The world is ageing: According to the WHO, the proportion of elderly persons aged 60 and over in the global population will increase from 12% in 2015 to 22% in 2050. This could mean smaller workforce and overburdened healthcare systems around the world. The solution? For Japan, it may be an AI-powered future called Society 5.0.

The Pacific island nation already has more than one in four people aged 65 or over. That’s 28.7% of the population, 36.2m elderly Japanese. No wonder a recent report from GlobalData calls Japan “a super-aging society with a shrinking and thrifty population that grew rich before it grew old.”

Of all the cutting edge countries in the East and Southeast Asia region, it is Japan which shares the most similarities with the leading nations of the West when it comes to slower tech uptake and changing demographics. Unlike Western nations though, Japan’s Society 5.0 plan means it isn’t relying on immigration to solve all its problems, according to Will Jasprizza, MD for the Tokyo branch of business development consultancy Intralink.

“Digitalisation to address a shrinking workforce is a vital focus for Japan,” Jasprizza tells Verdict. “The country’s population is both declining and ageing, causing the problem of a rapidly diminishing labour force. Japan doesn’t see much immigration, so it’s embracing robotics and drones as weapons against this trend.

“We’ve seen this reflected in logistics and last-mile delivery tech developments and innovations such as the remote-controlled convenience store robots developed by Japanese firm Telexistence.”

What is Society 5.0?

It wasn’t going to be long before robots were mentioned in a discussion on Japanese tech. Indeed, the nation has the world’s third-highest industrial robot density after Singapore and South Korea, according to the International Federation of Robotics (IFR).

But Japan’s so-called Society 5.0 plan involves more than just robotics. On the Japanese government website, the vision is one for Japan to become the first country in the world to achieve economic growth with a shrinking population by becoming “a super-aging, supersmart society.”“Japan cannot rely on a marked growth in consumer spending to spur a new era of 2%-plus GDP growth,” writes GlobalData. “As the government acknowledges, the job will have to be done by sustained productivity growth via further wholesale automation and innovation, digitalization, and creating a less risk-averse, more diverse corporate culture.”

Society 5.0 in the 2020s will be built on a technology stack comprising 5G connectivity, sensors, robotics, artificial intelligence (AI), high-performance computing and extended reality (XR). Japan has already shown off much of its vision in prototype form at this year’s Tokyo Olympics. Meanwhile, as we’ll see later, a new smart city formed upon Society 5.0’s principles is already being constructed by auto giant Toyota.

Japan is also one of the top three nations in 5G deployment and is the clear worldwide leader in robotics and supercomputers. With the latter technology Japan has, in GlobalData’s view, the potential to develop and deploy downstream AI applications in robotics, automation, healthcare, and XR, bringing the Society 5.0 vision one step closer to reality.

Intralink is already seeing this in action with the AI layer of the stack leading investment, as Jasprizza explains.

“For a German AI client, we recently targeted opportunities to provide drones to monitor construction work and pursued a partnership with a Japanese systems integrator. And we’re running a Japanese sale programme for DreamVu, a US startup offering 3D visual systems for autonomous robots.

“Drones are also being adopted for a range of unmanned security and surveillance applications.”

The AI acceleration of Japan

Outside of international partnerships, local companies are also pushing the pace in Japan, especially when it comes to AI use. For Hiroaki Kawamura, Country Manager Japan at data analytics brand Sumo Logic, Japanese companies are “looking at their approaches around data and how they can use this internally because they have so much information coming in continuously.

“These snapshots can be analysed over time to see what decisions are successful and which areas need improvement across software development and security,” Kawamura continues. “For Japanese companies, making use of all this data for AI, security and analytics is the next step for how they build out their operations and create new products for their customers. They are ahead of other companies in the APAC region, but they have to work hard to maintain that advantage, and that means working in real-time.”

Kawamura also notes that the fintech sector is developing rapidly in Japan, and as such DevOps and security strategies need to be examined in order to maintain company operations and protection of their systems.

“There is a big investment taking place in cloud security right now, and those services rely on AI and data to work. Consequently, demand for skills around security analytics and AI is going up and up.”

Jasprizza points to Japanese healthcare as a growing source of data, noting increased adoption of medical devices that can continuously measure and store patient data to give clinicians a fuller picture of patient health and responses to therapies.

“This goes hand-in-hand with artificial intelligence systems to analyse medical data. There’s also a growing demand for wellness solutions that allow individuals to track their own physical conditions, as there’s relatively high health awareness among Japanese people.

“Japan has recently approved two digital health applications for insomnia and to help people stop smoking. And there’s increasing focus on point of care technologies that reduce the need for hospital visits, as well as Big Data and AI systems in cancer treatment.”

A preference for the physical

With the current AI summer being very much a worldwide theme currently, it’s likely other countries will take Japan’s approach as one way to deal with the fallout of an ageing population, if they aren’t doing so already.

Such nations may not need to worry if, like Japan, they don’t have a tech sector propagating disruptors by the dozen. Japan is now showing that it can accelerate, or at least envision digital acceleration, towards its Society 5.0 dream despite a very paper-based and physical status quo.

As GlobalData researchers note, Japan’s relatively low degree of digitisation means that it is “unlikely to make a mark in AI for ecommerce and the consumer angled mobile internet.”

As they note, Japan remains “a rigidly conservative, risk-averse, hierarchical society”. Unlike hi-tech neighbours such as South Korea, the country is still dependant on fax machines, paper documents and in-person meetings. Less than 6% of citizens use digital online apps at government offices and over 80% of retail transactions in Japan are still in cash.

While modern disruptors like Uber Eats can be easily found in Japan’s major cities, payment infrastructure is still behind other Asian countries according to Hoa Q. Nguyen, a director for FPT Software which has made general delivery apps for Japan.

“Japan is still reliant on receipt printouts and barcode labels for parcels,” reveals Nguyen. “The use of a separate barcode scanner is preferred to scanning with a mobile phone which explains why there is a need for specialised Android devices equipped with mobile printers, scanners and payment card readers.”

Nguyen notes this is a different infrastructure to APAC locations such as Vietnam and Singapore, where FPT has business reach. Infrastructure is also lagging behind elsewhere in the country, according to Masataka Kondo, the Japan CTO of cloud and data firm NetApp.

“Small and medium-sized companies, which make up 99.5% of Japanese corporates, still rely on human processes,” Kondo tells Verdict. “This analogue work is found even in large companies and while many of them have started using public cloud services, there is a long way to go for everyone to understand the power of AI.”

As such, Japan is currently “focused instead on smartening up its automotive and automation sectors, which will be the drivers and shapers of the economy and help it pay for the energy, raw materials, and food that it needs to import,” writes GlobalData.

“The Japanese corporate giants, in close collaboration with the government and suppliers, are where the high-octane AI work is being done.”

Smart City 5.0

Any progressive Society 5.0 needs a smart city advanced enough for it to call home, whether in Japan or elsewhere. Toyota, one of the goliaths GlobalData recommends keeping an AI-eye on, is currently delivering one of Japan’s most exciting construction projects in years.

The company is to spend over $1bn to create Woven City, a smart city built from the ground up on a site at the foot of the iconic Mount Fuji. According to its official site, the 175-acre city will be home to a population of 3,000, including Toyota and allied scientists and engineers, and will be powered by hydrogen fuel cells.

A company delivering new cities for Japanese citizens is nothing new. App giant Line, for example, has partnered with the city of Fukuoka to integrate smart city technology. Two hours from Osaka, Smart City Fukouka is an aspiring “Japanese Silicon Valley” that will cover around 124 acres. On a smaller scale are the earthquake-proof and solar powered-towns Tsunashima Sustainable Smart Town and Fujisawa Sustainable Smart Town (pictured below), both developed by Panasonic.

Solar panels sit at Fujisawa Sustainable Smart Town, Japan (Akio Kon/Bloomberg via Getty Images)

“There’s a good deal of talk in Japan about Smart Cities and the Internet of Things,” reveals Intralink’s Jasprizza. “But I’d also sound a note of caution here, as Japan’s interpretation of the Smart City concept is vague. It’s a popular buzzword in the country, but the concrete business opportunities are still limited  – and tough to break into. To date, we’ve seen plenty of demo applications, but few that are coming through with real commercial value.”

Toyota’s Woven City though may be a breed apart with its soon-to-be-living crystallisation of Society 5.0 aspirations in Japan. GlobalData notes that while there’s nothing new about automakers using plots of land with fake city backdrops to test out new vehicles, Toyota is “doing it in a real city with real people living within its amped-up vision of the future.”

“In reference to the Society 5.0 vision, Toyota stresses that Woven will be a ‘city built for happiness,’” the GlobalData analysts write. “Hence, Toyota is going well beyond using Woven as a test lab for mobility. The blueprint sees its citizens living in connected smart homes with sensor-based AI to check occupants’ health and help understand and meet their needs, and with in-home robots to assist and facilitate daily life.”

Autonomous robots in the home will be accompanied on Woven City’s winding lanes by Toyota’s e-Palette autonomous vehicles (AVs) which were recently showcased at the Tokyo Olympics. The AVs will be used for shared transport, being able to carry 20 passengers at a time, along with deliveries. They will also be repurposed to serve as mobile shops, clinics, temporary offices and more in the city.

The name Woven City itself is a reference to weaving together three different types of streets or pathways: One for automated driving, one for pedestrians, and one for people with personal mobility devices.

The sensor-laden city will gather data from traffic lights, buildings and streets on everything from pedestrian traffic to precipitation and process it via optical networks and cloud data centres. This will create a real-time digital twin of Woven City and feed the synthesised information to e-Palettes and other vehicles in transit.

“The grand scheme is to create and evolve a programmable city and develop an exportable (at least to other parts of Japan) smart city platform in the process”, write GlobalData analysts, who also note that the Toyota Research Institute’s AI program has hired eminent academics to advance AI and data science beyond the current data fitting paradigm.

With multiple Woven Cities around the country, Japanese citizens could have robots in the home to tend to them, whether elderly or not, and autonomous tech picking up the slack when there aren’t enough humans to plug labour gaps. Writ large, the Toyota model could see our planet become a Woven World.

Japan, Society 5.0, AI and 5G

Japan is one of the top three countries globally in 5G deployment, although, as Verdict recently reported, that doesn’t mean the country is free of the patchy coverage that has dogged 5G rollout worldwide.

Still, it is probable that pairing the vision and prestige behind Woven City with the capabilities of 5G will bring the Society 5.0 masterplan to rapid life in Japan. Some like NetApp Japan’s Kondo are already thinking one step further when it comes to Japan’s interconnected future.

“In Japan, 6G will become the standard communication system in 2030, which will significantly raise the effectiveness of the data produced across the internet of things,” says the CTO. “This, along with AI, will dramatically increase productivity in factories, while R&D, logistics, and operations will also see benefit by automating processes, which streamlines the use of data.”

By 2025, Woven City will have welcomed its first 2000 citizens. By the time the metropolis is fully established, Society 5.0 might well be in full swing in Japan. Whether other ageing nations will have caught up is another matter.

“According to the Annual Report on the Ageing Society, published by the Japanese Cabinet Office earlier this year, Japan has led the global aging trend since 2005,” Kondo explains. “However the government and various industries have been leveraging data and AI in order to simulate the future and plan for the society of tomorrow. This will continue and by 2030, accessibility and the quality of AI should be improved, while the size of data available should be much larger, meaning what’s available to study is much greater.

“Not every solution used in Japan will work for all societies and countries. Each country has a different way of living and working with varying industry structures, finance and tax systems, cost of living and differing age groups etc. However, other countries can use Japan’s simulations as a basis and change their parameters in order to have an impact on their societies based on their respective needs.”

Find out more in the GlobalData Japan Tech: Thematic research report.

This article is part of a special series by GlobalData Media on artificial intelligence. Other articles in this series include:

• AI warfare is coming and businesses need to be prepared on our sister site – Investment Monitor
• AI is turning consumer goods brands into tech ones – and customers into R&D – Verdict Retail
• By leveraging AI for forecasting, RBC delivers next gen digital advice for Canadians – Retail Banker International
• Financial sectors look to AI in site selection – Investment Monitor