “The Long Tail and Lofty Head ofVideo Content,” new themes of activities aimed at estab-lishing interconnectivity and interoperability amongthese five types of networks have been emerging oneafter another in the area of Japan’s information and com-munications policy. These include (1) FMC (fixed-mobile convergence), (2) triple play (the merging ofvoice, video and data communications via a single line)and multiple play (triple play + mobile phone), (3) con-vergence of communications and broadcasting, (4) net-working of information home appliances, (5) promotingthe use of RFIDs, (6) promoting ITS utilization and (7)developing NGN (next-generation networks employingfull-digital and full-IP technology) both for wired andwireless networks (Figure 1).

Rather than pursing the comprehensive goal of “ubiq-uitous networking,” the government and the ICT indus-try have started to achieve these individual specificthemes. Nevertheless, steadily promoting the achieve-ment of these specific themes means nothing but pro-moting ubiquitous networking.

With an increasing number of specific goals beingidentified and achieved for each theme, the themes pursued

NRI Papers No. 126 March 1, 2008

Ubiquitous Networking by “International Symbiosis”


under individual programs are becoming more importantthan the “ubiquitous network” ICT paradigm itself. Thissituation suggests that we are in the process of achievingmaturity where this ICT paradigm will become part ofreality. This is mentioned in NRI Papers No. 113 in2006.

Figure 2 shows this situation in such a way thatextends Figure 1 of NRI Papers No. 97 (November 1,2005), “Japan’s National IT Strategy and the UbiquitousNetwork.” While the frequency of the appearance of theterm “ubiquitous” has already reached its peak and hasbeen declining, the frequency of the appearance of theconstituents of the ubiquitous network concept such asthe convergence of communications and broadcastingand the next-generation network has been increasing. Ifthe appearance of these phrases is added to Figure 1 ofNRI Papers No. 97, it becomes clear that Japaneseindustries still have high interest in the “ubiquitous para-digm,” as shown in Figure 2.

As such, as far as the Japanese network infrastructureis concerned, the ubiquitous network serves as theunderlying concept for the development of different

types of networks. Currently, steady progress is beingmade in activities to develop safe and secure networksthat can be connected “at any time, anywhere and withanything.”

(2) Emergence of Clusters of Solutions Related tothe Ubiquitous Network

The next question relates to the second aspect of the u-Japan Policy: Is progress steadily being made in “ICTutilization to resolve the emerging economic and socialproblems that Japan will face as it moves toward the2010s?”

In 2006, the Ministry of Internal Affairs and Com-munications began awarding the “u-Japan Best Prac-tice Grand Prize” with the aim of promoting thecreation of solutions that make use of the ubiquitousnetwork. While the ubiquitous network is still on theway toward development, the ministry invites solutionsusing the existing ICT environment to resolve varioussocioeconomic problems, evaluates them based on pre-scribed standards and awards prizes to the selectedsolutions as the best practices at a ceremony on June 1



Figure 1. Ubiquitous Networking Pursued under Individual Specific Themes

Wired/wireless broadband services

Wired: FTTH, xDSL, CATV, PLCWireless: mobile phone Internet, wireless LAN, WiMAX

Triple playMultiple play

Convergence of communications and broadcasting

Web computing

Promoting use of RFIDs

Networked information home appliances

NGN (next-generation network)

Promoting ITS utilization

Fixed telephones (VoIP)

Mobile phones

Video games

Car navigation systems

Multimedia kiosks

Webcams

IC cardsIPv6

RFIDs

ServersMobile PCs

Mobile PCs

Servers

MainframesPC

CSS

PC

PC

PC

PC

FMC PDA

WS

Digital TVs

Set-top boxesHome servers

Sensor networks

Network robots

Intelligent automatic vending machines

Information home appliances

Ubiquitous personal assistant

Broadcasting, traffic and real object networks

Broadcast: Terrestrial digital broadcasting, Internet broadcastingTraffic: Internet-connected GPS, ETC, ITS, AHSReal object: RFIDs, sensor networks

Internet

Notes: AHS = advanced cruise-assist highway system, CSS = client/server system, ETC = electronic toll collection system, FMC = fixed-mobile convergence, FTTH = fiber-to-the-home, IPv6 = Internet Protocol Version 6 (new IP protocol), ITS = intelligent transport systems, LAN = local area network, PC = personal computer, PDA = personal digital assistant, PLC = power line communications, VoIP = voice over Internet Protocol, WiMAX = worldwide interoperability for microwave access (radio communications system covering a radius of 50 km), WS = workstation, xDSL = various digital subscriber lines


every year during Information and CommunicationsMonth. This event provides a good opportunity to seewhat ubiquitous-network-related solutions are beingdeveloped.

The u-Japan Best Practice Grand Prize in 2006 wasawarded to the “Street Corner Monitoring Sensor Sys-tem to Protect Commuting School Children” developedby Matsushita Electric Industrial Co. (Figure 3).

This system works as follows. Active and passiveRFIDs are attached to backpacks carried by elementaryschool children. As the children pass the school gates,where an RFID reader is installed, to attend or leave theschool, this information is sent to the PCs and/or mobilephones of parents and teachers via the center.

In addition, the RFID readers are also installed on topof automatic vending machines (where electric power isavailable) that are installed almost everywhere on citystreets. Each time a school child passes one of thesevending machines, the time and a video image are storedin the center. Parents and teachers who have the correctID (authentication number) can access this informationon the Web.

From 2004 to 2005, violent crimes involving schoolchildren attending or leaving school often occurred inJapan. Concerned about this situation, the Japanese gov-ernment convened an inter-ministry committee inDecember 2005 to develop measures to prevent suchviolent crimes involving children.

In anticipation of the utilization of the ubiquitousnetwork to help prevent such crimes, the Ministry ofInternal Affairs and Communications conducted sur-veys on how many solutions making use of the ICT ofthe ubiquitous network, such as those developed by

Matsushita Electric Industrial Co., were availablethroughout the country. The ministry reported the sur-vey results, which revealed that 192 solutions hadalready been devised throughout the country as ofMarch 2006.

Once the utilization environment of the ubiquitousnetwork where mobile terminals, RFID, webcams andthe like are freely connected via wired and wirelessbroadband networks has been established, clusters ofnew solutions can emerge whenever a serious socialneed, such as protecting the safety of school childrenwhen they attend and leave school, becomes apparent.

In addition to Matsushita’s solutions, the u-Japan BestPractice Grand Prize 2006 was also awarded to the fol-lowing systems: the component receipt/shipment man-agement system developed by Fujitsu that uses RFIDtags between a component factory and a product assem-bly plant, which could reduce component inventory byhalf; the small-amount payment system via a networkthat uses NTT DoCoMo mobile phones; and the videodistribution system developed by SHE KNOWS JOUR-NAL (SKJ) that enables anyone to easily and quicklydistribute video and voice information via the Internet atlow cost.

The u-Japan Best Practice Grand Prize 2007 wasawarded to the “hospital bedside safety control systemusing RFIDs” developed by the Akita University Hospi-tal (Figure 4). This system uses RFIDs attached to injec-tion medications and patient wristbands and links themwith electronic medical records on a real-time basis viawireless LAN. The hospital is achieving the intendedeffect of preventing medical malpractice during dailymedical service.



1,000

800

900

700

600

500

400

300

200

100

01975 – 89 90 91 92 93 94 95 96 97 98 99

0 0 0 0 1 1 0 1 0 0 1

2000 01 02 03 04 05 06

Figure 2. Frequency of Appearance of Ubiquitous-Related Articles in Three Economic Newspapers

Notes: (1) The three economic newspapers are Nihon Keizai Shimbun, Nikkei Business Daily and Nikkan Kogyo Shimbun. Keywords include similar terms and phrases. (2) Figures indicate the total number of articles carrying the indicated terms and/or phrases.

(Articles)

(Year)

NGN (next-generation network)

Convergence of communications and broadcasting

Information home appliance network

Ubiquitous

FMC

Triple play

Mark Weiser. “Ubiquitous Computing” (88)

Translation of “The Computer for the 21st Century,” Mark Weiser, into Japanese (11/1991)

NRI, Ubiquitous Network (12/2000)NRI, Ubiquitous Networking: Towards a New Paradigm (2/2000)

Global Information Summit 2001 organized by Nihon Keizai Shimbun (3/2001)

Ken Sakamura, Yubikitasu Konpyuta Kakumei (Ubiquitous Computer Revolution) (6/2002)

901

632

504

104

24

307

822




Source: The Ministry of Internal Affairs and Communications, “u-Japan Best Practices 2006,” June 2006, http://www.soumu.go.jp/s-news/2006/pdf/060601_1_01.pdf

Figure 3. u-Japan Best Practice Grand Prize 2006

Street Corner Monitoring Sensor System (Matsushita Electric Industrial Co.)

Passes

Passes

Passes

Passes

RFIDs

Backpack

Parents

A small container with built-in RFIDs is attached to the backpack, RFID readers installed in school gates and monitoring points on the street indicate the following:• Whether children arrived safely at school• When children left school• When and where children passed by on

their way to school/home

Check the Web to learn when and where children passed detection points.

Send e-mail notices to parents indicating when children arrived and/or left school

Source: The Ministry of Internal Affairs and Communications, “u-Japan Best Practices 2007,” June 2007, http://www.soumu.go.jp/s-news/2007/pdf/070601_2_01.pdf

Figure 4. u-Japan Best Practice Grand Prize 2007

Bedside Safety Control System Using RFID Tags (Akita University Hospital)

RFID

Wireless LAN

Hospital information system

(electronic medical chart system)

Hospital employee ID cardsPatient wristbandsMedication injections/blood transfusions

Real-time link with the hospital information system via wireless LAN

If a patient-medication match is correct, the system records treatment information (who, to whom, what, when); if a patient-medication match is incorrect, the system displays an alarm to avert erroneous administration.

Features of This System

Effects of This System

Seamless connection of RFIDs, wireless LANs, PDAs and the hospital information system enables:

• Use of the system at bedsides throughout the hospital

• Easy reading of data by anybody• Quick reading while doctors and nurses

are busy working• For the first time in Japan, the latest

technology (RFIDs) was applied to bedside treatment to help resolve some problems facing hospitals

Improving medical safety

• Decreasing the number of incidents• Helping to prevent mistakes from

occurring• Fostering peace of mind among hospital

staff members

Improving work efficiency

• Easing of identification (distorted bands and drips, soiled tags)

• Cutting work time (about half that of a bar code system)

• Reliable treatment records (developed through both a medication check and a treatment record)

Reading RFIDs by PDA


In the medical field, the remote medical system devel-oped by NTT Resonant won a prize in 2006. This sys-tem transmits high-definition microscope images andenables a doctor conducting a surgical operation in ahospital located in a different location to receive advicefrom a specialist in pathology (the number of such spe-cialists is still limited in Japan) based on the transmittedimages.

A somewhat interesting system developed by NTTDoCoMo that won a prize in 2007 was the alcohol checksystem using videophones for truck drivers. The systemuses the videophone function of the third-generationmobile phone to talk face-to-face with a driver located ina remote location on a real-time basis and automaticallysends the data measured by an alcohol sensor connectedto the phone. The system enables a manager at the truck-ing company office to immediately check whether a dri-ver has drunk alcohol. This solution aims to address asocial problem of frequently occurring traffic accidentsresulting in injury or death caused by drunk drivers.

Recently, in addition to activities at the national leveland those by companies, in Europe and the US we seemoves to encourage individuals to participate in effortsto promote measures against global warming. In thethird session of the Digital Civilizations Forum(Ci’Num1), which was held in October 2007 in Bor-deaux, France, and in which the author participated, dis-cussions were held on the concept of “Ecogotchi,” anecological version of Tamagotchi, which is a personalcalculator that measures carbon dioxide emissions byindividuals, and that of “Eco-Footprint,” which records ahistory of carbon dioxide emissions by individuals.While these tools remain at the conceptual level, we caneasily imagine Ecogotchi and Eco-Footprint as specificsolutions in the near future as extensions of the video-phone alcohol check system mentioned above.

As such, serious social issues and needs are recog-nized and shared extensively by industry, the govern-ment, public organizations, municipalities and localcommunities. In the order of their seriousness, a widevariety of solutions have been proposed and developedby diverse players such as universities, communities andmedical institutions in addition to ICT companies. Themore promising the solutions, the higher the priority thatis given to their dissemination throughout the country.This is the precise process that is the aim of the u-Japanpolicy. At the same time, these solutions suggest that thefundamental constituents of achieving the ubiquitousnetwork society have steadily been taking root in Japa-nese society.

In addition to social problems, responses to economicissues have also been actively proposed and developed.When the concept of ubiquitous networking started to bediscussed, industry first paid attention to the use ofRFIDs in retailing.

In the US, a campaign against the use of RFIDs wasraised by a consumer group at such an early stage as ver-

ification testing of the devices. The point at issue wasthat even if RFIDs could be used for the process fromfactories to store warehouses, it might take considerabletime for products with RFIDs to arrive at stores.

At the study committee on the advanced utilization ofRFIDs organized by the Ministry of Internal Affairs andCommunications in 2003, the author noted that it ismeaningful to introduce RFIDs only when traceabilitycan be established for an entire life cycle of productsfrom the procurement of raw material to the disposal ofthe product, and pointed out three barriers that had to beovercome in order to establish such traceability. Theseare the barrier encountered when a product is deliveredfrom a warehouse to a store, the barrier of whether con-sumers bring products to their homes or elsewhere andthe barrier of whether RFIDs are utilized until the prod-uct is finally disposed of.

After these discussions, industry, academia and gov-ernment have all been conducting focused activities topromote the utilization of RFIDs. Figure 5 indicates thelatest situation monitored by NRI regarding the extent towhich progress is being made in verification tests andactual application of RFIDs.

While RFIDs were first intended for application in theretail and distribution fields, the application fields havequickly been expanded to include manufacturing, logis-tics, construction, finance, health care, personal serviceand public service fields. In Japan, RFIDs are being usedin such a way as meeting the initially anticipated expec-tation that RFIDs have a substantial potential as socialsolutions not merely as distribution solutions.

With respect to the place of use in each field, thethree barriers were overcome one after another, andRFIDs are used not only for distribution but also forsales. Furthermore, cases have emerged where RFIDsare used for service, support and other functions up tothe disposal stage. In addition, we also see the use ofRFIDs in the manufacturing and processing stagesprior to distribution as well as for indirect businessoperations. Thus, RFIDs are being utilized in everyaspect of business activities.

While some solutions are still at the verification testlevel, a shift from verification testing to actual applica-tion has been seen in many fields. In light of this situa-tion, as progress is made in technological innovations inthe field of RFIDs and social recognition expands in thefuture, a shift from verification testing to actual applica-tion will occur in many different fields. Through theseprocesses, the use of RFIDs will surely and resolutely berooted in industry and society in Japan.

As such, ubiquitous network solutions will be pro-posed and developed for social and industrial problemsin the order of their seriousness. These solutions will beverified and tested and demonstration projects will beimplemented. Emergent processes from these testingstages to major moves towards actual application willsteadily continue in the future.




(3) Towards establishment of a safe and secureusage environment

The third pillar of the u-Japan Policy consists of activi-ties towards the establishment of a safe and secure usageenvironment. As indicated above, the ubiquitous net-work brings users ultimate network convenience, and atthe same time, ultimate network vulnerability2.

During the discussions at the u-Japan Policy Round-table, we took a stance that it is appropriate to disclosecomprehensively the vulnerable aspects that the ubiqui-tous network has from the initial stage of its introductionwithout hiding them. Accordingly, in addition to theshadow issues that currently exist, we tried to identifyvulnerable aspects that might emerge when the ubiqui-tous network is firmly rooted in society in the future.

In studying such vulnerabilities, we selected ten cate-gories that include privacy, information security,illegal/harmful content, measures for intellectual prop-

erty rights, information literacy, the geographical divideand ecological considerations. For each category, theissues we currently face as well as the issues that arelikely to emerge in the future were examined. With tenissues assigned to each category, a total of 100 “shadowissues” of the ubiquitous network were consequentlyidentified.3

While this identification was conducted at the u-JapanPolicy Roundtable in 2004, the Ministry of InternalAffairs and Communications reviewed the 100 issues in2006 under the recognition that these shadow issueschange from moment to moment with changes in thetimes and technological innovations.

During this review process, the following four issueswere added to the 100 issues that were initially identi-fied: (1) ensuring security in mobile terminals, (2)response to anonymity of information senders, (3) pro-viding useful legal information and (4) utilization of



Note: DC = distribution center, GMS = general merchandise store, brown goods = household electrical entertainment appliances such as audio and video playersSource: Additions and modifications made by the author to “Kiro ni tatsu nihon no IC tagu (Japan’s IC Tags at the Crossroads),” Chiteki Shisan Sozo (Knowledge Creation and Integration), November 2006.

Figure 5. Verification Testing and Actual Application of RFIDs

Indirect operations Distribution Sales Service Support DisposalManufacturing/processing

Automobiles

Home appliances (brown goods)

Construction machines

Steel, material

Food processing

Office equipment

Land transport

Sea transport

Air transport

Apparel

Department stores

GMS

Drugstores

Video, CD

Restaurants

Books

Banks

Mass home electronics

retailers

Building, civil engineering

Manufacturing

Distribution

Construction

Retail

Finance

Medical institutions

Hotels

Electric power

Educational institutions

Libraries

Self-Defense Forces

Leisure such as travel, resorts,

sports

Health care

Infrastructure

Public service

and others

Personal service

Worker management

Asset management

Process management

Inventory management

Joint delivery center ~ stores

Traceability

Materials management

Patient chart management

Document management

Asset management

Execution management

Reducing textilesmaterials

Facility maintenance and management

Sales management

Future store verification test

Sales management

Theft prevention

Payment

Medication traceability

Medication distribution

Tool management

Monitoring children’s movements

Information service

Payment

Loan management

Supplies traceability verification test

Dispensation record management

Discarded material

traceability

Book distribution management and theft prevention

Home appliances traceability verification test

Delivery truck management

Baggage management

Improving efficiency of DC operations

Combined inspection of components

Sales management (used cars)

Home appliances traceability verification test

Actual application

Verification test

Asset/inventory management

Status managementTraceability

Improving efficiency of DC

operations


guidelines: a mechanism to inspect consistency andpositioning among guidelines that will newly emerge.

How extensive and how difficult to respond to these104 issues can be easily grasped by the fact that just fivewell-known issues, i.e., computer viruses, spam mail,unauthorized access, protection of juveniles from unlaw-ful content and privacy issues relative to finance/settle-ment, are serious enough to ensure the safety andsecurity of the network. Furthermore, in addition tothese five issues, we have 99 additional difficult issues toovercome.

These problems have extremely diverse aspects: (1)those for which the government should take the initiativein establishing a framework and system such as thedevelopment of electronic governments and the issue ofthe digital divide (gaps in utilizing digital technology),(2) those for which voluntary activities chiefly by com-panies are important such as considerations to privacyand the environment, (3) those for which rules for newindustrial activities must be widely accepted such as forintellectual property rights and electronic commerce, (4)those that will be developed through the improvement ofusers’ awareness of their responsibilities such as infor-mation literacy and manners of use and (5) those thatrequire responses to malicious users such as security andelimination of illegal/harmful content.

Table 2 lists these problems from the user perspective,and classifies them into five levels depending on thedegree of severity. In a network society or a ubiquitousnetwork society where a major change in social systemstakes place, ignorance and indifference are significant“user problems.” To help eliminate mistakes, user educa-tion and training are necessary measures. The most criti-cal “user problems” for which a legal system must beestablished are those caused by unlawful users and/ormalicious users who intend to do harm.

Currently, studies are being actively pursued by theStudy Group on the Comprehensive Legal System forCommunications and Broadcasting organized by theMinistry of Internal Affairs and Communications, ofwhich the author is a member, with respect to responsesto illegal and/or harmful content that falls under Levels 4and 5, which has been brought about through the popu-larization of the Internet.

These studies are an extension of those made at theRoundtable for Studying Communications-Broadcasting

Convergence organized under the initiative of then Min-ister for Internal Affairs and Communications HeizoTakenaka in 2006. The purpose of these studies is tochange the current legal system that regulates communi-cations and broadcasting by vertical classifications intonine laws, i.e., the Radio Law (wireless), the WireTelecommunications Law (wired), the Telecommunica-tions Business Law, the Broadcast Law, the Cable SoundBroadcast Law, the Cable Television Broadcast Law, theLaw Concerning Broadcast on Telecommunications Ser-vices, the Wire Broadcast Telephone Law and the NTTCompany Law, to a system consisting of the followinglayers: transmission infrastructure, platforms and con-tent. These laws are then to be combined into a singlelaw provisionally named the “Information and Commu-nications Law.”

The Study Group issued an interim report in June andpublished its final report on December 6, 2007. Afterspecific studies are made under the extensive frameworkthat is being developed, efforts will be made to submit abill to an ordinary session of the Diet in 2010.

The basic purpose of these activities is to change thelegal system to a layered structure to respond to thestructural changes occurring in the information andcommunications industry, which is rapidly makingprogress in digitization and IP utilization. This willenable free and diversified business integration andlinkages that transcend the layer borders, while pro-moting fair competition and user protection. For thispurpose, studies are underway on regulating transmis-sion infrastructure as a business consisting of transmis-sion facilities and transmission services withoutdistinction between communications and broadcasting,providing a new framework called a platform andestablishing regulations to ensure the openness of suchplatform (Figure 6).

These activities eventually require studies on whatsort of legal system is required for content, which willconsequently contribute to the “establishment of a safeand secure ICT usage environment” that is the thirdaspect of the u-Japan Policy.

In the process of studying this Information and Com-munications Law (provisional name), the Study Grouphas introduced a plan to classify the content layer, whichis the third layer, into three categories: (1) media service,(2) open communications and (3) personal communica-



Table 1. Five Levels of User Problems Causing “Shadow Issues” in Network Society

Level 1 Ignorance While not intentional, this act consequently puts oneself at a disadvantage

Level 2 Indifference Regardless of whether intentional, nothing is done

Level 3 Mistake While the act is not intentional, the result is harmful

Level 4 Willful An intentionally harmful act is done

Level 5 Malicious An intentionally malicious act is done


tions. Media service is to be further divided into “specialmedia service” and “general media service.”

“Media service” corresponds to conventional “broad-casting” and “personal communications” corresponds toconventional “communications.” While it is evidently aform of communications, content on the Internet has notbeen properly positioned in the existing legal systembecause it was not regarded as so-called “communica-tions” that is strictly protected within a network based onthe principle of protecting the secrecy of communica-tions, and its openness was taken for granted. Efforts are

ongoing to appropriately position such content withinthe legal system (Figure 7).

The Study Group considers it appropriate to establishthe minimum necessary regulations for content of opencommunications from the perspective of ensuring boththe freedom of expression and public welfare. Specifi-cally, the government should establish a basic portion of“common rules” that must be observed by all peopleconcerned as the minimum requirements to preclude thedistribution of illegal and harmful content. This basicportion should serve as the legal bases for the co-regulation



Figure 6. Fundamental Restructuring of Legal Structure for Communications and Broadcasting

Present Legal structure Information and Communications Law (tentative)

Communications Broadcasting Fundamental Principles

Laws and orders concerning measures against illegal and harmful information

Cable T

elevision Broadcast Law

Law to R

egulate the Operation of the

Cable S

ound Broadcasting S

ervice

Broadcast Law

NTTLaw

Law ConcerningWire Broadcasting

TelephoneBusiness

Telecommunications Business Law

Wire Telecommunications Law (wired)

Radio Law (wireless)

[Unrestricted distribution of information][Ensuring universal services][Assuring the safety and reliability of information and communications networks]

Content

Platform

Transmission Infrastructure

Transmission Services

Transmission Facilities

• Reconfiguration of rules for content, with emphasis on the “special social impact”

• Integration of rules for communications and broadcasting transmission services

• Ensuring flexible use of radio waves by making the classification of services broader, etc.

• Study on rules to ensure openness, including the necessity of such rules

Integration and cooperation beyond the layer are unrestricted in principle.

• Study on the necessity of minimally required rules from the perspective of promoting fair competition, etc.

Law C

oncerning B

roadcast on T

elecomm

unication S

ervices

Source: The Ministry of Internal Affairs and Communications, “Interim Report of the Study Group on the Comprehensive Legal System for Communications and Broadcasting,” June 2007

Source: The Ministry of Internal Affairs and Communications, “Interim Report of the Study Group on the Comprehensive Legal System for Communications and Broadcasting,” June 2007

Figure 7. Future Legal System for Content

Flow of other content (communication between specific individuals, such as personal communications) → Protecting the secrecy of communications

Media Service

Broadcasting and content delivery service that is comparable with broadcasting

Open Communications

Communication content having openness such as websites

Special Media Service (provisional name)

• Basic service is content delivery by terrestrial TV broadcasting

• In principle, maintaining the current laws and regulations

General Media Service (provisional name)

• Services are further classified based on social functions/influence for which more relaxed regulations are being considered

• Regulations on content are to be limited to those that secure proper content; regulations for other aspects are to be relaxed

• Establishing “common rules” that must be observed by all concerned.

• Studying the appropriateness of applying “zoning regulations” to content considered harmful

• Criteria for classification: additional studies are to be made while extensively hearing opinions of those concerned; full consideration is to be given to securing the freedom of expression

Content flow within

the ICT network

Classified based on social

functions/influence


by the government and private sectors when Internetservice providers (ISPs) and industrial associations pre-pare response measures and policies such as setting stan-dards for deleting and rating individual communications.

The Study Group also proposed that the introductionof the so-called “zoning regulations” should be consid-ered. With reference to the techniques of the HarmfulBook Prevention Ordinance, etc., these regulate specificactions for only a certain range and certain usage meth-ods.

While there is no predicting what will actually happenas the result of these studies, the issues that can bedirected towards solutions through these proposals areonly part of the “responses to illegal and harmful con-tent” that correspond to about 10 percent of the 104issues explained above.

Originally, these studies are designed to address ashift to the digital/IP format, which can be described asthe eve of ubiquitous networking. Accordingly, it isapparent that responses that are one level above are nec-essary for the legal system to properly deal with ubiqui-tous networking.

Nevertheless, it is extremely significant that laws andregulations be established as social consensus for the fol-lowing principles: (1) establishing an independent cate-gory for open communications by distinguishing themfrom communications and broadcasting content, (2)applying certain minimum rules and regulations to thiscategory and (3) seeing that such rules and regulationsensure both freedom of expression and public welfare.

While these measures may directly address less than10 percent of the total of 104 issues, these measures areextremely important in that they can establish a basicstance for resolving nearly 100 percent of the issues.These long, far-reaching activities should not be post-poned or shelved due to political factors or industrialpride. In any case, it is certain that a framework forresolving the 104 issues to be brought about by ubiqui-tous networking is to be secured.

As described above, activities towards ubiquitous net-working that started eight years ago have become deeplyrooted in the basic portion of Japan’s ICT policy in eachaspect of the three pillars of the u-Japan Policy, whichprovides the momentum in steady progress as we movetowards the 2010s.

2 New Issues: Response to“Galapagosization” of the Japanese ICT Industry4

As a result of the progress in ubiquitous networking overthe past eight years, many companies in the JapaneseICT industry have furnished the world’s latest informa-tion and communication infrastructure.

The benefits that are enjoyed by ordinary users as aresult of such progress include the use of: a networkinfrastructure where nearly 10 million individual users

enjoy optical fiber connections at 100 megabits per sec-ond; a GPS (global positioning system) that would havebeen limited to industrial use or special-purpose activi-ties; mobile phones that are equipped with a myriad offunctions such as electronic money and fingerprintauthentication technology; digital home appliances cen-tered on flat-screen TVs, based on which digital videorecorders, digital video cameras and PCs are all con-nected to freely exchange high-definition images; anddigital high-definition TV broadcasting that has beensteadily gaining in popularity in preparation for the ces-sation of the analog format in 2011.

However, with the development of the ICT utilizationenvironment for the ubiquitous network in Japan, theindustry has been facing new issues. These issues relateto the international deployment of the ubiquitous net-work by the ICT industry as a whole.

When we turn our eyes away from the Japanese mar-ket and look at the world’s latest products and servicesthat were produced as fruits of ubiquitous networkingfrom the perspective of whether such products and ser-vices have international competitiveness that is appropri-ate for their state-of-the-art attributes in the globalmarket, we will see a completely different story.

Figure 8 shows the share of various electronics prod-ucts in the world market. The share of Japanese compa-nies is very high at around 50 to 70 percent for productsthat are not connected to networks such as car navigationsystems, digital cameras, DVD recorders and plasmaTVs. However, the share is low for products that areconnected to networks such as mobile phones, servers,PCs and routers/switches. For example, the share ofmobile phones is 15.4 percent, and that of servers anddesktop PCs is less than 10 percent.

This difference is more striking when we see the shareof individual companies. While the total sales of eightmajor Japanese mobile phone manufacturers in theworld market including Japan is about ¥2 trillion, thisfigure is far less than the ¥2.6 trillion earned by a singlecompany, Nokia. The figure is close to the respectivesales of Motorola and Samsung. Furthermore, the totalcombined sales volume of seven Japanese PC manufac-turers (¥3 trillion) is far less than the sales of Dell alone,or ¥4.7 trillion. Hewlett-Packard (HP), which rankedsecond, alone recorded ¥2.9 trillion (Figure 9).

Another similar example is digital high-definitiontelevision broadcasting (HDTV). HDTV, which has beengaining in popularity in Japan, has been providing spec-tacular high-quality images to Japanese consumers. Itsfuture is promising as the new television broadcastingtechnology whose coverage has been expanding steadilythroughout Japan. When we turn to the status of its inter-national deployment, however, we must recognize thatdelays have occurred in its penetration overseas in spiteof the fact that it is the latest technology in the world.

For terrestrial digital broadcasting systems, threesystems have been standardized by the International




Telecommunication Union (ITU). They are the ATSC(Advanced Television Systems Committee) system inthe US, the DVB-T (Digital Video Broadcasting-Terrestrial) system in Europe and the ISDB-T (Inte-grated Services Digital Broadcasting-Terrestrial) systemin Japan. The system that is enjoying the most extensivepopularity is DVB-T in Europe. DVB-T has been rapidlyadopted not only in each European country but also inAfrica, the Middle East, India, South East Asia andOceania. In 2006, China announced that it would adoptits own independent system called DMB-T/H (DigitalMultimedia Broadcast-Terrestrial/Handheld). As of now,the only country that has adopted the ISDB-T system,which is used in Japan, is Brazil (Figure 10).

From October 2006 to April 2007, the Roundtable forStrengthening International Competitiveness of ICTorganized under the auspices of the Minister for InternalAffairs and Communications was held. At this round-table, several dozen people consisting mostly of man-agement executives of the leading Japanese companiesin the ICT industry and experts vigorously discussed theneed to strengthen the international competitiveness ofJapan’s information and communications industry.

At this roundtable, the phenomenon dubbed the “Gala-pagosization phenomenon” (with a slight trace of maso-chism) was discussed. In this phenomenon, the world’slatest products and services that have been developed inthe Japanese market and have been tailored to the highlysophisticated preferences of Japanese consumers, suchas mobile phones, PCs and the digital high-definition



0

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5

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6

8

10

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Note: HP = Hewlett-PackardSource: The Ministry of Internal Affairs and Communications, “Final Report of the Roundtable for Strengthening International Competitiveness of ICT,” April 2007

Figure 9. Comparison of Sales with Major Overseas Manufacturers

(Unit: ¥Trillion)

Mobile phones PCs Computer solutions (other than PCs)

Total of Japanese makers

Nokia Motorola Samsung Total of Japanese makers

Dell HP Total of Japanese makers

IBM

10.0

6.42.9

4.7

3.01.81.82.6

2.0

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ATSC

ATSCDVB-TISDB-T

SBTVD-T(ISDB-T)

DVB-T

DMB-T/H

DVB-T

Source: The Ministry of Internal Affairs and Communications, “Report of the Roundtable for Strengthening International Competitiveness of ICT,” May 2007 (Original source: DVB Project)

Figure 10. Worldwide Use of Digital Broadcasting ISDB-T System

6

Note: ICT = information and communications technologySource: Compiled based on “2006 White Paper on Information and Communications,” the Ministry of Internal Affairs and Communications

Figure 8. Share of Japanese ICT Products in the World Market is in No Way High

: Japanese market : Total of overseas markets

Car navigation systems

Digital cameras

DVD recorders

Plasma TVs

Mobile phones

Servers

Desktop PCs

Routers/switches

27.672.4

70.4 29.6

37.462.6

46.8 53.2

84.615.4

7.8 92.2

95.84.2

2.597.5


television broadcasting system, have not gained in popu-larity in the world market. Mobile phones and PCs arerepresentative examples.

In another committee organized by the Ministry ofEconomy, Trade and Industry to discuss globalization ofcontent in which the author also participated, opinionswere expressed that, in a sense, excessive adaptation tothe Japanese market that is somewhat large is also aproblem and that this phenomenon should be dubbed the“Madagascarization phenomenon,” rather than using thesmall Galapagos Islands as the referent.

In either case, the phenomenon has been seen inwhich corporate moves aiming to achieve the world’slatest technology for the Japanese market do not neces-sarily strengthen international competitiveness. How tolink these moves to strong international competitivenessis no doubt an extremely essential issue in consideringthe future of Japanese industry.

II Changing World Market and Conversion of Growth Mechanism

1 Changing World Market: Rise ofMegaGrowth Countries

(1) Japan’s ICT industry has shifted its focus to thedomestic market

During the 1980s, for Japan’s electronics industry,launching new products in the domestic market meantlaunching the same products in the world market almostsimultaneously.

Intense competition in which many companies haveaggressively engaged in the domestic market has simi-larly taken place in the European and US markets, whichwas internationally criticized as being faced with “tor-rent-like exports.” Individual companies have alwayshad the incentive for expanding market size in order togenerate profits by keeping the learning curve descend-ing (the more products are manufactured, the more pro-duction cost declines). In these business operations, it isfair to assume that there was totally no leeway for allow-ing corporate activities to center on the domestic market.

However, when we faced a restructuring boom as aresult of the bursting of the bubble in Japan during the1990s, the international activities of many Japanesecompanies were subjected to restructuring. The effect oncompanies that decided to take the approach of continu-ing international business operations without restructur-ing such activities and those that decided to selectinternational operations as their target for restructuringhas now become apparent. Many companies in Japan’sICT industry chose the latter option.

All of the new product groups that emerged with theprogress in ubiquitous networking are directly connected

to the network environment of each country, and mustface the fact that enormous costs are required to over-come differences in standards and systems. This factorcannot be ignored behind corporate actions that shiftedthe focus to the domestic market where such costs arenegligible.

In any case, a Galapagosized industry that focuses onthe domestic market can no longer find sanctuary in adomestic market that is experiencing a shrinking ten-dency due to a declining birth rate and improved longevity.Furthermore, intense competition in the domestic markethas been shortening the life cycles of products anddirecting the products towards early maturation. In orderto find some way out of this situation, it is undoubtedlynecessary for Japanese companies to look at overseasmarkets that have sizes many times greater than theJapanese market.

(2) Economic growth achieved by countries havinglarge populations

When companies enter the world market, however, theymust pay attention to the fact that the competitive envi-ronment surrounding Japan in the world market has seenmajor changes at the end of the 20th century.

First, Korean companies that survived the IMF (Inter-national Monetary Fund) crisis in 1997 have rapidlycome to the fore in the world market with their agiledecision-making abilities and capabilities for executingbold strategies. China, which joined the WTO (WorldTrade Organization) and has been equipped with incom-parable price competitiveness and business promotionability that cannot be ignored, has made its appearance inthe world market as an important player. In service fieldsincluding information technology service, India has beenabout to demonstrate overwhelmingly strong competi-tiveness by using the global network infrastructure.

The progress of these countries, especially China andIndia, has shown factors that are different from the con-ventional wisdom in world economy.

Over the period from the end of the 1980s into the1990s, after Japan had achieved high economic growth,countries that have the potential of achieving similargrowth have emerged. They are the so-called NIEs(newly industrializing economies) such as Singapore,Korea, Taiwan and Hong Kong.

The common characteristic among these countries thatwere expected to achieve high growth was that they havea high degree of mobility with small populations. Thesecountries have mostly achieved the anticipated growth andproduced companies that have been actively participatingin the world market. Nevertheless, these countries havenot come to have a vital impact on world economy partlybecause of their small populations. If we were to select acountry that has had such an impact, it would be Korea,which has a relatively large population among the NIEs orabout 48 million people. While global companies such asSamsung and Hyundai in Korea have come to exert major




influence as individual companies, this does not mean thatthe Korean economy of the entire nation has been playingan important role in the world market.

In any case, the new phenomenon of the world econ-omy that emerged at the end of the 20th century is thatcountries that have overwhelmingly large populations onthe scale of a billion people and vast land areas havestarted to achieve high economic growth of around 10percent.

Brazil and Russia, which are part of the BRICs thathave recently been attracting extensive attention, alsohave large populations of 190 million and 140 million,respectively. Furthermore, China’s GDP (gross domesticproduct) has already reached half that of Japan. The totalGDP of BRICs has already exceeded that of Japan.When these countries with large populations start toachieve substantial economic growth, the impact theywill have on world economy will be widely differentfrom that of NIEs.

The fact that China and India have started to achievegrowth rates of around 10 percent suggests that condi-tions are being set even for countries other than thosewith small populations to be able to achieve high eco-nomic growth.

(3) Rise of “MegaGrowth Countries”Advanced knowledge and information always serve asimportant engines for economic growth. Until the mid-dle of the 1990s, economic growth by NIEs was chieflyachieved by city-state countries with small populations,such as Singapore and Hong Kong where such advancedknowledge and information tend to be easily dissemi-nated throughout the country. As we entered the 21stcentury, however, countries with large populations suchas India and China began to achieve high growth. Whatis the major factor that distinguishes the period beforethe middle of the 1990s from the period thereafter?

The factor is the development of digital informationnetworks and popularity of the Internet. With the devel-opment of digital information networks, advanced knowl-edge and information that are important engines for highgrowth began to be able to be instantly and easily spreadthroughout the country and shared by many people. It isassumed that because of this factor, a country’s largepopulation and vast land area no longer hinders growth.

Of course, behind the economic growth of these coun-tries, there might have been changes in the capital aspectthat were brought about by a policy to actively invite for-eign capital and vitalized activities of global companiesand funds in response to such a policy. In addition, a fac-tor in the labor aspect could also have contributed tosuch growth. Personnel in developing countries havealso participated in global education and training systemprojects developed by the governments of developingand developed countries. An increasing number of theseindividuals have contributed to economic growth afterreturning to their home countries. Nevertheless, the

author considers that the most important factor effectiveto TFP (total factor productivity) is the extensive sharingof advanced knowledge and information as enabled bythe development of digital information networks.

A hypothesis derived from these considerations is therise of “MegaGrowth countries.”

MegaGrowth (abbreviated expression of Mega-population and high Growth) countries are striving toachieve a high rate of economic growth even thoughthey have a large population of around 40 million ormore. It can easily be imagined that MegaGrowth coun-tries that are expected to appear on the main stage ofworld economy with progress in the spread of digitalinformation networks will have an extremely largeimpact on the size and structure of the future world mar-ket because they have large populations. Such an impactwill be especially significant for products where one per-son purchases several units, if affordable, such as mobilephones and PCs.

With the current digital information networks furtherdeveloping into the ubiquitous network, advancedknowledge and information will be communicated moreeasily and intensely, which will accelerate the growthprocess. In this sense, the growth of MegaGrowth coun-tries is not unrelated to the ubiquitous network. Rather,the growth of these countries will promote ubiquitousnetworking, which is most effective for spreading theadvanced knowledge and information that constitute thelifeline of such growth.

(4) Market size of MegaGrowth countriesIn the 21st century, changes in the world economy willcenter on the growth (or slump) of the MegaGrowthcountries. By focusing on such changes in the Mega-Growth countries, the author has attempted to makesome “virtual calculations” to consider long-term struc-tural changes in the future world market. Let me reiter-ate that these are “virtual calculations” to facilitate anunderstanding of the nature and magnitude of the prob-lems, and these calculations do not fall under the cate-gory of estimates or projections.

In order to make these calculations, the top 30 coun-tries in terms of population in 2005 were selected. Table2 lists these countries with China at the top with thelargest population and Argentina at 30th with a popula-tion of about 39 million. If advanced countries areexcluded from this list, 23 countries remain. When wesee the economic growth rate of these countries withlarge populations, the rate exceeds the world average of3.5 percent with some exceptions. In this situation, wecannot justify the conventional thinking that countrieswith large populations cannot achieve high economicgrowth.

Of these countries, three countries with a per-capitaGDP of less than $600 and a GDP of less than $30 bil-lion, which are expected to have no major impact nomatter how high their growth, are excluded. They are




Ethiopia, Congo and Myanmar. Incidentally, these threecountries have also been achieving a growth rate of 5percent or more, which exceeds the world average. Theremaining 20 countries are considered MegaGrowthcountries (MegaGrowth 20).

By adding Japan, the US and European countries tothese MegaGrowth countries, they are classified intofour categories, namely, “Japan, US and Europe,” “fourBRICs countries: Brazil, Russia, India, China,” “11countries neighboring BRICs: Indonesia, Pakistan,Bangladesh, Mexico, Vietnam, the Philippines, Thai-land, Korea, Ukraine, Columbia and Argentina” and“five new middle-tier countries: Nigeria, Egypt, Turkey,Iran and South Africa.”

(5) Trend growth caseTable 3 indicates the results of virtual GDP calculationsevery ten years on the assumption that the GDPs ofJapan, the US and Europe and the MegaGrowth coun-tries will grow at the same rate from 2005 to 2035 as in2005.

For 2035, the per-capita GDP was also calculated byusing the population projections published by theUnited Nations. In order to examine the effects of digi-tal information networks, it would be meaningless totrace the trends too many years in the past. Accord-ingly, the real GDP growth rate in 2005 was adopted asthe figure that shows the current strength of the Mega-Growth countries.



Notes: (1) These 30 countries are those ranked within the top 30 in the world in terms of population in 2005; the underlined countries are MegaGrowth countries. (2) As of 2005, the EU consisted of 25 member countries. The real growth rate, however, is the EMU (Economic and Monetary Union) value. (3) Figures for GDP and GDP real growth rate are based on data from the World Bank. However, the GDP for Myanmar is the IMF estimate (base year = 2003), which is converted into dollars. (4) Figures for GDP real growth rate are based on data from the World Bank. However, the figure for the EU is the EMU value.Source: Compiled based on statistics published by the World Bank, the United Nations and IMF (International Monetary Fund).

Table 2. MegaGrowth Countries (MegaGrowth 20)

Country Population GDP GDP Real Per-capitaGrowth Rate GDP

(Region) (1,000 people) ($ Billion) (%) ($)

Year 2005 2005 2005 2005

World Total 6,464,750 44,645 3.50 6,906

1 China 1,323,345 2,234 10.20 1,688

2 India 1,103,371 806 9.20 730

3 US 298,213 12,417 3.20 41,636

4 Indonesia 222,781 287 5.60 1,289

5 Brazil 186,405 796 2.30 4,271

6 Pakistan 157,935 111 7.80 701

7 Russia 143,202 764 6.40 5,333

8 Bangladesh 141,822 60 6.00 423

9 Nigeria 131,530 99 6.90 752

10 Japan 128,085 4,534 2.60 35,398

11 Mexico 107,029 768 3.00 7,180

12 Vietnam 84,238 52 8.40 622

13 Philippines 83,054 99 5.00 1,192

14 Germany 82,689 2,795 1.00 33,800

15 Ethiopia 77,431 11 8.70 144

16 Egypt 74,033 89 4.90 1,207

17 Turkey 73,193 363 7.40 4,953

18 Iran 69,515 190 4.40 2,730

19 Thailand 64,233 177 4.50 2,750

20 France 60,496 2,127 1.20 35,153

21 UK 59,668 2,199 1.80 36,850

22 Italy 58,093 1,763 0.00 30,340

23 Congo 57,549 7 6.50 123

24 Myanmar 50,519 27 5.00 532

25 Korea 47,817 788 4.00 16,472

26 South Africa 47,432 240 4.90 5,050

27 Ukraine 46,481 83 2.60 1,783

28 Columbia 45,600 122 5.10 2,682

29 Spain 43,064 1,125 3.40 26,116

30 Argentina 38,747 183 9.20 4,728

Reference The EU2 459,387 13,458 1.30 29,296


Compared to the growth rate in the past five years,the growth rate of 2005 for Brazil and Russia is slightlylower, and that for India and China is slightly higher.Nevertheless, the order of growth rates of the countriesremains almost the same. In consideration of the char-acteristics of information networks that bring aboutaccumulated effects, the growth rate for 2005 that isnot very far back was intentionally adopted.

1) China ranks 1st and India ranks 4thWhile the calculations were quite simple, the resultsobtained are quite interesting. Figure 11 shows the

changes in the GDPs of Japan, the US and Europe andBRICs under this trend growth case every ten yearsuntil 2035. The most noteworthy is the rapid growth ofChina, the champion of the MegaGrowth countries.While China’s economic scale is already currentlygreater than that of most EU countries, China will sur-pass Germany and, by 2015, will outstrip Japan. Atsome point between 2025 to 2035, China will exceedthe EU, and then, eventually outpace the US. As aresult, according to these virtual calculations, Chinawill become the world’s largest economic power by2035.



Notes: (1) As of 2005, the EU consisted of 25 countries. (2) Figures for 2010 and after were calculated on the assumption that the real growth rate of 2005 continues every year. (3) Figures for the GDP and GDO real growth rate are based on World Bank information. However, the EMU growth rate is used for the EU. (4) Population projections for 2035 are based on the 2005 projections by the United Nations.Source: Compiled based on statistics published by the World Bank and the United Nations.

Country/Region GDP ($ Billion)

Per-capita GDP ($)

Year 2005 2015e 2025e 2035e 2035e

US 12,417 17,014 23,313 31,944 86,170

EU1 13,458 15,314 17,425 19,827 42,945

Europe and US 25,875 32,327 40,738 51,772 62,195

Japan 4,534 5,861 7,576 9,793 81,510

Japan/US/Europe 30,409 38,188 48,313 61,564 64,631

Germany 2,795 3,087 3,410 3,767 46,575

France 2,127 2,396 2,700 3,042 47,637

UK 2,199 2,628 3,142 3,755 57,355

Italy 1,763 1,763 1,763 1,763 32,350

Spain 1,125 1,571 2,195 3,066 70,016

China 2,234 5,901 15,587 41,171 28,348

India 806 1,943 4,684 11,294 7,558

Russia 764 1,420 2,641 4,911 40,362

Brazil 796 999 1,254 1,575 6,515

BRICs (4) 4,600 10,264 24,167 58,951 17,810

Ukraine 83 107 138 179 5,456

Pakistan 111 235 497 1,054 4,013

Bangladesh 60 108 193 345 1,591

Korea 788 1,166 1,726 2,555 52,726

Philippines 99 161 263 428 3,621

Vietnam 52 117 263 589 5,294

Indonesia 287 495 854 1,473 5,320

Thailand 177 274 426 662 8,867

Mexico 768 1,033 1,388 1,865 13,697

Columbia 122 201 331 544 8,752

Argentina 183 442 1,065 2,568 52,701

BRICs neighboring 2,730 4,339 7,144 12,261 8,830countries (11)

Iran 190 292 449 691 7,255

Turkey 363 740 1,511 3,086 31,958

Egypt 89 144 233 375 3,331

Nigeria 99 193 376 732 3,353

South Africa 240 386 624 1,006 20,775

New middle-tier countries (5) 980 1,756 3,193 5,891 10,311

MegaGrowth countries (20) 8,310 16,358 34,503 77,103 14,631

(Unit: $, 2005)

Table 3. Virtual Calculations of Economic Growth of Japan/US/Europe and MegaGrowth Countries (Trend Growth Case)


Although India has a large population, the economicscale is small with its per-capita GDP amounting to$730. Therefore, even if the country would achieve rapidgrowth for around the next ten years, India will not beable to show a major presence. Nevertheless, for the tenyears from 2015 to 2025, India will outstrip most Euro-pean countries at a single spurt and, by 2035, the countrywill ultimately exceed Japan.

Consequently, Japan will be ranked fourth in terms ofeconomic scale next to China, the US and India on anindividual country basis. If the EU is regarded as a sin-gle block, Japan’s rank will drop to fifth. Compared tothe current status of the world’s second largest economic

power, the international positioning of Japan will declinesubstantially.

If the current growth rate continues, European coun-tries including Germany will even be surpassed by Rus-sia by 2035, not to speak of China and India.

2) Economic growth of BRICs neighboring countriesFigure 12 examines the economic size that could emergeas a result of the economic growth of the 11 countries thatneighbor BRICs. In 2015, ten years after 2005, Korea andMexico will each have an economic size equivalent to thecurrent size of Spain. In 2035, Argentina, Indonesia andPakistan will also have economic sizes equivalent to or



2005 2015 2025 2035

45

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25

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Note: The above calculations were made on the assumption that the growth rate in 2005 continues every year. As of 2005, the EU consisted of 25 countries; the EMU value is used for the growth rate.Source: Compiled based on material published by the World Bank and the United Nations.

($ Trillion)

(Year)

China

US

EU

India

Japan

RussiaGermanyFranceBrazil

Figure 11. Changes in Economic Scale in Japan, US and Europe and BRICs (Trend Growth Case)

2005 2015 2025 2035

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Ukraine

Notes: The above indicates the size of the GDP. For the 11 BRICs neighboring countries, it is assumed that the average growth rate of the target countries in 2005 continues every year. For Germany, France, Italy and Spain, the base year for the GDP is 2005.Source: Compiled based on material published by the World Bank and the United Nations.

Figure 12. Economic Growth of 11 BRICs Neighboring Countries and Economic Scale of EU Countries in 2005 (Trend Growth Case)


exceeding the current size of Spain. Among these coun-tries, Korea and Argentina will each have a size equivalentto the current size of Germany.

3) Partial reversal seen in terms of the income level ofJapan/US/Europe and MegaGrowth countries

Because economic size alone cannot express the afflu-ence of individuals, each country was plotted on thechart with the horizontal axis representing populationand the vertical axis representing per-capita GDP. Undersuch parameters, Figure 13 compares 2005 with 2035.The chart for 2005 reveals that, except for Korea, thegroup of Japan, the US and Europe and the group ofMegaGrowth countries belong to totally different cate-gories. In 2035, these two categories are mixed, and par-tial reversion is seen in per-capita GDPs.

4) China not attaining the income level ofJapan/US/Europe

Another important point is that even though China willhave the largest economic size in 2035, its per-capitaGDP is expected to be $28,348, which is far less than

that of the US and Europe. The US, which is currentlythe world’s largest economic power, also has theworld’s most prominent income level even though it isnot the world’s highest. However, the world’s greatesteconomic power in 2035 under the trend growth casewill not be a country with a high-income level, but willalmost certainly be a country with a middle-incomelevel. If companies pursue economic size, they mustfocus on the segment of consumers having medium-sized affluence, rather than on the most highly affluentconsumers.

5) MegaGrowth economy becoming enormousAs a result of these changes, in 2035, BRICs will consti-tute a large economic bloc that is greater than the US orEU, not to speak of Japan. MegaGrowth countries as awhole will become greater than the current economicbloc comprised of advanced countries (Japan, the USand Europe). The same can be said of the economic blocconsisting of BRICs and the 11 countries neighboringBRICs. Accordingly, if economic size alone is taken intoaccount, economic activities targeting BRICs and BRICs



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Note: Calculations were made on the assumption that the growth rate in 2005 continues every year. As of 2005, the EU consisted of 25 countries. However, the EMU value was used for the growth rate.Source: Compiled based on material published by the World Bank and the United Nations.

Note: As of 2005, the EU consisted of 25 countries.Source: Compiled based on material published by the World Bank and the United Nations.

Per-capitaGDP($10,000)


Population (100 million people)


: Europe

: BRICs

: BRICs neighboring countries

: New middle-tier countries

: Europe

: BRICs



US

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FranceUK

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2035 (Trend Growth Case)

2005

Figure 13. Per-Capita GDP in 2005 and in 2035 (Trend Growth Case)


neighboring countries will become greater than thosetargeting the markets of today’s advanced countries.

(6) Contracted Equilibrium CaseWhile such trend growth case brings about tremendousunimaginable changes in world economy, can suchchanges actually occur?

Currently, partly influenced by An Inconvenient Truthby Al Gore, strong interest in the global environment isgrowing, in particular, the issue of global warming, notonly among advanced nations but also throughout the

world. The global environmental issues that were invisi-ble in the past are now becoming increasingly visiblesuch as frequently occurring abnormal weather, the retreatof glaciers and accelerated desertification. The fact thatit is difficult for all nations including MegaGrowth coun-tries to continue their current levels of consumption ofresources and energy constitutes international commonsense.

In the future, heated discussions will take place aboutthe issue of global warming between advanced countriesand developing countries, especially MegaGrowth countries.



Notes: (1) As of 2005, the EU2 consisted of 25 countries. (2) Figures for 2010 and after were calculated on the assumption that the growth rate of 2005 continues for the first decade, then is reduced to half for the next decade and is further reduced to one-fourth for the third decade. (3) Figures for GDP and GDP real growth rate are based on statistics published by the World Bank. However, the EMU growth rate is used for the EU. (4) Population projections for 2035 are based on the 2005 projections of the United Nations.Source: Compiled based on statistics published by the World Bank and the United Nations.

Country/Region GDP ($ Billion)Per-capita

GDP ($)

Year 2005 2015e 2025e 2035e 2035e

US 12,417 17,014 19,940 21,594 58,251

EU1 13,458 15,314 16,339 16,877 36,555

Europe and US 25,875 32,327 36,279 38,472 46,218

Japan 4,534 5,861 6,669 7,115 59,224

Japan/US/Europe 30,409 38,188 42,948 45,587 47,858

Germany 2,795 3,087 3,245 3,327 41,136

France 2,127 2,396 2,544 2,621 41,051

UK 2,199 2,628 2,875 3,007 45,922

Italy 1,763 1,763 1,763 1,763 32,350

Spain 1,125 1,571 1,860 2,024 46,212

China 2,234 5,901 9,705 12,484 8,596

India 806 1,943 3,046 3,824 2,559

Russia 764 1,420 1,946 2,281 18,744

Brazil 796 999 1,120 1,186 4,908

BRICs (4) 4,600 10,264 15,817 19,775 5,974

Ukraine 83 107 122 130 3,965

Pakistan 111 235 344 417 1,589

Bangladesh 60 108 144 168 774

Korea 788 1,166 1,421 1,570 32,402

Philippines 99 161 206 234 1,978

Vietnam 52 117 177 218 1,959

Indonesia 287 495 653 750 2,710

Thailand 177 274 343 383 5,136

Mexico 768 1,033 1,199 1,291 9,484

Columbia 122 201 259 294 4,726

Argentina 183 442 693 869 17,842

BRICs neighboring 2,730 4,339 5,561 6,325 4,555countries (11)

Iran 190 292 363 405 4,252

Turkey 363 740 1,064 1,279 13,240

Egypt 89 144 184 207 1,841

Nigeria 99 193 271 321 1,470

South Africa 240 386 492 556 11,482

New middle-tier countries (5) 980 1,756 2,374 2,768 4,845

MegaGrowth countries (20) 8,310 16,358 23,752 28,868 5,478

(Unit: $, 2005)

Table 4. Virtual Calculations of Economic Growth of Japan/US/Europe and MegaGrowth Countries (Contracted Equilibrium Case)


In any event, we can hardly believe that the current paceof resource and energy consumption can be permitted tocontinue.

Furthermore, most MegaGrowth countries are plaguedwith many problems such as securing water resources,domestic political issues, ethnic conflicts, income gapsand regional gaps and even the issues of a declining birthrate and improved longevity. It is extremely unreason-able to assume that the current relatively high economicgrowth rate can continue for another 30 years.

Accordingly, with reference to the pattern of post-wareconomic growth achieved in Japan, Table 4 shows simi-lar virtual calculations up to 2035 on the assumption thatthe current growth rate continues for the first decade,then is reduced to half for the next decade and furtherreduced to one-fourth for the third decade.

1) China surpassing JapanThis contracted equilibrium case also reveals interestingresults. When we see the growth of the individual coun-tries of Japan, the US and Europe and BRICs, the phe-nomenon that China surpasses the US and the EU willnot occur as many may expect. However, China doesoutstrip Japan in 2015 (Figure 14). In either the trendgrowth case or the contracted equilibrium case, Chinasurpasses Japan in terms of economic scale. Even ifstricter assumptions are applied, there is almost no doubtthat China will outstrip Japan some time in the futureunless there is some extraordinary reason.

Similar to American people 40 years ago who sawthe chart5 created by Herman Kahn suggesting that“Japan will surpass the US in the future in terms ofper-capita GNP (Gross National Product),” currently,most Japanese people will be unable to accept the real-ity of such a future even though they can understand ittheoretically.

If reversal actually occurs, this will have an extremelyextensive socioeconomic and political effect. Such effectwill begin to be felt when reversal becomes almost cer-tain. If we are to take any actions to minimize suchimpact or to conversely generate new opportunities, wedon’t have much time left.

For European countries, the result that all countriesincluding Germany will be surpassed by India under thiscontracted equilibrium case as well as under the trendgrowth case may have a greater effect. In particular, thiswill have a major political and social effect in the UK,which is a state that formerly asserted and maintainedsupremacy over other states.

2) Shrinking income gaps between Japan/US/Europeand MegaGrowth countries

Figure 15 shows the per-capita GDP in 2035 under thecontracted equilibrium case. The comparison betweenthis graph and the upper chart in Figure 13 for 2005reveals substantially narrowed gaps betweenJapan/US/Europe and MegaGrowth countries.

3) Expanding MegaGrowth economyUnder the contracted equilibrium case as well, the eco-nomic size of BRICs (four countries) will becomegreater than that of the 27 EU countries (this calculationwas made for 25 countries), and will be equivalent tothat of the US. This means that around 2035, marketingin the US market will have the same meaning as market-ing in the BRICs market. Naturally, the market of theMegaGrowth countries will become greater than that ofJapan, the EU or the US.

Under both cases, the results of these virtual calcula-tions reveal that in the future companies must establish astrategy by not only assuming the US and Europeanmarkets but also regarding those of the MegaGrowth



2005 2015 2025 2035

25

0

10

5

15

20

($ Trillion)

(Year)

US

EU

China

Japan

IndiaGermanyUKFranceRussiaItalyBrazil

Note: The above figures are the GDP of each country. Calculations were made on the assumption that the growth rate of 2005 continues for the first decade, then is reduced to half for the second decade and is further reduced to one-fourth for the third decade. As of 2005, the EU consisted of 25 countries. For the EU growth rate, the EMU values are used.Source: Compiled based on material published by the World Bank and the United Nations.

Figure 14. Changes in Economic Scale of Japan, US, Europe and BRICs (Contracted Equilibrium Case)


countries as important targets, and that otherwise theywill lose a major part of the world market.

2 Shift from “Flying Geese Type” Growth to“Simultaneous and Multiple EmergenceType” Growth

Such a rise of the MegaGrowth countries will com-pletely change the image of “Japan that started as adeveloping country, caught up with developed countries,and is now the only country that can equally compete inthe US and European markets.”

Until the 1980s, Japan was the only country that couldcompete on an equal footing in the world market withthe US and Europe by being ranked among the top eco-nomic powers. The term NIEs, meaning “newly industri-alizing economies,” was first officially used at theToronto Summit in 1988. From the end of the 1980s intothe 1990s, NIEs countries such as Korea and Singaporehave appeared as new challenger candidates.

Even with the emergence of these countries, the con-cept of the basic pattern of growth of the world economywas the “flying geese” format with Japan taking thelead, followed by NIEs, which were followed by theASEAN countries. Behind the ASEAN countries, therewere countries with large populations such as China andIndia. These countries were regarded as remaining in anorderly manner just as a flock of geese soaring in thesky.

However, in future world economy, the country thatwill aim to equally compete in the advanced marketswill not only be Japan. Even with slight time differences,Korea, China and India almost simultaneously began tofiercely compete to catch up with more advanced coun-tries. No matter what has been pursued, Japan will soonbecome sandwiched between the US and Europe, whichare still taking the lead, and Korea, China and India. Ifwe take a more extensive view of the world market,Japan may be confronted by BRICs (Brazil, Russia,

China and India) and further by BRICs neighboringcountries.

When we consider a rise of the MegaGrowth coun-tries, we can easily imagine that among these countries,countries/companies that have world-class competitive-ness in diverse fields may emerge. These include coun-tries with outstanding human resources in science andtechnology, countries with those who excel in design,countries blessed with natural resources and countriesenjoying sufficient human resources. From these, coun-tries/companies that will play important roles in theworld market as backed by the expanding domestic mar-ket ought to emerge. The best practices for growth asdemonstrated by such countries/companies will instantlyspread throughout the world via digital information net-works.

In the future, growth will not be achieved in anorderly manner by mimicking the pattern of flyinggeese. Rather, growth will be achieved simultaneously atmultiple locations by taking on diversified shapes androutes. These changes will be accelerated by globalcompanies, global funds, highly global education/train-ing systems and so on.

In a world where advanced knowledge and informa-tion can be instantly shared, activities to challenge onepromising business opportunity will be undertaken allover the world. It cannot be denied that among theseactivities, an unforeseen country might achieve unex-pected success by combining surprising managementresources. Digital information networks will make itmuch easier to discover and procure managementresources necessary for such success than in the past.Ubiquitous networking will further improve the qualityof the entire processes and accelerate these activities.

Japan, together with European countries and someAsian countries, will be exposed to severe situations suchas facing a declining birth rate and improved longevity,which will gradually diminish any hopes for long-termeconomic growth. However, sustainable economic



0 105 15 20

7

6

5

3

0

2

1

4

Note: Calculations were made on the assumption that the growth rate of 2005 continues for the first decade, then is reduced to half for the second decade and is further reduced to one-fourth for the third decade. As of 2005, the EU consisted of 25 countries. For the growth rate of the EU, the EMU values are used.Source: Compiled based on material published by the World Bank and the United Nations.



US

JapanSpain

UKFrance

GermanyKorea

Italy EU

Russia

BrazilIndia

China

: Europe

: BRICs



Figure 15. Per-Capita GDP in 2035 (Contracted Equilibrium Case)


growth can be expected of BRICs, which account formore than 40 percent of the world’s population. Asexplained previously, the growth potential of BRICsneighboring countries such as Vietnam, Indonesia, Pak-istan and Argentina is also high. Behind them, there arenew middle-tier countries.

What is important for Japanese companies is that, inthe future, high levels of growth will be attained simul-taneously in multiple locations for substantially longtimes by MegaGrowth countries that are outside theJapanese market. A strategy designed to catch up withonly the US and Europe will not be sufficient to dealwith major changes occurring in the future in the worldmarket, specifically a rise of the MegaGrowth countries.If Japanese companies are to find consolation in Mada-gascarization, it is quite doubtful that they can attaingrowth. Rather, in addition to global companies andfunds of existing advanced countries, BRICs and BRICsneighboring countries that will become highly competi-tive by simultaneously attaining growth in multiplelocations will quickly sweep over the entire world mar-ket.

III International Competitiveness and “International Symbiosis”

1 Concept of “International Symbiosis”

Under these circumstances, what is necessary for Japa-nese companies to do is to foster “international symbio-sis.”6

In attempting to catch up with competitors, Japanesecompanies have been solely devoted to improving tech-nological level and quality as well as price competitive-ness to successfully compete in the domestic market andto develop the world’s most advanced products and ser-vices. As a result, however, with respect to products thatare developed by making full use of Japanese manage-ment resources and by targeting the Japanese market, themore advanced and sophisticated such products are, themore such products are Galapagosized at the initialstage, resulting in a situation where they are not widelyaccepted in other markets.

Accordingly, such efforts are as indispensable as arethose to quickly develop a brand based on advancedtechnology and to facilitate prompt acceptance of such abrand in markets having similar characteristics. How-ever, attention must be paid to the fact that even if prod-ucts are accepted in high-end markets such as the USand EU, these products might not be able to meet theneeds of MegaGrowth countries, which are to becomethe growth center of future world economy. This meansthat the most advanced products cannot necessarilybecome the most profitable products or products achiev-

ing the largest sales figures in the future world market(Figure 16).

One of the characteristics of the future world marketwhere many countries will grow simultaneously will beunprecedented diversity. In the past, countries with smallper-capita GDPs were, with very few exceptions, thosewith small GDPs. As described in Chapter II, however,countries will emerge that have small per-capita GDPsbut will outstrip most European countries in terms ofGDP. Far into the future, China and India will surpassJapan in terms of GDP, and might even surpass the US.Countries that have large-sized markets and attain highgrowth will not necessarily be limited to countries withhigh per-capita GDPs.

Mass products that will be accepted in the growth cen-ters of the future will probably be those equipped withrobust basic functions, rather than with the latest tech-nology/design or sophistication, and those offering rea-sonable quality that can justify prices, rather than highquality. Before anything else, these products must offerprice competitiveness that can compete with China andTaiwan.

The ability required for international activities in thesemarkets is not necessarily the ability to produce state-of-the-art products but is the ability to provide products andservices that can be adapted to specific markets by meet-ing diversified development stages, diverse degrees ofsophistication of consumers and differences in culturalbackgrounds. To increase sales, companies must be ableto target not only high-end markets, but also middle-tierand low-end markets at least for a single product cate-gory. The ability to meet a wide variety of needs in theworld market will become vitally important.

In other words, in addition to the ability to developand supply products that can meet high-end markets,success or failure in competition will be determined bythe ability to develop product groups that are tailored tomiddle-tier and low-end markets. This can only beaccomplished by making maximum use of intellectualassets such as design, brand, intellectual goods and prod-uct concept that can meet high-end markets, and by



Figure 16. Galapagosization and MegaGrowth Countries

Factors giving rise to Galapagosization

• Progress in broadband services, ubiquitous networking• Isolation in terms of international standards• Strong focus on the domestic market• Moderately large domestic market• Sophisticated and discriminating consumers• Industrial structure with initiative taken by communications carriers• Delays in creating modules and platforms for devices and services

High end

Japan European countries MegaGrowth countries

Middle tier

Low end


modifying them to suit the middle-tier and low-end mar-ket according to a variety of needs such as quality, mate-rial or function. This ability is called “internationalsymbiosis” (Figure 17).

International symbiosis is important not only for salesbut also for profits. At least from the perspective of pol-icy, the improvement of international competitiveness ofJapanese companies in the past meant solely improvingthe following abilities of Japanese companies to those ofthe world’s most advanced. The abilities included tech-nological development, product development, design,marketing, ability to develop an efficient supply chainand mobilize various production process skills andexpertise. The era is long past in which the only wayJapan could challenge the US and European markets in asituation where it had few countries to rely on was toenhance the quality of its own management resources.

In addition to China and Vietnam, which are unrivaledin terms of manufacturing products at low cost, Russia,which has high research and development abilities, andIndia, which is excellent in software development, otherBRICs countries and BRICs neighboring countries willemerge as reliable partners offering incomparablyrenowned ability.

The ability to realize remarkably high productivity bycombining these superior, yet competitive costs of man-agement resources scattered all over the world and bycomprehensively linking such resources without anybreaks in practical terms is international symbiosis onthe supply side.

This optimal combination of management resourceswill constantly change in a world where growth isachieved simultaneously in many places. Companiesmust keep their eyes wide open to such changes occur-ring throughout the world and implement simulations fora portfolio of management resources. Personal relation-

ships must be established on a daily basis at the level ofmanagement executives and at the working level withcompanies having superior management resources.Based on these activities, management resources to becombined must be changed to better ones at appropriatetiming, which will constitute a source of profits.

To this end, the more advanced products and/or ser-vices are, the more quickly they must be separated intomodules and/or platforms. It becomes important toestablish a mechanism in which such products/servicesare manufactured at the lowest possible cost and are soldextensively at reasonable prices by utilizing diversemanagement resources available all over the world. Theability to make full use of such dynamism of diversemanagement resources is international symbiosis on thesupply side.

2 Improvement of InternationalCompetitiveness and “InternationalSymbiosis”

In the past, the theory of international management andthe theory of multinational corporations have alsopointed out the importance of a combination of manage-ment resources through international division of labor tosome extent. However, the forms of international sym-biosis that have recently been achieved by Nokia andSamsung are very different in scale.

With their small domestic markets, Finland and Koreahave been forced to adopt a corporate behavior of vigor-ously looking for partners all over the world and takingover markets that they can capture one after anotherbecause they do not find Madagascarization acceptable.The continuation of these activities has given rise to theoverwhelming performance that they currently enjoy.Among Japanese companies, Toyota and Canon are



Figure 17. International Competitiveness and “International Symbiosis”

High-end business in Japan

Substantially reducing cost by creating modules and platforms

Prospering together through symbiosis by seeking optimal combinations among diverse management

resources all over the world

Sales & marketingManufacturing R&D

Establishing the domestic market with leading paradigms and globally

evolving such paradigms

Adapting to a diversity that is characteristic of the markets of

US/Europe and MegaGrowth countries

Strengthening “international

competitiveness”

Demonstrating “international symbiosis”

World’s high-enddemand segment

World’s middle-tier andlow-end demand segments


strong in international symbiosis to a greater or lesserdegree.

The current business administration generally consistsof two major theories, one dealing with business strategyand the other with management resources. What wasdiscussed so far is that from the perspective of businessstrategy, Japanese companies must promote internationalsymbiosis in addition to strengthening internationalcompetitiveness.

However, what is correct from the perspective of busi-ness strategy is not necessarily correct from the perspec-tive of management resources. While it is probablycorrect that Japanese companies should promote interna-tional symbiosis, these same Japanese companies maybe those that are most unsuitable for international sym-biosis from the perspective of management resources. Tobridge this gap, government policy must play a majorrole in fields such as the development of humanresources capable of international symbiosis, the accu-mulation of evaluation information of managementresources of each country, which are constantly chang-ing, and the development of regulatory infrastructure.Such a role of government might be greater and moreimportant than the government policies designed toimprove international competitiveness.

To this point, I have explained how the improvementof international symbiosis is important for the JapaneseICT industry. However, it does not mean that activities tofurther improve the technological competitive edge inthe ICT field in pursuit of becoming the most advancedcountry in the world should be neglected.

Under the circumstances where an increasing trendtowards passing Japan has been discussed, any efforts toaim at constantly being ahead of other countries in theICT field are of great significance. This is true not onlyin terms of technology but also from the perspective ofincreasing interest in both Japanese society and Japaneseeconomy. However, we must note that in addition to theefforts to develop the world’s leading environment ofICT utilization in Japan, equivalent efforts must also bemade to promote and share such an ICT utilization envi-ronment among many countries in the world.

While the ubiquitous network paradigm has alreadybecome well known in Japan and Korea, more effortsare necessary to share this paradigm among neighbor-ing Asian countries and other countries or regions. It is

understood that unless these activities are conducted inconcert with industry, government and academia, suchactivities will not be successful in contributing tostrengthening the international competitiveness of ICT.

Notes(1) Ci’Num (Les Entretiens des Civilisations Numeriques,

Digital Civilization Forum); for three years from 2005,about 30 persons who are “designers of the future” anddecision-makers have gathered yearly in Bordeaux,France to discuss the future of digital civilization; it plansto publish a manifesto entitled “The Digital CivilizationForum—Taking up their challenges!” in 2008 after threeyears of discussions.

(2) Teruyasu Murakami, “Ubiquitous Networking: BusinessOpportunities and Strategic Issues,” NRI Papers, No. 79,August 1, 2004.

(3) Ministry of Internal Affairs and Communications,“Report on Systems of Ubiquitous Network Society(September 2006),” the Policy Roundtable for Realizinga Ubiquitous Network Society.

(4) Discussions about the international competitiveness andinternational symbiosis in the ICT industry are expandedin this paper based on the author’s paper published inShukan Economist (Weekly Economist) entitled “Koku-sai kyosoryoku kara kokusai kyoseiryoku no jidai he—Sekai de ureru shohin wo tsukuru tameniha “kokusaikyoseiryoku” ga hitsuyo da (Shifting from the Era ofInternational Competitiveness to the Era of InternationalSymbiosis—To Manufacture Products that Sell in theWorld, “International Symbiosis” is Necessary),Teruyasu Murakami, August 28, 2007. These considera-tions largely depend on the discussions at the Roundtablefor Strengthening the International Competitiveness ofICT, the Ministry of Internal Affairs and Communica-tions. I would like to express my appreciation for thevaluable observations and opinions expressed at thisroundtable.

(5) Herman Kahn and Anthony J. Wiener, The Year 2000,1968

(6) See Note 4.

Teruyasu Murakami is Chief Corporate Counselor at NRIand Doctor of Informatics (Kyoto University). His specialtiesinclude social systems, management strategies, ICT strate-gies and social informatics.



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