AI Strategies for Japanese Companies to Compete Globally (Part 1)

AI Strategies For Japanese Companies To Compete Globally (Part 1)

Hello everyone, My name is Kenshin Fujiwara and I am the CEO and founder of HACARUS Inc. 

Through this series of blogs, I will discuss a wide range of topics of AI, from the history of AI to practical tips for the successful application of AI projects. I hope my blog posts will help you better understand AI and solve your business issues.

In the last blog, we studied a case study of AI implementation at Osaka Gas, a Japanese utility company. Today, we will discuss differences in the use of AI between Japan and the rest of the world.

Differences in the Use of AI between Japan and the Rest of the World

So far, I have explained the features of sparse modeling and compared them to deep learning using several case studies. I am very passionate about sparse modeling and I believe that it will lead Japan into the future. I have discussed its superiority to deep learning because I think this technology will also allow Japan to compete on the global stage. 

As mentioned previously, deep learning has attracted a lot of attention since 2012. At that time, deep learning was used to win an image recognition competition and it was the first time AI seemed to surpass humans.

It has been said that this victory sparked the modern AI boom and most companies are researching deep learning methods. While deep learning is an extremely important technology in current AI research and development, it is not the best option for Japan. Currently, Japan doesn’t have the resources to compete on an equal footing with the rest of the world when it comes to deep learning. Japan is also at an overwhelming disadvantage when it comes to these development competitions.

The Potential of China in Data Collection

Next, I want you to think again about the amount of data that is required for deep learning training. While data collection is a tedious task in many countries, China is a bit of an exception. With a population of more than a billion people, China is using its vast amount of data to develop AI. Collecting various types of data from the daily activities of its citizens, China is already in a dominant position in the AI world. 

The Chinese culture also helps with AI development since many people are accepting of new technologies and trends. A prime example of this behavior is cashless payments. When introducing QR codes as a form of payment, the Chinese population adopted the practice almost instantaneously. 

Today, cashless payment is commonplace in general stores, restaurants, and even street stalls in urban areas. The use of QR codes as payment has become so ingrained in their lives that many people deposit their entire paycheck into a QR code operator’s account. 

In this example, the QR code technology isn’t necessarily a revolutionary technology, but not having it would be inconvenient for people living in China. In terms of AI development, the more people use QR code payments, the more data becomes accessible. This data includes their purchase history, financial information, individual salaries, and more. 

Applying this example to the business world, the collected purchasing data can be used by the marketing department and the financial information can be used by AI to analyze an individual’s credit score. These scores help quantify an individual’s creditworthiness through multiple perspectives. 

Little Backlash to Data Collection

There also seems to be a shift in the way people think about personal information. Recently, other methods for payment have begun to rise in popularity like facial recognition payments. 

With facial recognition, you can stand in front of a vending machine, select your product, and then place your face close to a camera on the machine. Then, it verifies your identity and processes the transaction. In a sense, biometric data can be considered the ultimate personal information.

One advantage of biometrics is its safety. While passwords can be recovered, changed, or stolen, biometric information can not be changed. While biometrics holds a lot of potential, many people in Japan might resist this technology since it is new. 

However, in China, this is the opposite. Due to their culture, the Chinese population shows little backlash to data collection and surveillance by the government. Instead, new technologies are emerging regularly, like augmented reality (AR) smart glasses that are used to monitor people on the streets using facial recognition. 

In this environment, vast amounts of data are collected ranging from shopping statistics, facial recognition, financial transactions, medical care, and public safety. The AI that is learning from this data is also evolving at a tremendous pace. 

Data Security Law to strengthen Data Management Regulations

In 2017, the Chinese government enacted a cybersecurity law restricting foreign companies from taking big data collected in the country out of the country. This law states that foreign companies will be held liable for their actions outside of the country if they are deemed to “undermine national security” with respect to their domestic data collection activities. 

In addition, the Data Security Law was passed in September of 2021 which strengthened data management regulations. Through these laws, it appears that the Chinese government is encouraging domestic firms to develop AI by tightening the bind on foreign companies trying to collect data. 

In the next blog, I will continue to discuss differences in the use of AI between Japan and the rest of the world, in terms of R&D costs. For your updated knowledge and insight about AI technology, subscribe to our newsletter or visit HACARUS website

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