Commentary / Japan

Can Japan revive its electronics industry glory?

by Waichi Sekiguchi

Consumer electronics were once the nation’s star industry, but today the global presence of Japanese firms in this sector has been greatly diminished with the rise of South Korean and Chinese rivals. The number of visitors to the Combined Exhibition of Advanced Technologies, which was launched in 2000 as Asia’s largest home electronics and information technology exhibition, has also been on a steady decline. But signs of change were seen at the CEATEC 2019, held Oct. 15 to 18 at Makuhari Messe in Chiba Prefecture, as the shift in exhibition content from consumer electronics to the “internet of things” once again drew attention to Japan’s technological prowess.

Speaking at a reception on the first day of the trade show, Hideki Makihara, state minister of the economy, trade and industry, hailed the nation’s technology power by citing the awarding of this year’s CEATEC award to Murata Manufacturing Co. for its development of next-generation all-solid batteries, which followed the Nobel Prize in chemistry given the previous week to Akira Yoshino, an honorary fellow with Asahi Kasei Corp., for his contribution to the development of lithium-ion batteries.

Large capacity lithium-ion batteries paved the way for the popular use of devices such as smartphones and electric vehicles. All-solid batteries are expected to power wearable devices that require long hours of continuous use. They are indeed the key technology that will support the internet of things in the future.

One of the features that attracted visitors’ attention was the test-run of an autonomous electric bus provided by SoftBank subsidiary SB Drive Corp. using a vehicle developed by France’s Navya. In collaboration with traffic signal manufacturer Nippon Signal Co., the system enabled the bus to operate even on busy streets with heavy pedestrian traffic by collecting signal information via cloud computing on a real-time basis.

In response to a question on why the autonomous bus was featured at the exhibition, Kiyoshi Shikano, executive producer of the CEATEC organizing association, said that utilizing signal information via such a network is the technology made possible by the internet of things. It reflects a sense of crisis that the significance of CEATEC will be lost if it keeps focusing on consumer electronics, where competition with other Asian makers is intensifying.

The changes that CEATEC has gone through are reflected in the number of participants and visitors. It was launched in 2000 by combining the Electronics Show, an exhibition of consumer electronics products and technology, with COM Japan, which showcased communications technologies. At its peak in 2007, 895 companies and organizations took part, including nearly 350 from overseas, and visitors topped 200,000.

But the number of exhibitors declined in the wake of the global financial crisis. In 2015, the number of participants fell to 531, a 40 percent decline from the peak, and visitors dropped to 133,000. Along with greater competition from Asian rivals, the consumer electronics market itself was radically changed by IT firms in the United States such as Apple and Google, which developed new information devices such as smartphones and tablets.

Feeling a sense of crisis and propelled by the need to invite participants from other sectors, the CEATEC organizers decided to overhaul the event as an exhibition for cyber-physical systems and the internet of things. Beginning in 2016 they sought exhibits from a wide range of firms that support internet of things infrastructure such as finance, distribution, construction, electricity and gas. And in the name of Society 5.0, the new socio-industrial policy promoted by the government, they highlighted the exhibits of such companies in prime locations at the center of the venue.

ANA Holdings, Shimizu Corp., Lixil and Japan Taxi are among the firms that debuted at CEATEC this year. The number of exhibiting companies and organizations recovered to 787 as organizers invited startups and university labs as well as foreign governments and firms to take part. The number of exhibitors from overseas, which at one point had fallen to 150, bounced back to 250 with active participation by companies from Switzerland and elsewhere. As many as 170 startup businesses and universities took part.

Because startups, university labs and overseas firms are not bound by the conventional framework of consumer electronics and are intent on developing new technologies, exhibits on augmented reality and virtual reality technologies attracted the attention of visitors to CEATEC 2019. Prodded by the growing presence of such entrants, Sony Corp., which hadn’t participated since 2013, returned and exhibited a 4K 3D camera for medical use that was jointly developed with Olympus Corp., emphasizing the medical equipment side of its business.

Personal computer maker Vaio, which spun off from Sony, took part in CEATEC for the first time and exhibited basic technology for robot development. Shun Yoshida, in charge of CEATEC’s public relations, says that while South Korean and Chinese makers now dominate the home electronics market, Japanese firms are making a comeback in the new field of internet of things.

In fact, this transformation of a consumer electronics exhibition is not unique to Japan. CES, which is held in Las Vegas every January, originally stood for Consumer Electronics Show. However, Gary Shapiro, president and CEO of its organizer, Consumer Technology Association, wants people to refer to the exhibition simply as CES because it now covers technology in a wide variety of new fields, from autonomous driving to drones and 3D printers. To make these changes clear, the organizer altered its name from Consumer Electronics Association to CTA in 2015.

In Europe, the consumer electronics and information technology exhibition IFA is held every September in Berlin. Beginning last year, the organizer has also held an exhibition focusing on auto-related technology in collaboration with an automobile show in Geneva. Jens Heithecker, in charge of organizing the IFA, says he has no intention of exhibiting automobiles but that such technologies and services like autonomous driving and MaaS (Mobility as a Service) are the next generation of consumer electronics technology that support people’s everyday lives.

In that sense, the response by CEATEC organizers may have come a bit late. But as we re-examine Japan’s technological prowess from the new perspective of the internet of things, we realize that the nation’s technological competitiveness has not necessarily been lost. True, Japanese firms may no longer be a match for their South Korean and Chinese rivals in the field of consumer electronics, such as smartphones, where sales volume matters. IT firms in the U.S. hold the edge in internet-related software and services. However, Japan can still excel in new technologies and products for the internet of things such as all-solid batteries and medical cameras.

Many Japanese manufacturers that used to bask in the fame of Japan as the kingdom of consumer electronics were left baffled as South Korean and Chinese competitors took their place, and were unable to come up with a clear strategy for exploring new fields of business. But with the arrival of the internet of things era and CEATEC’s shift of focus, that is likely the new direction of technology development that Japan should pursue. In that sense, the revival of CEATEC as an exhibition will serve as an important barometer for the resurgence of Japan’s consumer electronics industry.

Waichi Sekiguchi is president of MMRI, a Japanese research and consulting firm on information technology. He was formerly an editorial writer and a Washington correspondent for the Nikkei financial newspaper.

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