No title

METI "Vision of New Industrial Structure" - Japan's strategies for taking the lead in the Fourth Industrial Revolution - Interim Report by New Industr...

1 downloads 193 Views 6MB Size
"Vision of New Industrial Structure" - Japan's strategies for taking the lead in the Fourth Industrial Revolution Interim Report by New Industrial Structure Committee

April 27th, 2016

METI

"Japan Revitalization Strategy" Revised in 2015 (Decided at the Cabinet Meeting on June 30th, 2015) 

Innovation in IoT, Big Data and AI has been advancing more rapidly and impactfully than ever.



It is crucial to have vision common to both the public and the private so that the private sector can make proper investment and as such the government can promptly take measures to make or modify rules that will facilitate such investment.



In this regard the study should focus on (ⅰ) how and when the reform should be performed for IoT/Big Data/AI (i.e. the reform of industrial structure, employment structure, and economic and social system), (ⅱ) potential business opportunity, (ⅲ) task that the public and the private should engage in (e.g. regulatory and institutional reform, R&D/equipment/investment in human resource), clarifying timeframes for each task.



The study has been so far implemented for the formulation of "Vision of New Industrial Structure" (in August 2015) by “New Industrial Structure Committee” (chaired by Motoshige Ito, professor of Tokyo University) set up within "Industrial Structure Council" in joint work with the relevant government ministries and agencies.



The interim report was issued on April 27th, 2016.

Relevant government ministries and agencies The Cabinet Office; the Fair Trade Commission; the Financial Services Agency; the Ministry of Internal Affairs and Communications; the Ministry of Finance; the Ministry of Education, Culture, Sports, Science and Technology; the Ministry of Health, Labor and Welfare; the Ministry of Agriculture, Forestry and Fisheries; and the Ministry of Land, Infrastructure, Transport and Tourism. METI

1

Table of Contents 1. What is happening now? 2. Japan's basic strategy 3. Changes in society and conversion of industrial structures through the revolution 4. Changes in employment structures through the revolution 5. Estimates involving industrial and employment structures 6. Japan's specific strategy i. Developing environments for promoting data utilization (establishing data platforms, creating data distribution markets, promoting utilization of personal data, developing security-related technology and ecosystems that produce skilled human resources, ideal approaches to intellectual property policies in the revolution and ideal approaches to competition policies that address the revolution) ii. Fostering and securing human resources, improving flexibility in employment systems (establishing an educational system that meets new needs, securing human resources with a global mindset, promoting increased participation of more various sources of labor, increasing the flexibility of labor markets and employment systems) iii. Accelerating innovation and technology development (“Society 5.0”) (establishing an open innovation system, developing innovation bases from which Japan will lead the rest of the world / establishing national projects therefor / accelerating social implementation thereof, e.g., AI, strategically promoting the management of intellectual property and international standardization) iv. Fortifying financial functions (Fortifying equity finance toward the supply of risk capital, encouraging investment in intangible assets to address the revolution, further enhancing the functions of finance and settlement, positioning FinTech at the core) v. Facilitating smooth conversion of industrial and employment structures (establishing a governance system in which business owners are able to swiftly and boldly make decisions, developing systems and environments in which business owners are able to revitalize and reorganize business in a swift and flexible manner) vi. Disseminating the outcomes of the revolution to SMEs and local economies (establishing platforms on which IoT and other new technologies are introduced to and utilized within SMEs and communities) vii. Further enhancing economic and social systems to address the revolution (ideal approaches to regulatory reform so as to address the revolution, improving administrative services through the utilization of data, enhancing the development of business overseas through strategic collaboration and cooperation between industries, ensuring the outcomes of the revolution permeate society)

METI

2

1. What is happening now?

METI

3

What is happening now? (ⅰ) - Technological breakthroughs 

All business and information available to society in the “real world” can be freely controlled through digitized networks. (IoT)



Large volumes of data can be analyzed to create additional value. (Big Data)



Self-learning machines can analyze data and situations more rapidly and objectively than human beings. (Artificial intelligence: AI)





Automation can be applied to more diversified and complicated tasks. (Robotics) That which was previously impossible is now possible for society. Hence the potential dramatic changes in industrial and employment structures.

Increased volume of data

Improved processing capability

Discontinuous progress of AI

Data volumes worldwide can be doubled every two years.

Exponential progress can be seen with performance of hardware.

AI technology can enhance discontinuous progress with the support of deep learning etc. METI

4

What is happening now? (ⅱ) - Fourth Industrial Revolution 

These technological breakthroughs includes the changes below: ① Shift from mass production/uniform services to customized production/services based on individual needs (customized medical treatment, immediate custom-made clothing, educational service depending on individual understanding) ② Free matching of society’s unused potential assets with needs of individuals (Uber, Airbnb, etc.) ③ Support or replacement for human labor, recognition/learning capability (automated driving, manufacturing/management, delivery by drone) ④ Creation of new services、shift to after-market services for products and goods (from simple sales of equipment to added services of operation/security/insurance using sensor data), significant efficiency improvement throughout the entire supply chain with data sharing (integration of production equipment and logistics/delivery/payment systems) ⑤ Technology used in the revolution is common foundational technology for innovation across all industries, and allows for addressing new needs (genome editing technology × biodata=new drug discovery, new type of farm product, bioenergy, etc.)

First Industrial Revolution Harness fossil fuel energy (by steam engine)

Second Industrial Revolution Energy innovation (electricity, internal combustion engine)

Third Industrial Revolution Automation (Computer)

Forth Industrial Revolution Autonomous optimization (AI thinks on its own, takes optimal action based on a large volumes of data.

METI

5

Global strategy by leading overseas players

From Internet to the real world

Range of cloud services expanding, including information not only on the Internet but also from real life (From Internet to real world) (ii) Accumulating data in cloud servers, processed with artificial intelligence

Google Amazon Facebook

Ensuring the protection of their manufacturing industry know-how in which they specialize, and globally developing business using technology to their advantage (From real world to Internet) Standardizing manufacturing systems established in Germany and exporting them overseas (i) Sharing data related to factories and products around the world between companies, factories, and even machines

GE Siemens Bosch IBM Intel

etc. (i) Collecting data related to factories and products around the world

Examples from manufacturing sector

From real world to Internet

etc.

(iii) Giving optimum instructions to factories (iii) Optimally controlling factories

(ii) Accumulating and processing data with the high-performance manufacturing facilities at hand

Equipment for factories is shifting toward affordable devices that receive instructions from the cloud and execute them.

Source: FY 2014 Measures to Promote Manufacturing Technology

Maintaining value of high-performance equipment in factories, which is Germany’s strength

METI

6

Companies aiming to create new society with data (ⅰ) Changes taking place for human roles and work Robot Taxi Realization of unmanned taxi service Aiming to realize a futuristic, unmanned taxi service using automated driving system technology which detects vehicle surroundings and more. Services are expected to be available within specific section between the airport and Tokyo. Also it is expected that this technology will contribute to retention of public transport networks including buses where there is a problematic lack of drivers.

Aerosense, ALSOK, SECOM Use of drones in construction management of buildings, etc. Drone photography of construction sites from above increase safety by allowing work on high-rise building sites to be checked with designs kept on Cloud services.

exMedio Use of AI for dermatological diagnosis support system They developed free support service for diagnosis of dermatological disease called "Hifumiru" which operates with the help of photographs of afflicted body parts and medical patient interviews with affiliated dermatologists over smartphones.



Change how people move and live

○ Challenge

・Provide statutory measures for Road

Traffic Law, Road Transport Vehicle Law and international conventions for automatic guided driving.

Source: Materials submitted by Mr.Tomiyama at the second Public-Private Dialogue

Eliminate risky work

AI to assist with doctor's diagnosis

○ Challenge

○ Challenge

・Provide statutory measures for issues such as flying beyond line-of-sight, long-distance communication and collision prevention, encouraging usage.

・Upgrade performance of diagnosis support system using AI. ・Disseminate guidance prepared through review of diagnosis aid software. METI

7

Companies aiming to create new society with data (ⅱ) To the world of discontinuous customization

Seiren

Terumo

Realization of rapid, custom production in response to consumer needs

They developed a unique system called "Viscotecs" generating final product from instant printout based on combined data of customer's favorite fabric and design. Applicable to such materials as aluminum, wood and ceramics.

build-to-order manufacturing individual manufacturing individual order manufacturer consumer

Prevention of lifestyle-related disease using medical prescription/medical examination/health-related data With the permission of employees, combine their daily exercise data with medical records focusing on obesity and to analyze health improvement effects of walking, contributing to the furtherance of good health/the prevention of lifestylerelated diseases.

individual order consumer

・Align price of made-to-order product with price of mass produced item

○ Challenge

・Ensure optimal product liability. Source: Materials submitted by Mr/Ms Tomiyama at 2nd Public-Private Dialogue

Delivery of adaptive learning, depending on student understanding They have developed learning platforms such as "Juken Sapuri” (Exam-taking course), "Benkyo Sapuri” (Learning course) which provide various web-based, selfdirected learning opportunities. Additionally, a study is under way to deliver optimal recommendations on learning based on their actual learning level and less favorite subjects, using AI.

medical prescription medical examination records

build-to-order manufacturing

individual manufacturing manufacturer

Recruit

Amount of activity Number of steps Vital data

・Prolong healthy life expectancy with customized health service

○ Challenge

・Provide medical care/health information and implement optimal utilization of those services according to revised Personal Information Protection Law.

・Ensure effective learning with individual/optimal learning aid service

○ Challenge

・Pursue partnership with schools and other education organizations and develop infrastructure for use of adaptive learning at schools. METI

8

Technology (Common Platform Technology × Industry Core Technology )× Relevant Data Technology

Common platform technology (AI, IoT, Robotics)

Relevant data

Various goods and services

Financial technology

Data on trade/distribution Data on financial markets

Credit by data on trade/settlement, Robo-Adviser (asset management), etc.

Drug discovery technology

Health and medical data

Personalized medicines, Personalized cosmetic and beauty services, etc.

Biological data

New drug discovery, new type of farm product, advanced materials manufacturing, bioenergy, etc.

Energy load device control technology

Customer data

Energy demand response, monitoring services, etc.

Production control technology

Accidents and near-miss data

Enhancement of safety/productivity with early detection of failure/fault sign, improved insurance/rating, etc.

Bioinformatics Genome editing

METI

9

Envisioned reform of leading sectors (illustrative) (1)

Manufacturing innovation, industrial security, supply chain and retail ○ Directions of change ・Enabling instant response, made-to-order production with mass production factory. ・Realizing zero waste and lead time by data linkage through production, logistics and sales. ・ Full scale use of drone for logistics. ・ Constantly monitoring the plant equipment to detect failure/fault sign early and issue warnings appropriately.

Autonomous driving and mobility ○ Directions of change ・ Improved efficiency in logistics with realization of longitudinal column travel. ・ Increased utilization of full automatic guided vehicle system in various sectors. Start-up of advertising business and services to utilize time spent while driving. ・ Resolution of issues regarding people vulnerable to traffic, traffic accidents, congestion and environmental impact.

[PM’s statement at the second meeting of the Public-

[PM’s statement at the second meeting of the Public-

Private Dialogue] • Aim to realize parcel delivery service using drone within 3 years from now if possible. • To this end set up the Public-Private Council to discuss how it specifically should be treated between users and the relevant government offices. A policy to establish it should be formulated at such council by summer this year.

Private Dialogue]

• Develop system, infrastructure and verification by 2017 for autonomous driving service and transportation on expressways which will be in use at 2020 Olympic & Paralympic Games.

METI

10

Envisioned reform of leading sectors (illustrative) (2)

Health, medical, and nursing care

Finance (FinTech) ○ Directions of change ・ Realization of more convenient settlement, remittance and funding etc. through a small amount settlement, remittance and swift data-based credit review which will be all executed online. ・ Realization of efficient corporate back office and household finance through real-time visualization of corporate management, accounting and household finance.

○ Directions of change ・ Realization of customized services of health and prevention through utilization of health/medical data. ・ Mitigation of local burden of medical care/nursing care through implementing medical care robots with advance recognition/control assisted by AI. [PM’s statement at the second meeting of the PublicPrivate Dialogue]

• Publish new guidelines applicable commonly to review of diagnosis aid software by this spring so that diagnosis aid system using AI can be utilized at local medical institutions.

METI

11

Envisioned reform of leading sectors (illustrative) (3)

Smart housing, smart communities, and energy

Education

○ Directions of change ・ Realization of smart communities where supply and demand for energy are comprehensively managed including demand side as per characteristic of each region. ・ Deployment of diversified services by acquiring and utilizing various data within household and communities. let alone data on energy.

○ Directions of change ・ Realization of customized learning according to a leaner's degree of proficiency and favorite subjects by expanding adaptive learning etc.

[PM’s statement at the third meeting of the PublicPrivate Dialogue] • Strengthen drastically incentive to conserve electricity. Create "Negawatt trade market" by 2017 where one trades electricity conserved by utilizing residential photovoltaic power and IoT. • To this end formulate trade rules for providers and establish telecommunications standard to remotely control energy equipment within current fiscal year.

・Provision of easy access to knowledge or skills needed for each occupational activities at any time as per individual needs while making learning materials used openly and utilizing online classes. METI

12

Envisioned reform of leading sectors (illustrative) (4)

Agriculture ○ Directions of change ・ More improved productivity by labor saving through introduction of robot and automatic guided driving system etc. and by formation of tacit knowledge on production lines ・Realization of improved quality control through ensuring traceability etc. by enabling partnership among production, process, logistics and distribution based on ICT. ・ Provision of farm products in response to different consumers' needs through utilization of data on sales performance etc.

Tourism ○ Directions of change ・Provision of customized tourist experience to meet individual interests and preferences through collection and utilization of behavioral data of tourists. ・Increase of options in accommodations and transportation for tourists by expanding sharing and matching services, and entry of individual in tourist services as providers.

[PM’s statement at the fourth meeting of the PublicPrivate Dialogue] • Introduce cutting-edge technology into agricultural sector. Commercialize automatic guided riding system for agricultural equipment on cultivated land by 2018, and create system necessary for enabling unmanned system through remote monitoring by 2020.

METI

13

(Reference) Economic value by leading sectors  Chief think tanks project significant impact of IoT on such sectors as manufacturing, distribution/retail/logistics, finance, medical/health, public service.

[Economic value generated by IoT by sectors (global base)] (Aggregate economic value generated by IoT from 2013 - 2022)

3.9

Manufacturing innovation ものづくり革新

2.3

流通・小売・物流 Distribution/retail/logistics

1.3

金融 Finance

1.0

医療・健康 Medical/health スマートハウス、スマートコミュニティ Smart house/smart community/ energy infrastructure エネルギーインフラ

0.9 0.9

教育サービス Educational service

0.6

メディア・コンテンツ Media content Agriculture 農業

0.2

Public services 公共サービス(含む行政) (including administrative services)

4.6

(Economic value of IoT as of 2025) * Mobility (automatic driving system etc.)

(trillions of dollars)

0.9

( Source:METI's document on categorization and integration based on Cisco, McKinsey report)

[*Economic value] Value on the whole including increased sales by suppliers as well as increased value on the part of users such as companies which introduce IoT to pursue cost reduction through higher operating efficiency and increase sales through advanced marketing practices.

METI

14

2. Japan's basic strategy

METI

15

Two scenarios of Forth Industrial Revolution -Japan now at “turning point"[As-is scenario] - Retaining industrial/employment structure 

4th Industrial Revolution

   

Leaving walls between companies, keiretsu and industries as well as retention of self-sufficiency Relying on overseas data platforms Retaining immobile labor market Preserving exiting industries Continuing traditional education/training of human resource

   

Added value taken by overseas data platform providers Japanese industries becoming sort of subcontractors or poor players due to such platforms Collapse/bipolarization of middle class workers (loss of employment opportunities due to mechanization or digitization, decrease of wages) Subject to gradual innovation focusing on only hardware

[Reform scenario] - Shift and mobility of industrial/employment structure  

    

Discovering and acquiring new demand by taking advantage of AI technologies and data →creating innovative services and products Creating data platforms that have no boundaries among companies and keiretsu. Utilizing flexible labor market and foreigners Ensuring industrial metabolism Switching over to human resource education through use of data Becoming the core of international network (human resource, technology, funding, data)

   

 

Resolving social issues by creating new services/products, acquiring global markets and added value Increasing productivity and wage to compensate decline of population Spreading profit among SMEs and regional economy Concurrently reorganizing industries and mobilizing employment Realizing disruptive innovation for software etc.

Reform with burden or current stable situation with declining economy It is speed with which reform is deployed. METI

16

Basic approaches for dominant sectors 1.

(ⅰ) Understand directions of global technology and industries and strategies of leading companies around the world. (ⅱ) Analyze Japan's "strengths/weaknesses," and clarify sectors of "sectors with the greatest opportunity for improvement".

2. Share this approach with companies all over Japan and then create various strategies for the government, private sectors and research institutes. (ⅰ) Share long-term visions for the future (society, technology, industry, employment) with public and private sectors. (ⅱ) Determine specific goals, setting interim deadlines. (ⅲ) Develop a roadmap which defines all elements required for achieving goals and implement specific, short-term reform (regulatory reform, business promotion, private business activities, etc.) 3.

Based on these strategies, (ⅰ) Take the lead in driving reform for specific obstacles once their prospects are identified. (ⅱ) With respect to obstacles whose prospects are uncertain due to the possibility of different scenarios, make attempts to implement new ideas without waiting for the consensus.

METI

17

Importance of utilizing real data



Utilization of "data" is the source of added value in respect of the Forth Industrial Revolution.

Virtual data

1st stage

Data generated from websites (search etc.) and online activities such as SNS. →These platforms are controlled by overseas IT companies (Google, Amazon, Apple, etc.)

2nd stage

Real data

Data obtained from sensors etc. detecting activities in the real world of individuals and companies, such as data on health information, travel and operation at factories and etc. →Japan has possibility of acquiring platforms for such data if Japanese companies successfully approach these data. Real data consists of confidential data due to corporate competition and huge volume of data which should be shared to compose big data with great advantage arising from corporate cooperation. It is crucial to identify "cooperative domains" and "competitive domains", and to build "platforms" which shares and utilizes data coming borderlessly from offices/companies/keiretsu

METI

18 18

(Reference) Basic cycle for data utilization 1

5

Societal implementation/ Industrialization

Obtain data

4

2

Analyze by AI, etc.

6

Exchange/transmit data

Practical application 3 (big data, etc.) Establish business model which offers the entire basic cycle. METI METI

19

Japan's strength/weakness for data utilization Strength:Hardware (1) (5) Weakness: Software (2) (3) (4), concepts and systems to enable connection hardware and software that integrate hardware and software

Data cycle (evaluation)

☆Strength ★Weakness ☆The most advanced low birth rate and aging population ☆Global market share of automobile etc. ☆Consumers able to recognize and assess quality products ★Technology of 3D printing and its limited utilization

4

☆Super computer technology

5

Obtain data

1

2

☆World's cutting-edge high speed data network ★Maintenance cost of data center

Exchange/transmit data

Analyze with AI, etc.

★Development and utilization of AI technologies ★Development of software products ★Basic research of mathematics and medical fields, etc. ★Data scientists, security specialists, etc.

6

Societal implementation/ Industrialization

☆Global market share of robots, sensors, etc. ☆Data on quality school teachers (tacit knowledge on the local level) ★Global market share of mobile OS, device, etc.

Practical application (big data, etc.)

3

☆Local big data (medical care, transportation, etc.) ★data sharing, data exchange

Establish business model which offers the entire basic cycle.

★Regulation systems to facilitate new business ★Scale and speed of industrial reorganization ★Legacy cost of IT systems elaborated for each individual company

METI

20

Japan's strategies (1) - 7 policies -

(Redesign of socio-economic system for the future) (1) Develop environment for promoting data utilization •

Building data platform, creating data distribution market



Facilitating utilization of personal data



Building ecosystem that produces security technology /human resource



Formulating strategies on intellectual property in the Fourth Industrial Revolution



Formulating strategies on competition policy in line with the Fourth Industrial Revolution

(2) Enhance flexibility in the development/recruitment of human resource and employment system •

Building educational system in response to new needs



Acquiring talents globally



Promoting diverse types of employment,



Enhancing flexibility in labor market/employment system

(3) Accelerate innovation and technological development ("Society 5.0") •

Building an open innovation system



Develop innovation bases that lead the world/Establishing national projects/accelerating societal implementation (e.g. AI),



Promoting strategically intellectual property management and international standardization METI

21 21

Japan's strategies (2) - 7 policies -

(Redesign of socio-economic system for the future) (4) Strengthen financial capabilities •

Fortifying equity finance for the supply of risk capital



Encouraging investment in intangible assets in line with the Fourth Industrial Revolution



Improving capabilities of finance and settlement focusing on FinTech

(5) Facilitate shift of industrial /employment structure •

Building a governance system to enable swift and positive decision-making



Developing systems and environments to enable swift and flexible business revitalization/reorganization, etc.



Enhancing flexibility in labor market/employment system (stated again)

(6) Spread effect of the Fourth Industrial Revolution into SMEs and regional economy •

Introducing IoT etc. into SMEs and regional economy, and building base for utilizing them

(7) Ensure sophisticated system of economy and society for the Fourth Industrial Revolution •

Ensuring optimal regulatory reform in line with the Fourth Industrial Revolution



Improving administrative services using data



Performing enhanced global deployment through strategic partnership etc.



Spreading advantage of the Fourth Industrial Revolution into the society in general

METI

22 22

3. Changes in society and conversion of industrial structures through the revolution

METI METI

23

Societal needs to be realized by the Fourth Industrial Revolution  "Societal and structural issues (e.g. customer's true needs) which go beyond our capabilities can be addressed by utilizing innovative technology/data such as AI.  Competition will be conducted as to who will discover or acquire this new frontier expected to be spread globally. Move safely Make effective use of travel time Societal and structural issues facing Japan and the world      

Low birthrate and aging population Decline of regional economies and communities Limited energy and environmental constrain Food issues Water issues Other

Live "smartly" Keep healthy, support the elderly Live safely and securely

Learn effectively

Get "smartly" Use convenient infrastructure

Enjoy entertainment Share efficiently

Easily borrow fund and manage asset

METI METI

24 24

(1) Expansion of mobility industries impacting employment  

Opportunities are constantly arising for new value chains / industries by responding to societal needs. For example progress in automatic guided driving/drone technology is giving rise to new services and products, affecting a variety of industries. around 2030

2018Newly created role and value

(9)Expansion of sharing service

(6)Reduction of car insurance premiums

(4)24/7 Autonomous driving by industries

(2)Drone delivery (1) Platooning

(2) Unmanned drone logistics (partial)

(8)Unmanned transportation service

(5) Service using time in the car (Culture/entertainment)

(7) 24/7 autonomous logistics (including public roads)

(8)24/7 autonomous use by industries

(3) Advertising

(2) Drone delivery (expanded)

(1) Platooning

Level 2/3:Combined Function Level 4:Full Autonomous driving**(Limited Automation/Limited Selfto expressways) Driving Automation (requires driver's support*) ** Unmanned operations

Relevant industries (e.g.)

* (3) Advertising, or (5) entertainment or business services are available utilizing former driving time (now freed due to autonomous driving systems).

• Impact on employment (example)

(1)(2) Improvement of labor market with logistics etc. [About 40,000 surplus of job offers for truck drivers]

(10)Fully autonomous cars for private use (6)Reduction of car insurance premium (5)Service using time in the car (Culture/ entertainment)

...

(3) Advertising

(1) Platooning

Level 4:Full Autonomous driving (Level 4) (ordinary road/expressway etc.)

make progress across industries as increasing Agriculture/fishery, food, wholesale ・・・etc. range of non-manual operations become possible. Information service, advertisement 、casualty insurance,・・・etc.

...

Manufacturing (Automobiles /accessories, drones,)、Automobile maintenance, passenger road transportation, freight road transportation, retail, information communications,・・・etc. •

(4) Improvement of labor market in a variety of industries including logistics and agriculture.



(7)(8)(9) Significant change in employment structure for professional drivers.



(3)(5)(6) Creation of employment by creating new services.



(3)(5)(9) Creation of additional employment by creating new services.

... METI METI

25

Spread of vision “move" and its impact on society (pros and cons)  Spread of impact from industry/employment occurs, and concurrently impact on different societies may arise in/out of Japan. Individuals ○ Resolution of issues on people having difficulties in moving [7 million "the weak for shopping", about 40 million people without driver's licenses]

Domestic

○ Improvement in distribution of daily necessities for remote islanders [Total population of all remote islands: 319,000] ○ Safer traffic due to decrease of traffic accidents [Traffic fatalities: 4,117(2015)] [Economic loss due to accidents: 6.3trillion yen(2009)] ○ Freer work style with effective use of commuting time [About 20 minute (one-way) average commuting time by car] ●Necessity of acquiring new work skills or more needs of transition of labor force with change in employment structure

Overseas

○ [People without driver's licenses: about 6 billion ] ○ [Traffic fatalities:1.25million] [Economic loss due to accidents: over 100 billion USD (especially 1-2% loss of GNP in emerging countries)]

Society ○Decrease of environmental burden (CO2 etc.) by realization of uncongested traffic on ordinary roads or expressways [Annual economic loss: 3.3 billion people/hours,10 trillion yen] [CO2emission by domestic transportation sector: 220 million tons (17% of total emission] ○Faster emergency response for freight etc. in case of disaster ●Integrated control system of traffic and drone by connecting respective data results in significant increase of risk in case of failure ●Changes in labor market, employment system, social security system etc.

○[Energy consumption worldwide for transportation sector: 103 trillion Btu (20% of total)]

Source: Accenture Mr Hodo's presentation materials at 3rd New Industrial Structure Committee, "For abundant automobile society" by Japan Automobile Manufacturers Association, "Status of traffic accidents and traffic safety policy" by Cabinet Office, "Report on the weak for shopping" by Ministry of Economy, Trade and Industry, "CO2 emission for transportation sector" by Ministry of Land, Infrastructure and Transport, "Report on result of research of basic traffic situation" by Ministry of Land, Infrastructure and Transport, "Status of remote islands" by Ministry of Land, Infrastructure and Transport METI

METI

26

Multiple ways for meeting various needs of “move"  Possible shift from traditional types of industries to industries responding to changes in social needs (e.g. from automobile manufacturing industry to mobility smart service industry)  This shift will bring about shift from reorganization within same industry to reorganization among totally different industries. As a result major changes of industrial structure will occur. Business entities

Current

Traditional axis of reorganization Mobility Providers

○ Automobile manufacturer

(1) Gradual approach for upgrading automatic guided driving

Full automatic guided vehicle/drone

(2)Disruptive approach for realizing automatic guided driving Unmanned transportation service in limited areas

Ride sharing Platooning

○ Logistics provider (truck/railway/ drone etc.)

Restructuring axis in the Fourth Industrial Revolution

Unmanned transportation service Alternative

○Transportation business (bus/taxi etc.)

○ Sharing service provider Mobility of goods

around 2030

○ Drone manufacture ○ Information service

Human mobility

2018-

Expansion of sharing service Unmanned truck Full unmanned logistics

Complimentary Drone for last one mile delivery

"Move" automati cally, safely, freely and inexpens ively

Drone for main network ※ Trial is expected for late 2020's according to Public-Private ITS Vision/Roadmap 2015.

METI METI

27

(2) Industries flock to market related to “smart life“, impacting employment. 

Utilization of real housing data produces various new services and products, affecting various industries.

Newly created role and value

About middle of 2020's

Current

(7) Shift to mass customization (7)

(4) Health information service

(1) Display device utilization

(2)Display energy use

Energy Smart house

Relevant industries (e.g.)

(5) Autonomous efficiency of retail (shopping)

(6) Integration of devices and advertisement

(5) Partial autonomous efficiency of retail (shopping)

(4) Systematic use of EV (electricity storage) (1)Wide area control of supply/ demand of electricity

(1)

(2) Visualization

(3) More efficient home delivery (use of information delivery times)

(4) Partnering health service and medical care

(5)

(6) Optimal advertisement based on personal behavior

(8) Monitor/security of equipment (3) Further efficient regional logistics (enhancement of predicative capability)

(2) Watch (6) Electricity interchange with home to home (by fulfillment of parity)

(3) Incentive for electricity saving

(1) Wide area control of supply / demand of electricity

(8) Various services delivered through data platform

(9)

(4) Systematic use of EV (electricity storage) (1)

(2) Visualization

(2) Sophisticated watch (3) Incentive for electricity saving

(1) Control of supply/demand of wide-area electricity

Phase1/2 (Current status) Phase3 (Expanded linkage of devices) Phase4 (Reciprocal data use) Prior application of home Prior application of data from security services and Expanded effect to general housing / real estate related smart meters (installed in all automatic ordering industries houses by 2024) fulfillment etc. Retail, advertising, security, freight road transportation and medical/nursing care…etc. Prior application of Manufacturing (storage battery, EV), information service (aggregator business, negawatt trade)・・・etc. electricity storage use and electricity points

Manufacturing (electrical appliances, housing, household appliances), electricity/gas/water (retail), ・・・etc.

Electricity/gas (retail), electric equipment maker, construction/real estate leasing (housing), ・・・etc.

Impact on employment (e.g.)



(1)/(2) Fewer meter readers



(1) Less manpower for repair, maintenance and recall etc.



(3)/(4) Creation of new services (aggregator etc.), increase of employment due to increase of demand on products (EV etc.)



(3) Improvement of logistics labor market due to decrease of failed deliveries to empty homes

• (5)(6)(7)(8)(9)/(7)(8) Creation of additional employment by creating new services.

METI METI

28

Spread of vision “smart life" and its impact on society (pros and cons) Individuals ○ Realization of “smart life” friendly to environment [Electricity generated by residential photovoltaic power (aggregate): 8.65 million kW]

Domestic

○ Easier working by married couples through reduction of household workload - clothes washing/cleaning etc. [Post marriage female employment rate: 65.3%, Post child delivery female employment rate: 23.1%] ○ Resolution of issues of live-alone elderly under monitoring [Number of deaths at home of over 65 years live-alone elderlies in 23 wards in Tokyo: 2,869] ○ Decrease in deaths at home (heat shock etc.) [Number of unexpected deaths at home: 14,000] ●Risk of using housing data for criminal activities

Overseas

○ Upgrade of living standard through communitydistributed power sources in areas with inadequate infrastructure in emerging countries [Number of people living where there is no electric power : about 1.2 billion- 17%of world population(2013)]

Society ○ Realization of 3E+S (Energy security, Economic efficiency, Environment, Safety) ○ Improvement of efficiency of energy use at home [Energy use percentage at home: 14.4%] ○Realization of efficient distribution in response to needs for sufficient food [Food loss rate: 3.7%] ○ Increase of recall recovery rate and recovery rate of waste household electric appliance by identifying product locations [Number of serious product accidents due to nonresponse to recalled products: 100 cases per year] ○ Further enhancement of disaster-response capabilities ● Risk of cyber terrorism due to expanded networks ○ Contribution to achievement of goal for controlling global warming by improving efficiency of energy consumption [Goal: "Limit temperature increase to 2 degrees Celsius by 2050"] ○ Reduction of food loss worldwide [Number of people with insufficient food: about 800 million]

Source: "Statistics on food loss/household research 2014" by Ministry of Agriculture、Forestry and Fisheries, "White paper on energy usage 2015" by Agency of Natural Resources and Energy, "Walls blocking female continuous employment" by Cabinet Office, "White paper on aging society 2015 (full version)" by Cabinet Office, "Demographic survey 2014" by Ministry of Health、Labor and Welfare, "Renewable global status report 2015" by REN21, "World Food Programme “ by Hunger Statistics, "Tasks for product safety policy 2014" by Ministry of Economy、Trade and Industry

METI METI

29

Multiple ways of meeting the various needs of “smart life" 

Create new value by comprehensively utilizing integrated data inside home and in community.



New businesses may emerge that acquire most of their value by securing a competitive advantage through providing platform of such data integration.

Current

From 2017

About middle of 2020's → Integration of data on energy and housing/ creation of added value diversified through utilization of data

(1)Centralized approach Intensive on large scale

Phase1

Phase2

Distributed locally to area with demand

Energy

(2)Decentralized approach

Smart house

Home energy

Phase3 (Flexible and efficient energy supply system)

Phase2’ (Use of user resources)

Phase1

e.g self-learning/optimization by EcoCute and air-conditioner, etc.

Devices such Phase1 as home electric (enhanced functionality appliances single device) household appliances

Retail Health/medical prevention

Logistics

Restructuring axis in the Fourth Industrial Revolution

(wide area optimal)

(area optimal)

within

Phase2

e.g. visualization of electricity usage by smart meter

Phase2

(networking of devices: visualization, remote control, etc.)

Phase3

e.g.control of multiple devices via HEMS

Phase4 (Information collection by Platform and reciprocal data use

Phase3 (upgrade in linkage with other devices and services)

In a smart house, various upgrades occur in each device/service, integrating them into the platform. ⇒ Further advancement and resolution of issues in each domain (retail, heath etc.)

...

Obstacles exist for corporate partnership, data use, platforming.

METI METI

30

(3) (1) Industries flock to market related to “Keep healthy," impacting employment. Current

around 2030

during 2016-

Newly created role and value

(5)Personalized health service (2)Digitization of medical information

(2)Digitization of medical information

(1)Digitization of fitness information

(1)Fitness service in linkage with prevention

(3)Visualization of health condition

Phase1:Grasp of basic needs, collection of quality data Relevant industries (e.g.)

(10)Person alized (9)Personalized guidance medicines、 on nutrition personalized cosmetic and beauty services

Clustering data by integrating health related data, medical prescription, medical examination, clinical data

(7) Monitoring service

(4) medical examination recommendations

(2) Digitization of medical information

(3)Visualization of health

(1) Further improved fitness service

Phase2:Improvement of health and prevention based on relation between health and symptoms

Industries that develop more advanced data connection than data clusters (see description on the left) will be first players.

(8)Health minded community building (6) Insurance to cope with risk of life style diseases (5)Personalized health service (4) medical examination recommendations (3)Visualization of health condition and life style

Phase3:Optimizing and platforming through AI, etc.

Manufacture (food, cosmetics, household appliance), Finance(insurance), ・・・

Information service/software...

Medical institutions, entertainment (fitness), manufacturing (health equipment, wearable devices, apparel), communication ... • Impact on employment (e.g.)

(4)(5) Decrease of needs for medical/nursing care due to rise of independent elderlies will mitigate tightened labor market (this will enable focusing work force towards people truly in need of medical/nursing care).



(6)(7)(8)(9)(10) Creation of employment due to new services including "prevention and early diagnosis/early care-" related personalized services.

METI METI

31

(3)(2) Industries flock to market related to “support he elderly" impacting Employment employment. support -2030

Current

Newly created role and value

Excretion support equipment

Digitization of nursing care data

Transfer support equipment(care giver)

Optimal individual planning

Digitization of nursing care data

monitoring service

(1)Efficient administrative services Relevant industries (e.g.)

Transfer support Equipment (care receiver) Optimal individual planning

monitoring service

(2)Reduction of medical/care services workload

Reduction of direct services workload

Efficient indirect services

Smart nursing-care facility Transport support service

Communication Robot

service

Excretion support equipment

Food intake service Transfer support Equipment (care receiver)

Transfer support Equipment (caregiver)

Digitization of nursing care data

Optimal individual planning

Monitoring service

(3)Efficient medical/care services Information service...etc.

Manufacture (robots), medical equipment...etc.

Information communication, optical equipment, real estate, construction (housing) ...etc.

Impact on employment (e.g.)

• Efficient nursing care is expected by ensuring utilization of patient monitoring and digitization of care record.

• Efficient nursing care is expected by introducing excretion support equipment. • Reducing nursing-care worker turnover is expected through mitigating workload by introducing robots.

• With task of nursing care directly replaced by robots etc., drastic improvement of productivity with nursing care service is expected, allowing resources to be focused on people truly in need of human care.



Responding to the issues of shortage of nursing care workers, improving working conditions, and controlling taxpayer's burden. METI METI

32

Spread of vision “keep healthy, support the elderly" and impact on society (pros and cons) Individuals ○ Average life expectancy and healthy life expectancy are becoming longer, creating an ageless society.(living until the final days in his/her own way) [Percentage of population over 65years: 25%, Difference between average life expectancy and healthy life expectancy is about 10 years.]

Domestic

○ Independence/self-control of people in need of nursing care, progress of social participation [Number of elderly with difficulties in daily lives: 209 of 1,000 people] ○ Living securely until final days with nursing care [Percentage of single elderly households in 2035: 37.7%] ○ Realization of optimal workload of medical/nursing care [National medical expense: 40 trillion yen, lifestyle diseases as percentage of medical expenses: about one third]

Overseas

○ Increased average life expectancy, reduction of difference between average life expectancy and healthy life expectancy [Percentage of people over 65 years old worldwide : 12% on the average, average life expectancy: 71years, difference between average life expectancy and healthy life expectancy: about 10years]

Society ○ Reduction of fiscal burden of social security [32.7% of general account expenditure, medical expense: 11.4trillion yen, nursing care expense: 2.7trillion yen] ○ Resolution of supply-demand gap in nursing care workers [Gap of labor market estimated in 2025: 310,000 people, estimated in 2035: 680,000 people] ○ Improvement of working conditions of nursing care workers through higher productivity [Average salary of nursing care workers at welfare facilities: 218,900 yen compared to 324,000 yen average salary of all industries] ○ With prolonged healthy life expectancy, entry into labor market in the future may be on the rise despite projected population decrease. ●Possibility of increase of people unable to receive nursing care service unless industrial structure is reformed.

○ Optimal ratio of medical expenses [Percentage of medical expense compared to GDP: 9.3% (OECD member country average)] ○ Increasing need for nursing care services in Asian countries where aging populations are on the rise, and response to increasing need for preventive care in developed countries

Source: Materials for the Fourth Committee about healthy life expectancy/average life expectancy:WHO 2012 Comprehensive Survey of Living Conditions 1 in 2010, Report "Workshop for nursing care service responding to future needs in nursing care service," " Projection of the number of households for Japan (nationwide projection) compiled in January 2013" by National Institute of Population and Social Security Research

METI METI

33

Multiple ways to meet various needs of “support the elderly" Current

-2030 Efficient direct services of nursing care

・Alternative nursing care with robots

Reduction of direct workload of nursing care ・ Utilization of excretion support equipment ・ Utilization of robot suits, etc.

Efficient indirect nursing care services

・Digitization of nursing care records ・Utilization of watch sensor ・PDCA, etc. on enhanced quality/productivity based on data

Labor-intensive service model

・paper nursing care records ・Watch/patrol at night, etc.

3. Sophisticated innovation scenario ○ Realization of drastic streamlining and workload reduction through progressive robot technology / innovation ○ Advanced equipment / services dominating Asian markets where aging population is on the rise.

2. Enhanced productivity scenario ○ Realization of ability to address increased needs, securing nursing care workers, control of national burden through enhanced quality/productivity based on IT / sensors / robots ○ Improved quality of nursing care service - realization of nursing care at home without burden to family members

1. Stagnant productivity scenario ○ Increase of national burden ○ Shortage of nursing care workers ○ Increase of nursing care worker turnover, etc. METI METI

34

(4) Industries flock to markets related to “smart procurement," impacting employment. Current

around 2020

Newly created role and value

(4) Mass customization (3) Ensuring sophisticated safety (1) Reduction of lead time

(3) Ensuring sophisticated safety (2) Reduction of waste (materials inventory)

(1) Reduction of lead time

Phase1/2: Optimization of supply chain

(5) Prolonged product life cycle

(3) Realization of smart security

(2) Reduction of waste (merchandise inventory)

(1) Further reduction of lead time

Phase3:Provision of customized products by understanding customer needs Commercialize products after estimating needs and creating trends

Realization of mass customization that realizes fulfillment of individual needs

Relevant industries (e.g.)

(6) Expansion of domains of newly created services and products

(6) Creation of new services and products

(8) Creation of trend by identifying potential needs (7) Maintenance of products / zero downtime (4) Mass customization (5) Prolonged product life cycle (2) Zero waste, zero inventory

Phase 4: Sophisticated projection through AI

Medical care (Health), all types of industries or sectors including waste processing

Logistics, distribution ...

Manufacturing, communication, information service... Improve working conditions and labor market for factory workers





Improvement of logistics labor market





Change in necessary skills / type of work for factory workers



Impact on employment (e.g.)

Expected increase in demand of labor in many industries due to creation of new services and products Change in necessary skills / type of work for factory workers, logistics workers, back office workers, etc.



Expected increase of demand of labor in many industries due to creation of new services and products



Expected increase of demand of labor in domestic factory workers due to return of manufacturing sites to Japan, facilitated by reduction of lead time.



Change in necessary skills / type of work required for factory workers, logistics workers, back office workers, etc.

METI METI

35

Spread of “smart procurement " vision and its impact on society (pros and cons)

Individuals ○ People may be able to purchase whatever they want, whenever necessary and at fair prices.

Domestic

○ Consistent level / expansion of job openings due to development of new demand, increased competitiveness thanks to acquisition of domestic production sites [Active opening ratio: (jobs on production line) 1.23 (February 2016)] ●Need for change in worker skillsets, concerns about reducing job openings due to decline in international competitiveness (e.g. :machine → IT)

Overseas

○ People may be able to purchase whatever they want whenever necessary and at fair prices. ○ Reduction of waste worldwide [2.1billion ton]

Society ○ Realization of zero waste during production process (strengthen international competitiveness, reduce environmental impact) [Emission of CO2 from industrial sector(factory etc.): about 430 million tons (32.8% of total)] ○ Further construction of manufacturing facilities for sophisticated products in Japan (creation of new jobs, ripple effects for regional economies) [Overseas production rate for manufacture: 24.3% (2014)] ○ Control of illegal dumping of waste household electric appliances with increased networking of goods [Number of collected waste household electric appliances illegally dumped: (estimated record) 74,600]

○ Overseas deployment of smart factory system that realizes international contribution and market deployment by Japanese companies [GDP ratio for manufacturing: approx. 16%] ○ Recovery of waste material value with up-cycling, recycling and parts collection etc. [1.3 trillion USD market potential (Accenture's projection for 2030)]

Source: "Statistical data on general waste and industrial waste" by Resource Recycling Promotion Center, "Status of venous industry and challenges" by Ministry of Economy, Trade and Industry, "Statistical research on food loss and household research 2014" by Ministry of Agriculture、Forestry and Fisheries "Status of illegal dumping etc. of waste household electric appliance 2014" by Ministry of the Environment, "Status of general job reference February 2016" by Planet Aid, Accenture Mr Hodo's presentation at 3rd New Industrial Structure Committee, Ministry of Health,Labor and Welfare,"Emission amount of greenhouse effect gas 2013 (preliminary)" by Ministry of the Environment, METI METI "Survey of Overseas Business Activities" by Ministry of Economy, Trade and Industry, McKinsey"Manufacturing the future: The next era of global growth and innovation"

36

Multiple ways of meeting various needs of “smart procurement”  

Creation of new value by comprehensively utilizing integrated data on manufacturing / distribution / retail etc. Emergence of new business entities that secure a competitive advantage by utilizing technological innovation including AI is possible. Current

Players with manufacturing facilities

Manufacturer

Optimization of production by "visualization" and "data use" at factories

Efficient supply chain through collaboration

Players without manufacturing facilities

IT service provider

Preventive maintenance / insurance service using AI

Preventive maintenance / insurance service using sensor data

Component / material provider

Distributor (Retail/Wholesale) More efficient sales activities using distribution data (POS,EDI data etc.)

-2030

around 2020

Mass customization (instant customization of mass production, optimal control of robots with AI)

Commercialize products by estimating needs and creating trends with big data and AI

Monozukuri (manufacturing) Venture Provision of services utilizing big data on customers

Consumer

Consumers to participate in production process (prosumer) METI

37 37

4. Changes in employment structures with the revolution

METI METI

38

Focal point of change in employment structure (1)  Progress of labor saving in non-routine tasks besides routine tasks with emergence of robots etc. It is highly probable that middle-skill white-collar jobs, a major portion of the workforce in Japan, will decrease significantly while such progress leads to filling the overall manpower shortage.  Changes in business processes in line with the Fourth Industrial Revolution will bring about new employment needs including middle-skill workers. Therefore it is necessary to develop human resources to respond to changes in the employment structure and to shift the labor force to growth areas.

Change of jobs in line with the Fourth Industrial Revolution <Upstream jobs (management / planning / product planning / marketing, R&D)>

• Increase of high-skilled jobs due to expansion of business / markets in various industries (Occupations such as) management / strategy staff, M&A staff, data scientist, product planner for mass business, marketer / R&D staff, IT engineer to allow R&D findings to materialize) • Also increase of middle-skilled jobs to help with high-skilled workers such as data scientist etc. *This varies depending on how fast technological innovation progresses. (Occupations such as) operation staff to implement business creation process • Also increase of jobs for middle-skilled workers due to mass customization (Occupations such as) product planner / marketer who develop niche business, IT engineer to allow R&D findings to materialize

<Manufacturing / Procurement>

• Decrease in manufacturing jobs due to labor saving / unmanned factories with use of IoT and robots etc. (Occupations such as) production line workers, product / delivery inspectors • Decrease in procurement jobs due to automated, efficient supply chain management utilizing IoT. (Occupations such as) corporate procurement employees, shipment/delivery employees METI METI

39

Focal point of shift in employment structure (2) Change of jobs in line with the Fourth Industrial Revolution

<Sales>

• Decrease low-value-added sales jobs due to efficient, automated functionality of new technologies such as analyzing customer data and matching products /services with such data through AI and big data (Occupations such as) salespeople for low priced/regular insurance, cashiers for supermarkets • Increase in jobs for sales etc. of products/services which people buy chiefly for their safety (Occupations such as) salespeople for customized, high-value insurance, corporate salespeople with sophisticated consulting skills which will become a competitive advantage.

<Services>

• Decrease in jobs for simple, low-value-added services due to AI and robot replacement (jobs which robots can handle through imitation because AI can easily complete tasks based on past data or where the nature of the job is repetitive) (Occupations such as) waiter/waitress at normal restaurant, room clerk at low/middle grade hotel, call center staff, bank clerks, warehouse workers • Increase in jobs for high-value-added services for which direct human involvement enhances the quality/value of the services (Occupations such as) staff at exclusive restaurants, caregivers for expensive nursing care services, artist

<IT>

• Increase of jobs for not only high-skilled work that produces new business but also middle-skilled work due to mass customization (Occupations such as) manufacturing sector IoT business software developer, IT security staff

<Back office>

• Decrease back office jobs due to AI and global outsourcing substitutes (Occupations such as) accounting staff, human resources department payroll staff, data entry staff

METI METI

40

Envisioned reform of employment structure in line with the Fourth Industrial Revolution (illustrutive)

Target

As-is scenario

Optimal jobs in terms of quality and quantity with global market in possession

Losing markets with decrease of jobs and deteriorated quality

Jobs to create new business trend by developing AI and robot

Outflow overseas

Significant decrease AI and robot etc. will replace traditional jobs including workers at low value added production line, salesperson, back office staff.

(example) Management strategy prepared by

global companies, Top-level data scientists and R&D staff etc.

Jobs to work together with AI and robot, etc.

(example) ・Planning of various business ・Support work to help with high-skilled data scientist etc. (coordinator to incorporate change of business process into operation) ・Planning/marketing for customized product/ service expected to dramatically increase in the future Jobs independent from AI and robot, etc. (example)Human interaction ・High value added sales/service which can bring about enhanced quality/value of service through direct human involvement

Tendency of low wage/salary for many jobs

Accumulate jobs internally and externally

New employment responding to needs

Jobs to be replaced by AI and robot, etc.

METI METI

41

5. Projections involving industrial and employment structures

METI METI

42

Summary of Projections (towards 2030)

Status quo scenario

  

Added value will flow overseas due to reliance on overseas platform providers by Japanese industries to provide business. Inability to generate added value that can respond to societal challenges will bring about low added value and low growth rate for domestic industries. Workforce concentrating into jobs with low added value and low growth rate that compete with industries of machine/software will produce a society where low-wage workers are the standard.

Reform scenario

  

Ability to generate added value that can respond to social challenges will bring about acquisition of industries with high added value and high growth rate on global basis. Enhanced productivity caused by developed services based on technological innovation and increased entry into labor market will resolve issues of decreasing workforce. Workforce's shift to jobs which require solely human element in harmony with machine/software will let workers earn high wages/salary.

[Projected result]

※2015-2030(annual rate)

As-is scenario

Reform scenario

Real GDP growth rate

+0.8%

+2.0%

Nominal GDP growth rate

+1.4%

+3.5%

Wage increase rate

+2.2%

+3.7%

Nominal (2020)

547 trillion yen

(2030)

624 trillion yen

GDP

592 trillion yen

Fourth Industrial Revolutiondriven added value: 30 trillion yen

※This projection result requires continuous study in accordance with the reform’s ever-changing "vision."

846 trillion yen

METI METI

43

Projected result of industrial structure (GDP growth rate / number of workers / labor productivity) Sector (1) Raw materials Agriculture/fishery, mining etc. (2) Process manufacturing (intermediate goods etc.) Petroleum products, pig iron/crude steel, chemical fiber etc.

(3) Customer response type manufacturing Automobiles, communication equipment, industrial machinery etc. (4) Service /technology provision

Construction, wholesale, retail, finance etc.

(5) Information service Information service, service for businesses

(6) Hospitality service Hotel, restaurant, entertainment etc.

(7) Infrastructure network Electricity, telegraph/telephone etc.

(8) Others Medical/Nursing Care, governments, education etc.

Total

Optimal state envisioned with reform scenario

Nominal GDP growth rate (annual rate)

※Comparison between 2015 and 2030 Labor productivity (annual rate)

Number of workers

※ ( )denotes number of workers in 2015.

As-is

Reform

As-is

Reform

Expected to grow in accordance with national economic growth

+0.0%

+2.7%

-0.81million-0.71million

Expected to grow with efficient production of standardized products, and by deploying widelyused product development cycle

-0.3%

+1.9%

-0.58million -0.43million

Expected to create new value, significantly increase added value and minimize decrease in workers by deploying customized services and shift to new service industry etc.

+1.9%

+4.1%

Expected to increase added value by securing leading position in systemization/platforming of services using customer information

+1.0%

+3.4%

-2.83million -0.48million (20.26million)

+2.0% +3.6%

Expected to significantly increase added value and employment as core sector for the Fourth Industrial Revolution, driving economic growth

+2.3%

+4.5%

-0.17million+0.72million

+2.5% +3.8%

+1.2%

+3.7%

-0.80million+0.24million

+1.6%

+3.8%

-0.53million -0.07million

+1.7%

+3.0%

+0.51million+0.28million

+1.4%

+3.5%

-7.35million -1.61million

Expected to increase added value and employment by expanding local markets through identification of potential demand based on customer information Expected to increase added value enhancing quality of entire system, efficiency of supply and entry into different areas by integrating other service industries

Expected to have suppressed increase in workers due to efficient provision of social security etc. with AI, robot etc.

(2.78million)

(1.52million) -2.14million-1.17million (7.75million)

(6.41million)

(6.54million)

(3.88million)

(14.21million)

(63.34million)

As-is

Reform

+2.3% +4.7% +2.9% +4.2% +4.0% +5.2%

+2.1%

+3.5%

+2.6% +4.0% +1.5%

+2.9%

+2.3% +3.6%

※Each sector represents a category representing individual activities related to goods/services in accordance with industrial classification based on activities in the Input-Output Table. For example if company performs efficiently automobile manufacture by introducing IT, its activities are divided into automobile manufacture and information service, and each activity is respectively categorized into "customer response manufacturing" and "information service."

METI METI

44

Changes in number of workers by occupation (increase rate)

※Comparison between 2015 and 2030

Occupation (1) Upstream jobs Management strategy staff, R&D staff etc.

(2) Manufacturing/Procurement Production line workers, corporate procurement staff

Optimal state envisioned with reform scenario

-1.36million

Expected to be on the decrease regardless of success of reform due to replacement by AI and robot

-2.62million

Expected to increase jobs for sales etc. of products/services with sophisticated consulting needs as a competitive advantage.

(4) Sales (high possibility of replacement)

Expected to be on the decrease regardless of success of reform due to streamlining/automation with AI and big data

Staff at exclusive restaurants, caregivers at expensive nursing care service etc.

(6) Services (high possibility of replacement) Staff with typical restaurant, call center staff etc.

(7) IT IoT business manufacturing software developer, IT security staff etc.

(8) Back office

Accounting staff, personnel staff for salary management, data entry staff

(ⅸ) Others Construction workers etc.

Total

As-is

Expected to increase core manpower to engage in new businesses including planning of management/product, marketing, R&D

(3) Sales (low possibility of replacement) Salespeople for customized highvalue insurance etc.

Salespeople for low priced/regular insurance, cashiers for supermarket etc. (5) Services (low possibility of replacement)

Number of workers by occupation

Expected to increase jobs for high value added sales/services for which direct human involvement creates enhanced quality/value of services Expected to be on the decrease due to streamlining / automation with AI and big data ※As-is scenario shows slight increase as it serves as a source of employment.

Expected to increase jobs for IT as it meets needs from manufacturing as a whole which is pursuing IoT and improved security

Expected to be on the decrease regardless of success of reform due to replacement with AI and global outsourcing Expected to be on the decrease due to streamlining/automation with AI and big data

Number of workers by occupation (annual rate)

Reform

As-is

Reform

-2.2 %

+1.2 %

-2.97million

-1.2 %

-1.4 %

-0.62million +1.14million

-1.2 %

+1.7 %

-0.62million

-1.3 %

-1.4%

-0.1 %

+1.8 %

-0.51million

+0.1 %

-0.3 %

+0.45million

-0.2 %

+2.1 %

-0.8 %

-0.8 %

+0.96million

-0.68million

-0.06million +1.79million +0.23million -0.03million -1.45million

-1.43million

-0.82million

-0.37million

-1.1 %

-0.5 %

-7.35million

-1.61million

-0.8 %

-0.2 %

(Source) Compiled by METI based on "Collaborative research result on probability of computerization for occupations in Japan" by Nomura Research Institute and University of Oxford(Dr. Michael A. Osborne, Dr. Carl Benedikt Frey)

METI METI

45

(Reference) Projection of industry and employment structures Projections regarding macro-economic trends such as 2030 GDP, income level, production value by sectors, number of workers by sectors, number of workers by occupations, while considering dramatic improvement of productivity triggered by the Fourth Industrial Revolution, smooth transfer of economic resources to growth industries, shifting employment with business process changes, all of which are derived from a combination of (1) Macro-economic model,(2) Industrial structure model, (3) Employment structure model.

(1) Macro-economic model  This model shows the supply/demand adjustment state which represents short/medium-term change of GDP based on total demand including consumption and investment while long-term GDP is affected by potential GDP supply restrictions.  As-is scenario produces a low potential growth rate vector.  The reform scenario indicates upward potential growth due to the Fourth Industrial Revolution. Furthermore, consumption/investment expands with subsequent potential demand and projected increased economic growth rate.

(2) Industrial structure model  This model, based on trends in the past 20 years, projects the percentage of final demand by sectors in 2030, the interim investment structure and labor productivity.  Production value by sectors is projected by the following: final demand from macro-economic model analyzed by percentage of final demand by sectors and this calculated final demand is multiplied by inverse matrix coefficient derived from intermediate input structure.

(3) Employment structure model  Number of workers by occupation is projected with number of workers by industry sectors multiplied by ratio of occupations to sectors.  Reform scenario surmises that increased occupations indicate jobs with low possibility of replacement by AI/robot and decreased occupations indicate jobs with high possibility of replacement based on collaborative research by Nomura Research Institute and University of Oxford.

 Number of workers by sectors is projected with production value by sections divided by labor productivity.

METI METI

46

<Main premises of projection>  Size of workforce Figures until 2014 are derived from actual figures. Regarding figures after 2015, as-is scenario used a projection based on "Zero growth/status of participation," and the reform scenario used a projection based on "Economic revitalization/progress of labor participation“ using data derived from "Estimated labor supply/demand" (May 2014) by JILPT (hereinafter referred to as "estimated workforce") ※ Note: Number of workers in 2030 is affected by long-standing decrease of productive age population due to low birth rate/aging population.

 Price increase rate With respect to the baseline price increase rate for, as-is scenario referred to “Projection on medium / long term economy / finance (January 21, 2016)" (hereinafter referred to as "medium/long term projection") by Cabinet Office, and reform scenario referred to the same with respect to price increase index for economic revitalization case. Figures in 2023 were used to assume figures after 2024.  Foreign exchange rate Figures till 2015 are derived from actual figures. Figures in 2015 used to assume figures after 2016.

 Structural / frictional unemployment  Finance 2.8% - used as assumption based on relationship of past With respect to each item of national expenditure, general unemployment and vacancy rate (job openings to potential government fixed capital formation is expected to increase number of employees) with domestic corporate goods price index in the "medium / long term projection" and other expenditures (excluding  Working hours social security) increase with the consumer price index Average working hours - calculated using "numbers of (virtually no change). Social security expenditure is expected working hours by gender / age in 2014 "from " Basic to increase with nominal GDP growth and wage increase Survey on Wage Structure" by Ministry of Health, Labor rates. and Welfare and "numbers of workers by gender / age from "estimated workforce."  Consumption tax It is assumed that consumption tax will be raised to 10% in  Fixed capital consumption rate / Capacity utilization 2017. index 8.6% or less - used as assumption based on relationship of past capital investment and private corporate capital stock. For capacity utilization index, figures in 2014 were used as assumption. METI METI

47

6.Japan’s detailed strategies i. Environmental development for promoting data utilization

METI

48

(1)Development of data platforms and creation of a secondary market for data

Challenges •

If data remains enclosed within each companies as it is now, data platforms, which is the basis of global data utilization, will have to rely on foreign countries.



On top of such development of data platforms, it is important to simultaneously promote data exchange based on the market’s mechanism by vitalizing negotiation-based transaction and create a market place where data can be openly traded with third parties, etc.

Basic Direction of Efforts • •

Promote the development of global data platforms in areas where Japan’s strengths can be leveraged. Internationalize such efforts by creating successful cases as soon as possible. In the future, data producers and data users need to be matched up and a system (secondary market for data) where data flows and is mutually used and applied needs to be established. Rights, responsibilities, and transaction rules between the producers and users of data need to be clearly stipulated and discussions towards the development of technical aspects and actual systems for the development of a secondary market of data is to take place.

Short Term Efforts • • • • •

Development of data platforms (Smart factories, industrial safety, automatic driving map, healthcare/medical, etc. ) Improve environment for future platform development (Environment for verification, creation of rules and systems, promotion of international standardization, etc.) Confirm current contracts regarding data use and application. Create templates for contracts and model provisions. Promote precedent cases working towards the creation of a secondary market for data. Switch from the conventional face to face and written operation to promoting the use of IT as a rule. METI 49

Clarification of competitive area and cooperative area ~e.g.(1) Cooperative area in the manufacturing scene For manufacturing sites to connect with each other between companies (large corporations and SMEs) and organizations, it is important to carefully

[Cloud]

determine how to collect what type of data for

Data Cooperation (2)Distribution

Data Cooperation collaboration↓

 A public-private working group for related

(3)Sales

(1)Procurement

companies was created (July 2015) and is working on model cases, information sharing, and standardization such as the IEC and ISO.

Creation of Platform

[Instruction by the Prime Minister based on the 5th Public-private Dialogue]

[Edge]

•Create advanced systems to share and use data from the

Data in Data possible Competitive to be share Area

Data in the Production Scene

manufacturing scene collected by sensors amongst factories and companies at 50 locations throughout the nation by 2020. •Collaborate with Germany, with which Japan shares a strong manufacturing industry, in international standardization. (*Attended by a broad range of manufacturing related companies) ○Control/network equipment manufacturers (Mitsubishi Electric, Hitachi, etc.) ○IT vendors (Fujitsu, NEC, etc.) ○Users (MHI, Toyota Motors, Nissan Motors, etc.) ○Others, trading companies, think tanks, etc.

METI

50

Clarification of competitive area and cooperative area—e.g.(2) Cooperative area in industrial safety.

 Efforts in industrial safety are similar amongst companies and have high potential of progress in data sharing as well as its effectiveness.  Start on the organization of data that can be shared as well as on the verification of the effectiveness of data sharing by collaboration amongst companies in the same industrial complex.  Reflect the results of the verification process in new regulation systems and promote continuous monitoring utilizing IoT etc. Support insurance development and other efforts, too.

<Examples of topics to be verified> (1) Parts management for common equipment (Packing & sealing for rotating machinery, etc.)

(2) Continuous monitoring of operation status (early detection of anomaly/signs) ・Alert “Anomaly”

Past ・Long detection lead time

→ Large impact on production

Upper limit alarm Normal

Super Certified Companies Certification Criteria (Additional) Organic collaboration ・Utilization of IoT, Big Data, etc. of verification and ・High level risk assessment regulations systems. ・Evaluation of saftey capability by third party, etc.

・Alert “unusual situation” ・Shorten detection lead time New→ Minimal impact on production

Signs

Index for status management Early detection

<Regulation system for high level Selfcontrolled Safety>

Privileges in regulations depending on ability to maintain safety. • •

Certified Companies Certification Criteria ・Creation of an organization specializing on safety. ・Implementation of PDCA ・Ensure sufficient education and training etc.



Allow use of new inspection methods Allow lower frequency of inspection to enable long term continuous operation Allow broader minor changes of facility by “filing a report” only, etc.

Companies

Lower limit alarm

Time flow

METI

51

Clarification of competitive area and cooperative area ―e.g.(3) Cooperative area related to autonomous driving maps 

Various autonomous driving related data exist



Of those data, economies of scale can be expected by inter-company collaboration in 3D map information etc.



In Europe, 3 German automobile manufacturers have jointly bought a map company.

《Dynamic Information(<1sec) 》 ITS’s predictive information (vehicle information in the vicinity, pedestrian information, traffic light information.

Autonomous driving related data linkage

Scope of Cooperative Area and area of competition needs to be determined.

《Quasi-dynamic Information(<1min) 》 Accident information, traffic information, small-area weather information, etc.

[PM's statement at the 5th Public-

《Quasi-static Information<1hour)》 Traffic regulation information, road construction work information, large area weather information 《Static Information(<1month)》 Road surface information, traffic lane information, 3D structure information, etc.

Base

Private Dialogue] • Make autonomous driving maps ready for practical use as early as 2018. • Gather automobile manufacturers and map companies to create a crosscompany unified specification and create a proposal for international standardization by the end of FY 2016.

METI

52

(Clarification of competitive Area and cooperative area ―e.g.(4) Cooperative area related to healthcare and medicine.  Utilize the massive amount of treatment and examination data, etc. compiled (to create big data) for drug development and R&D of treatment methods, etc. 根拠に基づく Optimal treatment based on evidence 最適な治療

Solid line ≒ named data Dotted line ≒ anonymous data

Medical institution

医療機関

Island / rural clinic

離島・僻地診療所

Development 人工知能を適用 of AI-applied した医療システム medical system 開発

Hospital

病院

Collecting

収集機関 body Institutions that can properly 医療情報を預かり、 manage and anonymize 適切な管理のもとで medical data 匿名加工等が可能な機関

Clinical research, 臨床研究 epidemio・疫学研究 logical 用データ research data

Health service 健康サービス提供者 providers

Medical device maker

医療機器メーカー 新技術、 Scientific discovery of 科学的発見 new technology

Medical education

医育機関

新薬/新技術 Efficient R&D for drug discovery 開発の効率化

Pharma

製薬企業

Clinics 診療所 Effect 1 Medical services and administration 効果① 医療サービス、医療行政 Effect 2 Clinical research, epidemiological research, AI, etc. 効果② 新技術/臨床研究、疫学研究、人工知能等 Effect 3 New industry/health services for individuals etc. 効果③ 新産業/個人の為の健康サービス等

Public administration

行政

Determine health 先制的な行政 Policy on the basis of データに基づいた pre-emptive 医療政策の決定 administrative data

新サービス、 Development of new services and products 商品の開発 Health-related companies 健康関連企業

(Source: Excerpts with partial changes to material from the Council for Next Generation Medical ICT Platforms.

[PM's statement at the 5th Public-Private Dialogue]

In order to utilize data for new drug and treatment development, legislation to create an organization that engages in simple and easy collection of large amount of treatment/ examination data, anonymizes and safely manages the data is to be developed by the end of next year. METI

53

(Clarification of competitive area and Cooperative area

―i.e.(5) Cooperative area related to healthcare and medicine.

 Promote the utilization of receipts, health check-ups, and healthcare related data, with the consent of the data source individual, by creating a “Healthcare Data Consortium”, capable of data analysis, from entities, mainly “health conscious” companies, that accumulate and utilize their employees’ and other data. Company/insurer

Healthcare related information

Intervene at an appropriate timing

Health check-up

Feedback loop 健 康 Recovery

本人

Healthcare related information

Examination data etc.

Doctor/public health nurse

Healthcare related information

Medical institution

Instruction on exercise

Must consult medical institution

Healthcare related data (steps walked, pulse, temperature, weight, blood pressure, sleep…)

Health check-up

Integrate

Health level

Health check-up data

Healthcare related information

Medical receipt data

Verification image of utilizing medical receipt, health check-up and healthcare related data to prevent the aggravation of lifestyle related diseases

Make symptom Worried about Alert if symptom transparent to a symptom worsens ensure continuous treatment

(Source: Reference material from Ministry of Economy, Trade, and Industry, NextGeneration Healthcare Industry Council, Health Investment Working Group (10th meeting))

[PM's statement at the 5th PublicPrivate Dialogue] • Start verification project compiling and analyzing receipt, health check-up, and healthcare data held by medical institutions, companies and insurers by the end of this FY. • Start efforts that provide stronger incentives to medical insurers to contribute to prevention and health promotion, including the above effort. METI

54

(2) Promotion of personal data utilization

Challenges •

Clarification of rules on obtaining consent from the data source individual and on the anonymization process is insufficient. Social recognition on the merits of personal data utilization is insufficient.



There are cases where useful data remain scattered, not compiled to a sufficient size.



There are cases where companies and administrative bodies possess large amounts of personal data which are kept idle and remain both unutilized by themselves and not supplied to third parties.

Basic Direction of Efforts •

Keeping in mind the balance with ensuring protection of privacy, accelerate clarification of rules on obtaining consent from the data source individual and on the anonymization process, and publicize the rules.



Develop an organization that engages in simple and easy collection of large amounts of treatment/ examination data, anonymizes and safely manages the data (by the end of next year).



Look into creating an organization that records personal data with the involvement of the data source individual and compiles the data for uniform management in order to provide various companies with the data.

Short Term Efforts • • • •

International standardization of guideline to obtain consent from data source individuals. Create guideline for anonymization process (To be developed by certified personal information protection organizations of each industry) Materialize the plan of creating a proxy organization that does not require consent of the data source individual in the healthcare and medical field, etc. Consider a framework of utilizing personal data with the involvement of the data source individual. METI 55

(Reference)Efforts in the UK ~midata~

(参考)英国の対応

 The UK is running a public-private joint project “midata” since 2011, which is a framework that enables consumers to freely access their own personal data obtained by private companies, also making it possible for the data to be provided to third party companies as needed.

UK: How midata works fields

Electric power providers

Financial Institutions (banks, credit cards, etc.)

(1) Request data disclosure Participants: British government, consumer organizations, regulators (ICO, OfCom, OfGem), private companies (Google, British Gas, Lloyds TSB, 02, etc.)

Mobile Communications carriers

(2) Obtain data real time (machine readable format) (3) Provide data

(5) Advice, recommendations Individual

Third part company (4) Data analysis

(Reference) EU Data Protection Regulation Draft Article 18 (Rights to data portability)

2 The data subject holds the right to obtain those data he/she provided the controller in a structured and commonly used electronic format, and also holds the right to transfer data from one electronic processing system to and into another, without being prevented from doing so by the controller. Source: Ministry of Economy, Trade and Industry

Industrial Structure Council New Industrial Structure Committee (7th meeting)

METI

56

(3) Development of ecosystem that produces security technologies and human resource for security

Challenges •

In order to strengthen cyber security, the government needs to take leadership and collaborate with players from the industrial side to create an eco-system where an industry is created around security.

Basic Direction of Efforts •

Develop an eco-system where actual incident management, analysis of new attack information, R&D based on such information, and development of human resource based on such practice collaborate and look into creating a system where security countermeasure needs are created in the industrial side.



Clarify standards related to security countermeasures and introduce a system of evaluation in by market.



Further, consider utilizing frameworks of regulation in fields where the maintenance of a certain standard of service and security is needed according to industry law.

Short Term Efforts • • • •

Spread the Cyber Security Management Guideline. Accelerate the development of technology and human resource that will lead to strengthening cyber security countermeasures. Strengthen security countermeasures at important infrastructure companies. Strengthen recruitment of human resource for security (develop human resource for security through the creation of national qualifications and other measures and promote the recruitment of qualified human resource) METI 57

(Reference) Cyber attack update ○Many incidents of leakage of important information have occurred by targeted cyber attacks to governmental organizations and companies. ○On top of information leakage, there is an increased risk of cyber attacks that result in physical damage targeting social infrastructures and IoT systems. With the 2020 Tokyo Olympics and Paralymic games ahead, the risk will grow further. [Percentage of Targeted Attacks with Confirmed Information Leakage、 etc] 23.8%

25% 20%

[ Cyber Attack to IoT System]

17.2%



19.6%

15% 10%



5% 0% 2011年度

2012年度

2013年度



July 2015, a security researcher proved that Chrysler’s “Connected Car” system (a system which enables the driver to start the engine and understand the current position of the vehicle using GPS through a smartphone) had vulnerabilities through which it can be hacked. Specifically, he pointed out that a third party could stop the engine or control the brakes by remote operation using a smartphone. Chrysler recalled 1.4 million vehicles.

(Source)Drafted by the Ministry of Economy, Trade, and Industry based on the IPA “Information Security Incidents Damage Situation Survey” 2011, 2012, 2013.

Source:Wired Magazine

[Attacks to Public and Industrial Infrastructure Overseas] Damage to blast furnace of a steel refinery (German, 2014) Fraudulent manipulation of control system was gained by targeted attack. Resulted in damage of blast furnace.

Large scale blackout in Ukraine (2015) Fraudulent manipulation of control system was gained by targeted attack. Resulted in a large scale blackout effecting millions of homes in western Ukraine for 3 to 6 hours.

Source: Ministry of Economy, Trade and Industry, Industrial Structure Council, New Industrial Structure Committee (7th meeting)

METI

58

(4) Intellectual property policies in the face of Forth Industrial Revolution

Challenges •

A new system for intellectual property encompassing new informational assets such as creations using artificial intelligence and databases compiled by sensors, etc. is needed.

Basic Direction of Efforts •

Clarify how to handle creations using artificial intelligence etc. as intellectual property.



Prevent free rides on related technologies and databases.



Secure appropriate compensation when technology or data is shared with a third party.



In order to promote innovation by smooth utilization of data, develop a new system for existing intellectual property, taking the balance of protection and utilization into consideration.

Short Term Efforts • • •

Consider how future intellectual property protection should be established regarding new informational assets such as creations using AI, databases, etc. as well as related technologies. Develop plans to promote the collaborative utilization of intellectual property. Develop a new copyright system (a rights limitation system with a certain level of flexibility, etc.) METI

59

(Reference) Protection of database comparison of systems by nation

 Japan, US, and the UK all protect databases with creativity by copyright laws.  On the other hand, there are no systems that grant rights to databases deemed not creative in Japan and the US, while the EU protects their right by granting a “special right”. ※Databases deemed not creative can be protected as “trade secret” if it is not made public. Certain protection may apply through conduct control by tort law, etc..

EU

Japan

USA

Creative

Protected by Copyright Law

Not Creative

Sui generis right(Special Right) Content: Right to prohibit actions of extracting substantial parts of the database’s content or the secondary use of the content.

(None)

(None)

Source: Reference material for the Ministry of Economy, Trade Industrial Structure Council New Industrial Structure Committee (7th meeting), Mr. Miyake’s reference material at the Study Group on Cross-sectional Systems toward the Forth Industrial Revolution.

METI

60

(5)Modality of new rules of competition corresponding to Forth Industrial Revolution

Challenges •

In order to develop a fair environment for competition and to promote innovation, parts of platformers not encompassed by existing laws need to be enumerated and the need of new policies, including not only aspects pertaining to competition related policies, for new problems that arise where existing laws do not or may not effectively cover need to be evaluated.



In the event that the Fair Trade Commission confirms incidents where fair competition is being inhibited or incidents against the Anti-monopoly law, quick and strict legal action must to be taken.

Basic Direction of Efforts •

Collaborate with related governmental agencies to understand the competitive environment in the digital market and scrutinize key issues and challenges.



Clarify what cannot be encompassed by existing laws and consider how Japan should deal with parts not covered and consider the need of new methodologies in a broad range of existing systems.



Streamline the environment for enforcing the Anti-monopoly act and the Fair Trade Commission will take quick and strict legal action if it confirms any violation.

Short Term Efforts •

Reorganize ideas on how to correspond to platforms and consider what measures need to be taken. METI

61

(Reference) Statement of objection sent to Google (April 20 th, 2016) On April 20th, the European Commission sent a Statement of Objection to Google stating the company is forcing manufacturers of smart phones and other mobile devices to preinstall its application and set as default, leading to close off ways for other company’s applications from the market and stifling competition. Concerns of the European Commission(Press Release)

Google’s Comment (Statement by Executive Vice President on same day)

 Google requires to pre-install Google Search (search app), Google Chrome (browser) and other apps as default as a condition to license Google Play (Application Store) to Android devices. →Points out the following three effects (1) Makes it difficult for Google’s competitors to have their search apps and browsers installed as default to smartphones and other mobile devices. (2) Lowers incentive for manufacturers of smartphones and other mobile devices to set search apps and browsers that compete with Google Search and Google Chrome as default. (3) Lowers incentive for consumers to download competing search apps and browsers.

 Since its release in 2007, Android has served as the engine for both mobile software and hardware innovation, empowering many manufacturers of smartphones, etc. and has allowed developers of all sizes to reach consumers. As the result, users enjoy extraordinary choices of apps and devices at ever-lower prices.

 Android is an open-source system meaning that it can be freely used and modified. However, Google, as a condition to pre-install Google Play and Google Search to a modified operating system (Android fork), requires a manufacturer to enter into an “AntiFragmentation Agreement” that commits to not to sell devices running on Android forks. →Denies consumers’ access to innovative smart device services enabled by superior OS (Android fork)

 Google takes the European Commission’s concerns seriously but also believes that its business model is giving consumers OS with unprecedented performance while keeping manufacturers’ costs low and flexibility high.

 Google grants significant financial incentives to manufacturers of smartphones, etc. on condition that they exclusively pre-install Google Search as search apps on their devices.

※Statement of Objection • • • •

Statement of Objection is one of the procedures preceding the European Commission’s decision on a cease and desist order or penalty, and outlines objections raised against the party and its supporting evidence. Companies receiving the statement have 12 weeks to present their argument in writing and to submit supporting evidence, and may also request an oral hearing. The sending of the statement of objection does not prejudge the final outcome of the investigation and European Commission will take decision after receiving counterarguments from related parties. There is no legal deadline for the Commission to make decisions. METI (Source)European Commission’s press release, Google’s blog

62

6. Japan’s specific strategy ii. Fostering and securing human resources, improving flexibility in employment systems

METI

63

(1)Development of an educational system encompassing new needs

Challenges

• With the introduction of artificial intelligence etc. to the workplace, skills required, job descriptions and businesses themselves have greatly changed. In order to nurture capabilities to open doors to new generations and create new values, the existing educational system and learning system needs to further evolve.

Basic Direction of Efforts • Reform content and methodology of education through active collaboration with private entities and by effectively utilizing ICT, such as making programming education a compulsory subject in elementary and secondary education. • Develop and recruit top class human resource that can lead global competition in the forth industrial revolution and create new business trends through reform of higher education. • Convert content of higher education and continuous learning by workers to an educational content that matches the society’s needs for the forth industrial revolution.

Short Term Efforts •

• • • • •

Make programming education a compulsory subject, evolving in tandem with children’s development, which will serve to nurture logical thinking abilities etc. in elementary and secondary education. Provide related assistance such as in the development of teaching materials and dispatching of human resource. Develop content and utilize human resource from the private sector through collaboration of the public education world and the industrial sector. Strengthen learning by the individual’s proficiency level by utilizing IT (Verification of using adaptive learning, etc.) Draft action plan based on the Government, University, Industry Research Roundtable on the Development of Human Resource in the Science and Technological Area (surveys to understand actual conditions, matching science and technology related human resource with jobs etc. ) Work on the details of creating higher education organizations offering practical vocational training. (IT data, tourism, design, etc.) Create a “Forth Industrial Revolution Ministerial Meeting for Human Resource Development (tentative)” to discuss “industrial policies”, “employment policies”, “education and human resource policies” all in one.

[PM’s statement at the 26 th Council for Industrial Competitiveness] • Make programming education a compulsory subject from elementary and secondary education. • Make full use of IT to assist in each student studying at their varying levels of proficiency.

METI

64

Programming education around the world --A trend of becoming a compulsory subject 

In order to develop human resource that meet the needs of a forth industrial revolution, countries around the world are making programming education a compulsory subject.



In Japan, programming is only included in junior high school industrial arts and homemaking class in its measurement and control unit, and as an elective in high school IT information courses.

 Israel  Programming education is a compulsory subject school since 2000.

in high

 UK

 Programming education is a compulsory subject for children between age 5 and 16 as “computing class” since September 2014.

(Source)Department for Education Web (UK)

 USA

 The “Every Student Succeeds Act”, including computer science in its curriculum, was enacted on December 10 th, 2015. Computer Science will now become a compulsory subject throughout the US in the future.

 Finland

 Programming education has become a compulsory subject for children between age 7 and 16 with its curriculum revision of 2016.

(Source)White House Web (USA)

METI

65

“Comprehensive Human Resource Development Initiative Toward the Forth Industrial Revolution” Source:26th Council for Industrial Competitiveness Reference ~Efforts at the Elementary/Secondary Education Stage~ “The Next Generation School” (A new education program will start from 2020) Develop Information Utilization Skills Integral to the Next Generation

In order to open new horizons for the new generation, skills needed to utilize necessary information to create new values and skills to identify and solve problems utilizing ICT will be developed, according to the developmental stage of children.

ICT will be effectively leveraged in the process of identifying and solving problems, etc. for each and all subjects, in lines with the characteristic of the subject. Programming education will become a compulsory subject, according to the developmental stage of children. Opportunities to learn programming through experience will be secured in elementary school, programming education regarding contents will be included in junior high school, and information class will become an all-high school wide compulsory course.

material submit by the Minister of Education, Culture, Sports, Science and Technology

Creation of a “Next Generation School”, Catering to the Needs of AL and Individual Learning

For the comprehensive development of basic knowledge and skills such as vocabulary and reading comprehension, as well as creative problem solving skills, teaching will be improved from a perspective of proactive deep learning through dialogues (active learning). The disparity in academic abilities, stemming from gaps in vocabulary and reading comprehension skills which start from lower grades of elementary school will be resolved, and increased evolutionary learning and other measures will ensure children are taught according to the needs of the individual. Secure opportunities for children to learn and experience in a variety of fields in science, arts, and culture.

With the best mix of enhanced teaching by teachers in the classroom and capitalizing on the merits of diversity, each child will be taught carefully according to their individual understanding level and problem solving skills will be developed. Team schools and the “Headquarter for the collaboration of schools in the area” will be utilized to provide diverse learning and experience opportunities outside of the education program for children.

In order to develop capabilities and skills needed for the next generation and to create valuable learning achievements, informatization of schools centering on contents created by effectively mixing knowhow and human resource from the private sector and the knowledge accumulated by teachers and schools is integral.

The public sector and private sector will collaborate to create an “education program with doors opened to society”

The Ministry of Education, Culture, Science and Technology, Ministry of Economy, Trade and Industry and the Ministry of Internal Affairs and Communication will collaborate to create a public-private consortium consisting of school officials, ICT related companies, and start-ups and will start working on the development and sharing of good educational contents and dispatch instructors to schools. Efforts to make schools ICT-ready to support leading edge education will be accelerated. An “Acceleration of Information of Education Plan” will be drawn up to promote the creation of environment for the informatization of schools centering on contents, and support industry-government-academia collaboration towards effective utilization of ICT according to the actual situations of ICT environment at each school.

*The Ministry of Economy, Trade, Industry will especially support in the promotion of contents development in collaboration with ICT companies and securing instructors. The Ministry of Internal Affairs and Communication will support from the aspects of utilization of the cloud, equipping with Wi-Fi, and nationwide road tours.

METI

66

(2)Recruiting global human resource Challenges •During a time of transition, shifting workforce to growth areas, human resource from overseas needs to be recruited in specialized and technical areas not only at the top level but for middle skill level as well.

Basic Direction of Efforts •

In order to change “unclear job descriptions”, ”long work hours”, “compensation system that doesn’t correlate with performance”, “little career paths at headquarters”, “Japanese language barrier” in Japanese corporations, a workstyle revolution will be promoted through the formation of pressure from the labor market as well as capital market.



Create a better environment, such as cutting down on the time needed to apply for permanent residence.

Short Term Efforts •

Create the “Japanese Version Green Card for Highly Skilled Human Resource from Overseas” which will offer one of the world’s fastest application. (Shorten the required period of stay before applying for permanent residence for highly skilled human resource from overseas )

[PM’s statement at the 26th Council for Industrial Competitiveness] •

Introduce the “Japanese Version Green Card for Highly Skilled Human Resource from Overseas” which will have one of the shortest period of stay requirement before applying for permanent residence. METI

67

International comparison of permission for permanent residence/green card •

The UK and US clearly state categories for permanent residence application such as entrepreneurs, corporate employers with a certain income or above for the UK and large scale investors, managers/board members of multinational companies, special skilled workers/knowledge workers for the US.



Permission for permanent residence in Japan requires a longer period of stay to apply compared to the US, etc., and there is no clear statement of type of human resource, such as entrepreneurs, investors, researchers, etc., that the government is looking for. Period of Stay Required for Application for Permanent Residence

Application by Mail or Internet

Employment by Company

10 years as a general rule

Directly submit to Immigration Counter

Required (Incl. self-employment)

(1)Good behavior and conduct (2)Asset and skill to maintain a living (3)Matches the benefits of Japan (No criminal record, tax records, period of stay)

UK

5 years as a general rule

Internet from overseas, mail domestically

Depends on Category Not required for investors

 

Entrepreneurs/investors Corporate employers with a certain income or above

US

No requirement

Internet from overseas, mail domestically

Depends on Category Not required for investors

 

Investors Managers/board members of multinational companies Special skilled workers/knowledge workers

Not available for new applications, available for renewals.

Required

 

Japan

5 years exception: “Contributors to Japan” “Highly Skilled Professionals”

-

3 years for some entrepreneurs

Green Card

Korea

5 years as a general rule - Advanced Science & Technology Area PhD: 1 Year or longer BS: 3 Year or longer - Point System: 3 Years or longer

Type of Permanent Resident Sought by Government



 

Entrepreneurs/investors Researchers in advanced science and technology Human resource in specialized profession Expatriates of multinational 68 companies METI

(3)Promotion of a diverse workforce Challenges •

In order to battle and succeed in fast-changing global competition, it is critical to make the most out of diverse human resource, regardless of nationality, sex, and age, and optimize recruiting and placement.

Basic Direction of Efforts •

Promote “Workstyle Revolution” by the formation of pressure from the labor market and capital market.



Similarly, utilize pressure from the labor and capital markets to create an employment environment where all can take part, so that women and the elderly can take part in the workforce.

Short Term Efforts •

Promote “Workstyle Revolution”



Create opportunities for dialogues between companies promoting diversity as a management goal and the capital market (on the modality of human resource strategy, etc. )

METI

69

(Reference) Diversity in Japan (women/foreigners) 

Compared to the percentage of women in the workforce, the percentage of women in managerial positions is, in an international comparison, low.



Both the percentage of total population for the number of foreigners and working foreigners are low. Diversity of nationality at the top level of companies is also low. [International Comparison of Foreigner Population and Number of Working Foreigners

[International Comparison of percentage of women in managerial positions and board members]

Total Population Managerial Position Workers in general

50.0 45.0

42.3

40.0 35.0 30.0 25.0

Board Member

(2013, Unit: million)

Japan

Korea

Singapore

Germany

UK

12,741

4,926

541

8,272

6,313

Foreigner population (Ratio) (Unit: million, US 2011, Japan 2014, Others 2012)

212(1.7%)

149(3.0%) 149(28.1%) 721(9.0%)

479(7.5%)

Working foreigners (Ratio) (Unit: million)

79(1.2%) 2014

76(2.9%) 2013

264(8.8%) 2013

124(37.0%) 2012

245(6.1%) 2014

20.0 15.0 11.2 10.0 5.0

2.1

0.0

METI

70

(4) Improve flexibility of the labor market and employment system

Challenges •

Japan continues to have a membership style (workers ascribe themselves to companies and the companies invest in human resource) employment system.



Need to transform into an employment framework which can smoothly react to global and speedy changes in business.

Basic Direction of Efforts •

Consider plans to improve mobility in the labor market by providing assistance to shift workforce with small risk. Further, there is a need to develop a system to promote reorganization of companies and industries as well as promote active regeneration of businesses.



Change to a labor law system that stands on the precondition that evaluation and management will be based on the individual’s performance.



Look into changing the social security system based on the majority of population being employed by a single company for a long term.

Short Term Efforts •

Add the “improve productivity” and “enhance competitiveness” point of views to “equal pay for equal work”



Create a “Forth Industrial Revolution Ministerial Meeting for Human Resource Development (tentative)” to discuss “industrial policies”, “employment policies”, “education and human resource policies” all in one. METI 71

(Reference) Improvement of workforce mobility  The largest inhibitor of changing domains that make up a business portfolio or pulling out of a business domain is said to be the “disposition of employees”  As it is crucial to shift the workforce to growing industries and businesses, improvement of mobility within the labor market through assistance for shifting the workforce with small risk as well as developing a system to promote active regeneration of businesses may be needed. [Top Inhibitor of Closure of Business Domain] n=4,377 [HR & Labor Related Concerns for M&As n=895] Number of Times

Difficulty in the disposition of employees in the domain

Percentage

400

1,379

31.5%

Relationship with supplier and customer

765

17.5%

Fear of damaging corporate image

700

16.0%

250

Historical and personnel related background of domain

590

13.5%

200

Cost of pulling out of business

476

10.9%

100

Competitors continue the business Legal and other institutional background

33

0.8%

6

0.1%

(出所)RIETI森川副所長レポート 『日本企業の構造変化:経営戦略・内部組織・企業行動』 Others

428

Source: Ministry of Economy, Trade and Industry

9.8%

380

350 300

274

150

150

53

50

38

0 Unifying Difficult to working reduce conditions number of employees

Losing talented human resource

Difficult to agree with labor union

Other

(Source) General Research and Study 2013, “Research and study on creating fair fules in the M&A market” (Study on the relationship etc. between listed companies and their shareholders)

Industrial Structure Council New Industrial Structure Committee (7th meeting)

METI

72

(Reference) To a mutually independent partnership between “company” and “individual” (1) Crowdsourcing as the initial stage 

Croudsourcing, an online system to match up outsourcing contracts, is starting to gain grounds in Japan.



Currently, work such as system development, web page production, and writing are the main types of work handled. However, the types and amount of work may grow and the quality may become more sophisticated in the future.

Efforts in Japan (Lancers, Crowd Works) Created a business matching mainly IT related contract work for clients, including large companies, with individual workers. A track record of number of orders and evaluations by clients determine the workers’ market value, creating a clearer correlation between the individual’s “track record and skill” and “compensation table” than the real world. ※Registered users: Lancers- over 700,000 (undisclosed/estimate), Crowd Works – 8 million (as of December 2015)

(Reference) Crowdsourcicng Association website

InnoCentive

Efforts in the US

Upwork

・Largest crowdsourcing company in the US. Covers skilled work such as programming, writing, translation, and designing to simple work such as clerical paperwork, bringing together a diverse crowd of workers from around the world. (Registered users: 9.3 million)

・The individual freelancer’s track record and evaluation is transparent through ratings by clients. (Reference) Upwork website

・Crowdsourcing company created in the US to solve scientific problems in research and development. Sophisticated topics such as starting a business, chemistry, computer science, engineering, food/agriculture, life science, math/statistics, physics are handled. ・Used by large companies and the government, etc. As the topics handled are more sophisticated than conventional crowdsourcing, the time frame per contract is long (1 to 2 months) and the compensation is high (USD 2,000 to millions)

(Reference) InnoCentive website

METI

73

(Reference) To a mutually independent partnership between “company” and “individual” (2) Diverse workstyle as a transition  In order for the individual to be able to attain their individual workstyle of preference, a diverse forms of workstyle such as double work, human resource loans, regular employee dispatch, etc. have started.

en Factory: Active Support of Double Work

 Highlights “No Mono-work” in its human resource policy and actively encourages engaging in a business besides one’s main occupation. En Factory calls this “parallel work” and approximately half of its employees actually “parallel work”.  In a bi-annual internal study group, parallel workers report their achievements to all employees.  Examples of “Parallel Work”  At en Factory: Service Supervision / Parallel work: BCP Consultant  At en Factory: SE / Parallel work: Regional vitalization coordinator

(Reference)en Factory website Survey on Efforts Related to Side Businesses and Double work 2014 (Small and Medium Enterprise Agency)

Panasonic: Regular Employee Dispatch  Rolled out a regular employee dispatch operation for highly skilled engineers who wish to develop their career as a specialist and not as management.  Engineers enrolled in this system will have the opportunity to continuously be involved with high level projects, thus keep up or improve his/her skill level and market value. (Reference) Panasonic website

METI

74

6.Japan’s specific strategy iii. Accelerating innovation and technology development (“Society 5.0”) METI

75

(1)Development of an open innovation system

Challenges

R&D at companies, universities and R&D entities close doors from each other leading to insufficient inter-organizational mobility in funding, human resource, technology and data amongst them. We have yet to see Japanese start-ups that have the capability to compete on a global scale and Japan remains left out from global networks of entrepreneurs and their supporters.

• •

Basic Direction of Efforts

Regarding academic-industrial collaboration, triple the size of investment to universities and R&D entities in the next ten years. Strengthen support systems to connect start-ups from the local market to the global market. Become a hub of the global network of entrepreneurs and their supporters. Strengthen strategic collaboration between large corporations and start-ups.

• •

Short Term Efforts Strengthen efforts for the promotion of serious academic-industrial collaboration in research (develop an academicindustrial collaboration system involving the entire organization at universities. Strengthen intellectual property management, etc.). Provide support and create environment for the promotion of open innovation between large corporations and start-ups. (support research & development, create templates for contracts, etc.) Create environment to promote active investment to mid to long term innovative R&D at companies that lead to innovation. Create a governmental organization consortium to carry out all policies related to start-ups that connect local areas in Japan with the world. Strengthen functions to provide financing to start-ups (vitalize corporate venture capitals, etc.)



• • • •

[PM's statement at the 5th Public-Private Dialogue] •

Strengthen the academic-industrial collaboration system and target tripling corporate investment into universities and re R&D entities within the next ten years. METI

76

(Reference)Japan’s current innovation eco-system (1/3) (technology) 

Half of all companies see no progress in open innovation compared to 10 years ago.



Of all technologies, 61% are developed by a single company and 64% remain idle without being commercialized which indicates that open innovation, both spin-ins and spin-outs, have not progressed. Especially, collaboration with startups are especially slow to progress for both spin-ins and spin-outs.

<Has open innovation become more active compared to 10 years ago?> More active No change Less active

Less active 3%

More active More active 47% No change 50%

(n=111) (Source) Industrial Structure Council, Committee on R&D and Innovation

3 rd

Small

Spin In

<Percentage of independent development and collaborative development with external organizations>

Independently Group company Domestic competitor (horizontal cooperation) Domestic company in the value chain (vertical cooperation) Other domestic company (collaboration with different industry) Domestic University Domestic public organization Domestic start-up Overseas University Overseas public organization Overseas company (excluding start-ups) Overseas start-ups Commissioned from other companies, etc.

(%)

61.4 8.4 2.7 5.6 3.9 8.6 3.1 0.9 1.2 0.3 1.5

Spin Out

<Disposition of technology/ideas not commercialized>

(%)

Keep idle

63

Commercialize at a group company Try to utilize at a different company Spin-off of employees/organization (start-up) Continue discussions behind the scene

10 6 2 20

(n=97)

0.4 2.1 (n=97)

METI

77

(Reference)Japan’s Current Innovation Eco-system (2/3) (Human Resource)  Extremely low mobility amongst human resource in research, and more dynamic interchange of talent across organizational borders is needed. ■Mobility of human resource in research by organization type as of 2013. Companies

Human resource in research

Approx. 666,000

Universities

Approx. 1,200

Human resource in research Approx. 200

Approx. 389,000

Approx. 500 Approx. 7,400

Approx. 15,200

Overseas

Approx. 5,200

Public research Organizations, etc.

Human resource in Research

Approx. 86,000

*For movement between domestic organizations, the figure represents the number of “researchers that have joined from external organizations”. *Source for the number of researchers at domestic universities, incoming and outgoing researchers (mid-long term) is the Ministry of Education, Culture, Science and Technology “General conditions of international research and development”. METI 78 Source: Ministry of Economy, Trade and Industry Industrial Structure Council New Industrial Structure Committee (7th meeting)

(Reference) Japan’s current innovation eco-system (3) (Funding)



“Organization” to “organization” academic and industrial collaboration is slow to evolve, as seen in the fact that when compared to overseas, the rate of funding provided to researches at Universities from companies is low and that the average budget per research is low, etc.

■Percentage of total research budgets of

companies contributed as research funds of Universities. Nation

2008(%)

2012(%)

Japan

0.44

0.46

US

1.06

0.91

Germany

3.65

3.65

UK

1.96

1.71

Korea

1.78

1.34

China

3.99

3.32

Source:Drafted by the Ministry of Economy, Trade and Industry based on the OECD「Research and Development Statistics」

Source: Ministry of Economy, Trade and Industry

■Joint research budget per research at Japanese and other Universities.

10 million yen per research is the prevalent budget size at Universities overseas.

3 to 5

million yen

Above 10 million yen 5 to 10

4%

million yen % Less than

9%

1 million yen 39%

1 to 3 million yen

The average budget is approx. 2 million yen at Japanese Universities

43%

Industrial Structure Council New Industrial Structure Committee (7th meeting)

METI

79

(2)Creation of world’s leading innovation centers, development of national projects, acceleration of implementation to real life (Artificial intelligence, etc.) Challenges • Japan has been left out of the global innovation network in all aspects such as human resource, technology, and funding. • In order to create innovations that can lead the forth industrial revolution, a new large scale national project is needed, something similar to efforts on artificial intelligence in the US and Europe. • Japan lacks sufficient environment, systems, locations where top global researchers can freely engage in leading edge research encompassing all the way to implementation in real society.

Basic Direction of Efforts • Strengthen technology intelligence across government related organizations. Take global trends into consideration and draft and implement a technology strategy in important fields (integrated research of artificial intelligence, which is a generic technology, and robotics, bio, energy/environmental technologies, etc.). • Attract top class human resource from around the world and develop five universities and R&D entities into leading edge strategic research centers. • Strengthen functions of universities and R&D entities, collaborate with Innovation Network Japan, and strategically implement achievements to real society.

Short Term Efforts • Create “Strategic Conference for Artificial Intelligence Technology” through the collaboration of public research organizations which will serve as the commander in the promotion of artificial intelligence R&D. Draft a technical roadmap for R&D goals and its commercialization (by the end of this fiscal year). Work on launching an AI national project that can lead the world. • Take a unified approach for the promotion of technology development utilizing deep learning and introduction to the working scene and its verification. Accelerate innovation and implementation to real society. • Attract top class human resource in a variety of fields and organize the environment (compensation rules, regulation systems, etc.) to develop a global open innovation center to promote open innovation. • For national projects in general, take global trends into consideration, and drastically cut down on the number of project in order to select and concentrate. • Further strengthen the function of implementing R &D achievements to real society at universities and R&D entities. (Fraunhofer Model)

[PM's statement at the fifth meeting of the Public-Private Dialogue] •

Create at least five academic-industrial cooperation strategic research centers with the world’s top class professors and research facilities for companies by the end of the next fiscal year. METI

80

(Reference) Isolation from global networks (1/3)(technology)  The number of international joint authorships of papers have greatly increased around the world between 2003 and 2013. While joint authorships between European nations and the US have increased, the increase for Japan is relatively small.

Poland Turkey

Sweden

Russia

Iran

Belgium

Turkey

Italy

Russia

Iran

UK

Spain

France

Japan

Sweden Belgium

Poland

Netherlands Germany

South Korea

Switzerland

Netherlands

Germany

South Korea

Switzerland Italy

France

Japan

Taiwan Canada

Spain

UK

Taiwan Canada

US

China

US

China Australia India

Australia Brazil

India

Brazil

*Size of the circle of each nation represent the number of scientific articles (articles carried in academic journals and articles included in proceedings at international conferences) *The lines connecting nations represent the number of international joint authorship articles, and larger the number the thicker the line.

Source: Drafted by the National Institute of Science and Technology Policy based on “Scopus” by Elsevier Source: Central Education Council, Excerpt from Summary of Deliberations “Graduate School Education Reform Playing a Leading Role into the Future”

METI

81

(Reference) Isolation from global networks (2/3)(Human resources)

 Looking at the movement of researchers worldwide, the US is at the core of international research networks. On the other hand, Japan is left out of international research networks.

or more

*The thickness of the arrows are based on the number of researchers moving between the two nations (1996 to 2011). Source of the number of moving researchers is the “Number of researchers” in OECD reference material “International flows of scientific authors, 1996-2011”. *Data represented in this chart is only for the two nations between which over a total of 2,000 researchers moved during the designated time. Source: Drafted by the Ministry of Education Culture, Science, and Technology based on OECD’s “Science, Technology and Industry Scoreboard 2013” Source: Central Education Council, Excerpt from Summary of Deliberations “Graduate School Education Reform Playing a Leading Role into the Future”

METI

82

(Reference) Isolation from global networks (3/3)(Funding) 

Although funds from overseas are increasingly making up a larger percentage of total research funds used in Japan, the percentage continues to be much lower than that of other major nations.

-- : Companies -- : Universities -- : Public organizations

Amount of research fund (million yen)

Percentage of research fund from overseas (%)

Percentage of overseas funding in major nations’ research funds (data from 2012)

Japan

US Germany France

China

Source: Ministry of Education, Culture, Science, and Technology, Science and Technology Policy Bureau, Science Technology Catalog 2014

Research funds・・・ Personnel expenses, raw material, purchase of tangible fixed assets, lease obligation, etc.

(Source)Ministry of Internal Affairs and Communications 2013 Science Technology Research Survey

UK

METI

83

Develop a system for research on artificial intelligence 

Create the “Conference for Artificial Intelligence Strategy” under the direction of the PM. Starting this fiscal year, this conference will be the commander in facilitating collaboration in AI technology R&D amongst the Ministry of Internal Affairs and Communications, Ministry of Education, Culture, Sports, Science and Technology and Ministry of Economy, Trade and Industry.



Draft a roadmap for R&D goals and its commercialization (by the end of this fiscal year)

Conference for Artificial Intelligence Strategy ○Commander of the 3 Ministry collaboration for artificial intelligence R&D and innovation policies

(Chairman, advisor (CSTI), industrial sector, academia, executives in supervisory roles from 5 companies, bureau directors from 3 Ministries) (Secretariat to be co-hosted by the 3 Ministries)

Conference for Research Collaboration (Director’s Meeting) ○Overall coordination of research (approve on detailed theme for collaborative research)

National Institute of Information and Communications Technology(MIC)

Director of CiNet Center: Toshio Yanagida

RIKEN AIP Center (MEXT)

Director: Masashi Sugiyama

Conference for Industrial Collaboration

Collaboration

National Institute of Advanced Industrial Science and Technology AI Research Center (METI)

○Overall coordination on the collaboration of R&D and industries (human resource development, standardization, road maps, technology, intellectual property trend analysis, regulation reform analysis, etc.)

Task Force ○Work on the actual promotion of tasks by setting task forces by issue, for example, on the drafting of a road map.

Director: Junichi Tsujii

Deploy Achievements

Government/companies, etc. in the Field of Exit [PM's statement at the 5th Public-Private Dialogue] •

Integrate industry-government-academia and create the “Conference for Artificial Intelligence Strategy” which will preside over related government agencies. Draft a roadmap for R&D goals and its commercialization (by the end of this fiscal year) METI

84

Artificial intelligence and deep learning Education Secretary Assistance to white collar jobs

Deep learning and its impact on industries

Translation EC for foreign countries Home choirs, nursing care

Understanding others Large scale Automatic operation logistics Substitute emotional labor comprehension of knowledge Automation of agriculture Optimization of production equipment Comprehension of language Crime prevention & surveillance Environment Security recognition Marketing Robust autonomous and behavior Diagnostic imaging behavior in the face of according to Advertisements change of environment context Behavior prediction Technology to Abnormality “touch softly” detection Improvement of image recognition accuracy

USA & Canada take the lead 2015 2006 (1) Image (2) Recognition

2020 Multi-modal Recognition

(4) (3) Behavior Interaction

2025 (5) Symbol Grounding

2030 (6) Knowledge Acquisition

Source: Ministry of Economy, Trade and Industry Industrial Structure Council New Industrial Structure Committee (2nd meeting) Presentation material by Associate Professor Yutaka Matsuo METI

85

Next generation R&D for artificial intelligence-direction of R&D and sample projects

AI is a technology that can be integrated with a variety of fields. Taking into consideration the strengths of Japan, below are the main fields with which integration should be promoted. --Manufacturing: Integrate with Japan’s strong manufacturing capabilities, the world’s top class industrial robots and automobiles to create an unmatched manufacturing industry. --Human Life: Integrate with Japan’s high quality service industry, medical/nursing care service, logistics, etc. to provide a rich prosperous lifestyle. --Science / Engineering: Integrate with the world’s top class fundamental science to promote the development of science and technology.



Indicate the direction to which R&D is to evolve, attract leading edge technology and human resource from overseas research organizations and universities, and engage in R&D with both public and private sectors, who will become users, taking part. Further, align R&D achievements with challenges and data at the exit, and provide total support using tools to implement achievements to real life, such as human resource development, standardization strategies, etc. so that all efforts will find a way out.

AI for

Manufacturing (AI × Robotics)

Future Image to be Accomplished by Projects (examples) ex)Improve productivity in manufacturing through work assistance for small quantity large variety production using teachingless industrial robots, failure prediction during assembly work, etc.

Human Life

ex) Support to various industries through consumer behavior analysis will bring various added values to services, leading to the improvement of life satisfaction.

Science/Engineering

ex) In life science, clinical medicine, material science and engineering, etc., new hypothesis and theories etc. will be automatically generated based on a variety of experimental data, leading to the acceleration of fundamental research.

(AI × IoT)

(AI × Big Data)

Planning to look into flagship projects integrating multiple fields (Ex. :Fundamental technologies for ultra high speed development of advanced materials project)

METI

86

(3) Strategically promoting the management of intellectual property and international standardization

Challenges •

Lack system to propose high quality international standardization as an “all Japan” effort after confirming areas of competition and collaboration.



Human resource that can strategically secure international standardization and work on intellectual property management while connecting them to management strategies and collaboration with R&D efforts eyeing international standardization are needed.

Basic Direction of Efforts •

The government will provide one-stop support from intellectual management, development of human resource that can work on international standardization, formulation of standardization strategies at companies, to the creation, proposal, and negotiation of international standardization drafts.



In government lead R&D initiatives, make up projects that eye strategic acquisition of rights and international standardization from the beginning.

Short Term Efforts •

Reinforce international standardization activities by the National Research and Development Agency (involvement through project management, etc.).



Increase standardization education at universities, etc. (in both humanities and science courses) and newly create a qualification system related to standardization.



In order to incorporate standardization as part of business and management strategies at companies, promote the creation of Chief Standardization Officer positions.



Support of global business development through creating a leading patent review system etc.



Take a comprehensive look at the modality of industrial property rights taking into consideration changes in industrial structure and subsequent changes in corporate patent strategies. METI

87

(Reference) Types of international standardization and case studies

Type of Standardization

(1) Standardization of Product Specification

Combination of Standard and Patent(Typical patterns)

Blue-ray Disc 〔Panasonic/SONY, etc.〕

Standardize including company’s patent.

Standard Patents

License

Standardized peripheral interface to company’s patent (2) Standardization of Interface Specification

Standard Patents etc.

Patents etc. Evaluation Standard

Source: Ministry of Economy, Trade and Industry

・Internationally standardized the specifications for Blue-ray Discs ・Patents needed to conform with the standard is licensed for low cost to all parties without discrimination.

QR Code 〔Denso〕 ・Standardized the basic specification of QR codes and provided it at no cost. ・Reading technology for QR codes remains in a black box and reading devices and software are sold for profit. ⇒Attained top share in Japan as reading device manufacturer.

Standardized the evaluation method of product including company’s patent. (3) Standardization of Performance Criteria /Evaluation Method

Case Study

*Excerpts from ”Analysis of Strategic Cases Related to Intellectual Property and Standardization (2014 edition)” (Ministry of Economy, Trade, and Industry)

QR Code was standardized and made available at no cost Secure profit by reading device

Crystal Device 〔Quartz Crystal Industry Association of Japan〕 ・The industry as a whole created an IEC quality evaluation standard for crystal devices.

Created a grade for high quality crystals that only Japanese companies can produce.

・Manufacturing technologies remained a black box thus competitiveness maintained.

Industrial Structure Council New Industrial Structure Committee (6th meeting)

METI

88

(Reference) US and Europe take the lead in international standardization President: Junji Nomura Chair:Tyco

Chair:Rockwell Automation Siemens

Market Strategy Board ・Project Team “”The future of factories” Standardization Management Board ・8th Strategic Group “Forth industrial revolution/smart manufacturing” ・Technical Committees(*) Ex. 65th Technical Committee Industrial Process Measurement and Control Devices

 

Chair: Siemens

President: Zhang Xiaogang Chair: Deutsche Telekom Technical Management Board ・Strategic Advisory Group “Forth industrial revolution” 

・Technical Committees(*) Ex. 184 th Technical Committee ”Automation system & integration”

Chair: Schneider Electric * Committee to draw up international standards of technical elements

(Source) Reference material by Yasuyuki Nishioka, Professor at Hosei University

METI

89

6.Japan’s specific strategy ⅳ. Fortifying financial functions

METI

90

(1)Fortifying equity finance toward the supply of risk money Challenges •

In order to vitalize innovation at start-ups and elsewhere, equity finance functions by private equity (PE funds) and venture capitals (VC) etc. need to be strengthened to supply more risk money to support bold decision making of corporate management.



Given the current background where large Western corporations are using their huge financial powers to buy out technology start-ups, a strategic approach involving both public and private entities is needed.

Basic Direction of Efforts •

Stronger equity financing capabilities by diverse financial entities, namely corporate venture capitals (CVC), is needed.



Upon verification of achievements by public-private funds etc., consider further strengthening their function.

Short Term Efforts •

Create systems to increase financing to venture capitals, etc. from companies, institutional investors, etc. and grow the venture capital industry.



Consider strengthening support functions such as political investment by public-private funds that will support side by side. METI

91

(Reference) Capturing financing for growth from the global capital market  Companies that have created strong expectations for growth of business through a virtuous cycle of data utilization have captured high levels of financing from the global capital market which lead to their speedy growth investment such as M&As.

(billion dollars)

Aggregated market value

Aggregated market value = net profit x 10

Net profit (Reference) Drafted by the Ministry of Economy, Trade, Industry based on Google Finance (November 23rd, 2015 closing price)(Reference material for 3rd Secretariat Meeting) METI

92

(Reference)Capital strength is the key to M&A investment to technology start-ups 

R&D key to the forth industrial revolution requires a larger scale investment than conventional investments for internet start-ups (on top of human resource investment to programmers, etc., investment for facilities and machinery is needed).



IT companies like Google and Apple utilize their huge M&A resources ,earned from their main business, for active M&As of technology startups. This size of M&A resource plays a large part in competitiveness.

*M&S Resources: Operating cash flow less investment in tangible fixed assets such as capital investment, etc.

Knowledge Intensive

Low

Internet Start-ups

Top Companies Listed in the 1st section of the TSE**

25

Alphabet(Google)

13

Amazon.com

3.8

Facebook

4.2

Manufacturer (average) 製造業(平均) Non-manufacturing/ 非製造・非金融業(平均) non-finance (average) Reference) Toyota 参考)トヨタ自動車

5 Companies spent approx.11trillion yen a year(Approx. 99 billion n USD)as investment resource

>

Size of investment needed grows

54

Microsoft

GAFA +M

Intensiveness)

AI, Bio, Material, Robotics, etc.

Apple

Money(Degree of Capital

Technology Start-ups

Comparison of “M&A Resources*”(billion dollars; average for 2013-2015)

High

Labor Intensive

Top 135 TSE 1st Section companies spent approx. 10trillion yen a year(Approx. 91

1.0 0.3 14

billion USD)as investment resource

** Companies listed in the 1st section of the TSE that have over 10 billion USD average sales in the last three years. (73 manufacturers, 62 non-manufacturing/non-finance companies)

Source: Analysis by Ministry of Economy, Trade and Industry based on SPEEDA

METI

93

(Reference)Creation of Innovation Through Growth Investment 

In the last two years, Google has bought over 10 start-ups that develop and sell artificial intelligence and robotics related technology.



Likewise, Western companies with huge funds engage in one after another growth investment (M&A, capital investment, R&D, etc.) to acquire technology and leading edge human resource, etc. for the creation of innovation.

[Companies Google has Acquired] Name of Company

Main Product

Date of MBO

SCHAFT (Japan)

Humanoid robots

December 2013

Industrial Perception

Robot arms

Meka Robotics(US)

Robotics

Holomni (US)

Robotics

Overview

First start-up at Tokyo University. Won first place prize at the DARPA Robotics Challenge in 2013. Industrial robot (for logistics, automatic unloading machine for trucks, etc.). December 2013 A spin-off from Willow Garage, famous for its OS for robots A spin-off start-up from the MIT Computer Science and Artificial Intelligence December 2013 Laboratory. Bipedal robots, etc. December 2013 Development of robotic vehicles capable of moving in various directions. Advanced video filming device utilizing robot arms. Works together with projection mapping.

Bot & Dolly (US)

Robot shaped camera

Boston Dynamics(US)

Robotics

Nest (US)

Home automation

DeepMind Technologies (UK)

Artificial intelligence

Jetpac (US)

Artificial intelligence

August 2014

Travel guide application applying big data analysis, image processing and machine learning.

Vision Factory (UK)

Artificial intelligence

October 2014

Image recognition system using deep learning.

Revolv (US)

Home automation

October 2014

Timeful (US)

Artificial intelligence

May 2015

December 2013 Spin-off from MIT. Creates humanoid and animal shaped robots. Manufactures thermostats and fire alarms. Functions as the hub for smartJanuary 2014 homes. CEO is Tony Fadell, first developer of iPod. Developed artificial intelligence that can learn how to play various video January 2014 games through reinforcement learning.



Source: CrunchBase

December 2013

Manufactures hardware used as a hub for Connected Homes (links devices in a household) Utilizes machine learning to propose optimized behavior to users to deepen learning experiences.

METI

94

(Reference)Size of Suppliers of Capital (Flow) 我が国の資金供給構造 

Indirect investment prevails in Japan and financial entities taking business risks do not play a large role.



On top of increasing the sizes of PEs and VCs, there may be needs for banks to supply risk money or for complementation by government policy financing.

Direct Financing

Indirect Financing

Banks 23.7 Trillion Yen

Credit Unions 3.9 Trillion Yen

Government Corporate Bonds Affiliated 8.6 Trillion Yen Financial Institutions 3.0 Trillion Yen

(Source) Banks/Credit unions/Government affiliated financial institutions: Bank of Japan “Loans and Bills Discounted by Sector” 2014 Corporate bonds/Equity: Japan Securities Dealers Association “FACT BOOK 2015” PE: “Japan Buyout Market Review--First Half 2015” Public-Private Investment Fund: "Verification Report on the Guideline for Public-private Investment Fund Operations” VC: Venture Enterprise Center “Venture Whitepaper 2015”

Business Investment (Risk Money) Equity 2.0 Trillion Yen

PE 656.9 Billion Yen

Public-Private VC Investment Funds 1,17.1 185.0 Billion Yen Billion Yen

Note: Banks/Credit unions/Government affiliated financial institutions: New loans as funding for equipment, less loans to local public bodies and individuals as well as international yen loans Corporate Bonds: Amount raised at listed companies. Equity: Amount raised at listed and newly listed companies PE: Total amount for Buyouts and PIPEs Public-private fund: Actual investment amount for 2014

METI

95

(Reference)Exit strategies for start-ups(Japan/US) 

Comparing exit strategies for start-ups, Japanese start-ups have a higher ratio of IPO and lower ratio of M&A compared to the US

Change in breakdown of method of exit of companies receiving VC investment in Japan (data for IPO & M&A only) IPO

M&A

Change in breakdown of method of exit of companies receiving VC investment in the US (data for IPO & M&A only) IPO

M&A

(Source) Drafted by the Ministry of Economy, Trade and Industry based on the Venture Enterprise Center’s “Venture Whitepaper 2015” (Note) For IPOs and M&As in Japan, when multiple VCs invest in the same company, each investment received count as an exit. METI

96

(2)Vitalization of investment in intangible Assets toward Fourth Industrial Revolution Challenges •

In order to create new innovations making full use of innovative technologies such as artificial intelligence, etc., drastic increase needs to be made in investments for intangible assets such as R&D assets, information assets, intellectual property, human resource, etc., on top of the current investment centering on tangible fixed assets such as production facility, etc.

Basic Direction of Efforts •

Consider the modality of investment in intangible assets to create sustainable corporate values as well as methods to evaluate such values in order to lead to increasing effective and substantial intangible asset investment.



Promote the accumulation of intangible assets as a nationwide effort and increase political support to vitalize innovation at companies.

Short Term Efforts •

On top of capital investment catering to the needs of the forth industrial revolution, consider beefing up incentives for investment in intangible assets which will become platforms for innovation as well as for mid to long term R&D investment, etc.

METI

97

(Reference) Corporate investment in intangible assets 

High percentage of corporate investment go to intangible assets (R&D, brand assets, investment in human resource, etc.) Corporate Investment and Capital Investment in the GDP Investment recognized by the company Investment that should be reflected in GDP To be included in capital investment (R&D) after the new standard is introduced in December 2016

Scope of investment currently reflected in GDP

(1) Approximately 6.8 trillion yen

・Copyrights, licenses

・Designs, etc.

Approximately 1.1 trillion yen

Innovative Assets

Approximately 1.9 trillion yen ・R&D

Approximately 5.8 trillion yen

・Software ← 0.9 trillion yen ・Plant engineering ・Mineral exploration

・Buildings, structural objects ・Machinery, facilities, etc.

Intangible Assets

1.0-1.5 trillion yen

(3) Approximately 1.5 to 2.0 trillion yen Foreign direct investment

Information assets ・Databases Approximately 100 billion yen

Economic competitivity ・Brand asset, etc. ・Human resource assets unique to companies ・Organizational structures, etc.

Approximately 0.7 trillion yen

Equity as investment and loans ・Foreign direct investment portion ・M&As, etc.

Approximately 1.0 trillion yen

Tangible Fixed Assets

(2) Approximately 2.5 trillion yen

Approximately 1.4 trillion yen Natural resources

・Land ・Underground resources ・Fishing grounds, etc.

Approximately 0.2 trillion yen

(net amount for land purchase)

Purchase of used products

Approximately 0.1 trillion yen

*Used the latest data available for each item. Each number are rounded off, thus the sum total be different. (Reference) Created with JIP database of RIETI by Mizuho Research Institute

(Reference material)”Are Companies Only Racking Up Cash? Deviations from GDP Statistics (February 22nd, 2016)” by Hajime Takata, Managing executive officer and chief economist of Mizuho Research Institute http://www.mizuho-ri.co.jp/publication/research/pdf/today/rt160222.pdf?ad=ml

METI

98

(Reference) Investment in Intangible Assets and Innovation, a virtuous cycle toward enhanced productivity  Investment in intangible assets is important*1, as this investment supports innovation in companies, such as catering to the needs of the forth industrial revolution, creation of innovative technology, etc., reform into a corporate organization that can utilize and apply new technologies, etc. In the US, investment in intangible assets has already grown to a size larger than that of tangible assets.

US/Japan Comparison of Intangible Asset/Tangible Fixed Asset Investment Investment Amount in Intangible Asset / Investment Amount in Tangible Asset

1.8 1.6

Intangible Asset>Tangible Asset

1.4 1.2

US

1.0 0.8 0.6

Japan

0.4 0.2

Tangible Asset>Intangible Asset

0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

*1:In Corrado’s research one third of the US’s increase in productivity from the 1990’s to early 2000’s is estimated to be a result of investment in intangible assets. Corrado, Hulten, Sichel (2005), “Intangible Capital and U.S. Economic Growth.” Review of Income and Wealth 55, pp.658-660

(Source of chart)RIETI”JIP Database 2013”, INTAN Invest “intangible investment data website Aug.2014”, Cabinet Office “93SN”, US Department of Commerce “National Income and Product Accounts Tables Jan.2016”

METI

99

(3) Further enhancing the functions of finance and settlement placing FinTech as the core

Challenges •

FinTech brings hopes for possibilities of utilization in regional vitalization and making financial and settlement services more convenient, efficient, and close to people. Centering around this trend, advancements of financial and settlement services need to be promoted.



In doing so, it is important to design incentives such as creating an environment that makes it most convenient and carefree for FinTech, providing the most advanced services, to operate successfully.

Basic Direction of Efforts •

The effect of FinTech’s innovation of financial services doesn’t only effect the finance industry itself but is extremely important from the aspects of advancement of management and improvement of productivity at SMEs, etc. as well as smooth financing, etc. It can hugely contribute to asset building of individual families, too.



With such understanding, there is a need to consider how to work on the institutional side and information system side in a integrated manner to maximize the power of FinTech.

Short Term Efforts •

Develop a FinTech “eco-system” (consider the modality of “Open API(note) ”, make financing of financing related IT companies easier for financial groups, create systems to introduce voluntary registration system to settlement business agencies, etc.)



Finance and settlement infrastructure reform (promotion changing all credit card authorizations to IC equipped cards, etc.)



Work on user protection and the safety of systems, etc.

(Note)API(Application Programming Interface): a specification for connection for using functions such as apps. By making this public (Open API), anybody can design and provide services.

METI

100

(Reference)FinTech services expanding across boarders of industries Company

Private home budgets

Finance Industry

Crowdfunding

Crowdfunding / P2P Lending Online / Short term small amount / Automatic Lending

Settlement by Dongle

Accounting

Banks

Settlement Prevention of Fraudulent Use of Credit Cards

Savings Mobile transfer

Newcomers

Transfers

Settlement + Operating Capital Loans

Corporate accounting

Bitcoin Market Place

Loans Securities Companies

Credit & Loans Utilizing Real Time Transaction Information From SNS and e-commerce.

Investment

Asset management

Home budgets

Virtual currencies Small-amount Periodic Investment Data Aggregation (Home budget information)

Newcomers

Investment

Crowd / Automatic accounting

Robo Advisor Pay-for-use Automobile Insurance

Insurance

Insurance companies

Insurance Telematics Information Service

METI

101

6.Japan’s specific strategy ⅴ. Facilitating smooth conversion of industrial and employment structures

METI

102

(1) Establishing a governance system in which business owners are able to swiftly and boldly make decisions

Challenges •

In Japan, shuffling and closing of business domains tend to happen after the business or the company’s results fall in the red.



Japanese companies need to adapt to discontinuous and quick changes under the direction of a CEO. The modality of corporate management, such as “setting a growth target”, “strategy and methodology to attain goals”, “strong-willed decision making”, etc., need to be reviewed for change, keeping in mind that the competition is with global corporations.

Basic Direction of Efforts •

As a system of corporate decision making, it is important to develop a governance system that can respond to changes in business environment, enabling quick and bold decisions, such as starting a new business domain or selling / closing a business domain.



To do so, it is important to strengthen the monitoring function of the board, including a reform of the appointment/dismissal procedures of the CEO. Specifically, board member’s meetings should take in diverse knowledge including that from outside board directors, and center its activity on reviewing and decision making on management and business strategies. At the same time, decisions regarding business execution need to be made quickly through delegation of power to top management, including the CEO. It is also important to enhance the clarity and objectivity of the polices and process regarding the appointment / dismissal of CEOs, which is an important strategic decision for the company.

Short Term Efforts •

Promote corporate governance reforms and strengthen its effectiveness

(compile and organize information on practices both domestic and from overseas regarding enhancement of functions of the board, draft a business practice policy, etc. ) METI

103

(Reference) Shuffling of business domains at European & American companies (1)Change of business domains at GE  Shrunk finance businesses which GE had grown up to 2000 and other noncore businesses to strengthen energy, aero engine and other businesses. $180,000m

Change in Sales by Division at GE

$160,000m

$140,000m

$140B

$130B

Other Material

Material

$120,000m

Media

Media Home electronics/ devices

$150B Other

2007 Sell plastic business to SABIC (Saudi Arabia)

Media Home electronics/ devices

Home electronics/ devices

$100,000m

Finance

$80,000m Finance $60,000m

2005 Sell most of re-insurance business to Swiss-Re

Finance

Transportation

$20,000m

Healthcare Transportation Healthcare Aviation

Aviation

Energy

2013 Buy energy division of Alstom (France)

Energy

$m 2000

$36B

2005

$52B

(Source)GE Annual Report

2010

$117B Other

Home electronics/ devices

Finance Transportation

2016 Sell consumer electronics division to Haier (China).

Healthcare

Aviation 2013 Buy Avio’s (Italy) airplane division.

Aviation

Energy

2015 Announce closure of GE Capital. Subsequen tly sells other finance related businesses.

Healthcare Transportation

$40,000m

2011 Sell NBC Universal Comcast (US)

$72B

Energy

2015

$92B

METI

104

Reference) Shuffling of business domains at European & American companies (1)Change of business domains at Siemens

 Discontinued businesses with little future prospect or little synergy with main businesses. Focused on profitable businesses. €90,000m

€80,000m

€70,000m

€77B

Change in Sales by Division at Siemens €75B Others

Others

2006

Merge and spin out communication network business with Nokia

Information and communication

€60,000m

2010

Lamp/LED Finance

Information and communication

€50,000m

Transportation

Lamp/LED €40,000m

Transportation

Healthcare

Healthcare €30,000m

€20,000m

Un-consolidate lighting company Osram. Spin off in 2013.

Industrials

Transportation Healthcare Healthcare

2007

Sell car parts business

2006

Buy Bayer’s diagnostic pharmaceutical business.

Industrials Industrials

Buy Date Behring (US), testing machinery company

€10,000m

€m 2000

Electric power

€36B

2005

Transportation

Finance

Electric power Electric power

Others Finance

€69B

2007

Industrials

€77B

€42B

(Source) Siemens Annual Report

2010

2011 Sell IT service division to EtoS(France)

2011 Sell nuclear power division to Areva (France)アレ バ(仏)に原子 力事業を売却

€61B

Electric power

2015

€66B METI

105

(2)Development of systems and environments to enable quick and flexible revival and shuffling of business domains

Challenges •

Global companies need to engage in large scale M&As using a variety of methods and buy out promising start-ups, actively spin-off business arms to elevate stockholder value, and strengthen the power to promote the company’s business.



Same goes for domestic companies and each entity will need to create an environment where business domains can be flexibly and quickly reshuffled according to each company’s situation.

Basic Direction of Efforts •

All needed systems and environments need to be created so that diverse corporate needs can be met to enable quick and flexible shuffling of business portfolios.

Short Term Efforts •

Consider the creation of systems and environments to enable quick and flexible revival and shuffling of business domains.



Promotion of early stage efforts for reviving businesses and succession of businesses at SMEs, promotion of investment taking the timing of succession as an opportunity.

METI

106

(Reference) Create environment to enable speedy and flexible shuffling of business domains 

Looking at the top 10 M&As overseas in the last ten years, shuffling of business domains using diverse tactics such as spin-offs and TOBs with treasury stocks as consideration.



For example, TOBs with treasury stocks as considerations are popular overseas while TOBs in Japan are typically by cash.

Top 10 TOBs in the World by Transaction Amount Transaction Amount (million dollars)

Percentage acquired by TOB (%)

Date Complet ed

Acquiring Company (Country)

Acquired Company (Country)



2007/11/ 02

RFS Holding(Netherlands)

ABN Amro Holding(Netherlands)

98,189

98.80



2005/08/ 09

Royal Dutch Petroleum(Netherlands )

Shell Transport & Trading(UK)

74,559

100



2009/3/2 6

Rosche Holding(Switzerland)

Genentech(US)

46,695



2007/11/ 14

Rio Tinto Canada Holding (Canada

Alcan (Canada)

37,630

Friendly/Ho stile

Cash:93 Equity:7

not friendly

Cash:0 Equity:100

friendly

47.82

Cash:100 Equity:0

hostile

100

Cash:100 Equity:0

friendly

Mittal Steele(Netherlands)

Arcelore (Luxemburg)

2006/04/ 19

Telefonica(Spain)

02(UK)

2005/06/ 30

Telecom Italia(Italy)



2007/10/ 05

Group of Investors(Italy)

Endesa (Spain)

26,438

45.62



2011/04/ 08

Sanofi Aventis (France)

Genzyme(US)

23,898

10

2007/04/ 23

Iberdrola (Spain)

Scottish Power(UK)

22,210





Telecom Italia Mobile(Italy)

32,240

Considerations (%)

2006/08/ 08



31,659

28,821

(Past 10 years)

93.70

Cash:29 Equity:71

friendly

Cash:100 Equity:0

friendly

Cash:66 Equity:34

friendly

Cash:100 Equity:0

hostile

100

Cash:84 Others: 16

friendly

100

Cash:53 Equity:47

friendly

100

44.65

Top 10 TOBs in Japan by Transaction Amount

(Past 10 years)

Considera tions (%)

friendly / hostile

100

Cash:100 Equity:0

friendly

5,734

100

Cash:100 Equity:0

friendly

Bank of Ayudhya (Thailand)

5,279

72.01

Cash:100 Equity:0

friendly

Dentsu

Aegis Group (UKI)

4,116

86.37

Cash:100 Equity:0

friendly

2010/0 6/08

Astellas Pharma

OSI Pharmaceuticals (US)

4,031

100

Cash:100 Equity:0

friendly



2008/1 1/04

Bank of Tokyo-Mitsubishi UFJ

Union Bank of California (US)

3,707

38.88

Cash:100 Equity:0

friendly



2008/0 1/28

Eisai

MGI Pharma (US)

3,557

100

Cash:100 Equity:0

friendly



2015/1 /13

Otsuka Pharmaceutical

Avanir Pharmaceuticals(US)

3,427

100

Cash:100 Equity:0

friendly



2010/1 2/13

NTT

Dimension Data (South Africa)

3,119

100

Cash:100 Equity:0

friendly

1 0

2010/1 0/06

Panasonic

Panasonic Electric Works (Japan)

3,041

32.16

Cash:100 Equity:0

friendly

Date Com plet ed

Acquiring Company (Country)

Acquired Company (Country)



2007/0 4/16

Japan Tobacco

Gallaher Group(UK)

14,654



2008/0 5/14

Takeda Pharmaceutical

Millennium Pharmaceuticals (US)



2013/1 2/18

Bank of Tokyo-Mitsubishi UFJ



2013/0 3/26



(Source) Drafted by the Ministry of Economy, Trade and Industry based on Thomson One and Press Releases from Companies

Transacti on Amount (million dollars)

Percent age acquire d by TOB (%)

METI

107

6.Japan’s specific strategy vi. Disseminating the outcomes of the revolution to SMEs and local economies

METI

108

(1) Establishing bases on which IoT and other new technologies are introduced into and utilized in SMEs and communities Challenges • • •

The fruits of the forth industrial revolution need to be delivered from large corporations to SMEs and from national government to local municipalities. Such diffusion to SMEs and regional areas have been a challenge in other nations, including Germany. At the actual business scene of SMEs, the development of basic platforms for the utilization of IT is a challenge. Support needs to start from the development of basic capabilities. In the actual working level of manufacturing, agriculture, construction, etc., aging and lack of successors are serious problems. Succession of knowhow is an urgent issue.

Basic Direction of Efforts • • • •

Promote the trend of IT investment at SMEs, broadening from investing in internal control operations to business activities that produce actual profit such as the manufacturing process, service, sales activity, etc. Actively promote the introduction of robots, etc. to support automation at the working level. In order to link the development of such basic platform systems with developing new business models, create support systems for international standardization. Increase the value added to services and products using new artificial intelligence (deep learning, etc.)

Short Term Efforts •



• • • • •

Bill for Strengthening SME’s management. (in a “guideline by business area”, which will be drafted for each industry, sample cases of SMEs increasing their earning power through IT investment in their business activity and SMEs making IT related facility investment a policy and actively and boldly investing in IT will be supported) In the next two years, support over 10,000 SMEs introduce IT to their company by specialists. Especially, for the manufacturing industry, centers will be created where companies can receive consultation by “Smart Manufacturing Supporter’s Squad”, consisting of specialists in IT, “Kaizen” activities, and introduction of robots. Reduce the initial introduction cost of small-sized versatile robots by over 20%. Support the increase of human resource (system integrators) that can assist in the introduction of robots. In order to improve productivity at SMEs that do not have sufficient workforces, promote investment for labor savings and automation through capital investment related to service robots and IoT. Increase “Partnership organizations for the support of utilization of standardization” (regional banks, etc.) to 47 prefectures in order to support standardization at SMEs. Promote technological development and its introduction to the working level using deep learning in various areas as an integrated approach and accelerate innovation and its implementation to actual society. Development of a robot test field, etc. based on the Fukushima Innovation Coast Plan. METI 109

Introducing robots/Promotion of adopting IT at SMEs

[PM's statement at the 5th Public-Private Dialogue]

1.Assist in the Introduction of Robots (Lower introduction cost, double supporting partners ) ●Make the process more efficient through standardization of the robot introduction process and related skills. ●Develop a small-sized versatile robot (platform robot) ●Reduce the introduction cost of small-sized versatile robots by over 20% in the next 5 years and double the number of supporting businesses (Sier) to 30,000 persons. 2.Support by Specialists (support by IT Specialists and the “Smart Manufacturing Supporters’ Squad (Smart monodukuri ouentai)”)

(1) Support by IT specialists

●The most serious bottleneck in the adoption of IT is not being able to take the first step due to lack of IT literacy. ●Increase the number and types of IT and other specialists at “General support centers (Yorozushien kyoten)”.

(2) Support by “Smart Manufacturing Supporter’s Squad”

●Many SMEs do not know how to improve their operations, and how to utilize new technologies such as IoT robots, etc. in doing so. ●Provide one-on-one support for not only “kaizen” but for the introduction of IoT/robots by training and dispatching human resource that can support the process. ●Specialists will support over 10,000 SMEs in the next two years to teach knowhow on IT adoption etc. ●As part of this effort, start creating locations where consultation by the “Smart Manufacturing Support Squad” is available.

Training at Schools Former workers with strong production skills



Human resource with knowledge on IoT/robots



Knowhow on the introduction of IoT/robots Knowhow on “Kaizen” in the field

Start Creating Centers Nationwide this Year Smart Manufacturing Supporter’s Squad ・ “Kaizen” activity at companies ・ Support introduction of IoT/ robots

Consultation at centers Dispatch to SMEs METI

110 110

6.Japan’s specific strategy vii. Further enhancing economic and social systems to address the revolution

METI

111

(1) Ideal approaches to regulatory reform so as to address the revolution

Challenges •

With the development of the forth industrial revolution, business activities with higher levels of uncertainties have become important.



In new service areas such as the sharing economy, services not expected under conventional regulations are appearing one after another, resulting in the government measures falling behind.



For this reason, it is difficult to sufficiently react to the new needs in the private sector by reforming existing regulations and systems.

Basic Direction of Efforts •

Firstly, a “future vision” needs to be shared, and a concrete goal to be met within a mid-term timeframe is to be set.



Then, create a road map including all elements needed to attain the goal (reform of regulations, business promotion ideas, business development in the private sector, self-regulations, etc.), followed by the development of a mechanism where the roadmap is altered as the situation changes while carrying out short term measures.

Short Term Efforts

Introduction of a regulation reform mechanism whose goal is to create the world’s most advanced business environment through a new form of public-private collaboration. ex) Autonomous driving cars on local roads, drone operation management system, negawatt marketplace, sharing economy, etc.



Creation of a regulation system integrated with hard infrastructure platforms (5G, creation of data center, etc.) For the development of the sharing economy from which various businesses are born, support the private sector create self-regulatory standards such as user protection.



[PM’s statement at the 26th Council for Industrial Competitiveness] •

A “roadmap method” where actual reform of systems are planned backward from by when what technology is to be available in society. METI

112

“Backward planning roadmap method” to conquer Forth Industrial Revolution ○ Under the forth industrial revolution, drastic and unforeseeable innovation and changes in business models may occur. ○ In order to meet the needs of an uncertain future and to conquer international competition, regulation planning backward from the long term future vision and a mechanism to review administrative procedures need to be introduced.

Backward Counting Goal Roadmap Method 1. Share a long term vision of the future

Future Vision of Autonomous Driving ・Reduce traffic accidents, alleviate traffic congestion, reduce environmental load. ・Utilization of autonomous driving technology in various industries (logistics, mobile service, etc.) ・Reduce driver’s load and secures free time PM’s Statement at the Public-private Dialogue on Future Investment (November 5th, 2015)

2.Set concrete goals with a mid-term deadline.

We will make mobility service by autonomous driving and autonomous cruising on highways possible at the 2020 Olympic & Paralympic Games. In order to do so, needed verification will be available, and systems and infrastructure will be created by 2017.

Roadmap Example for Collaboration Area 2016

Area of Cooperation

Ⅴ. Functional Safety, etc. Ⅵ. Security Ⅶ. Recognition Technology Ⅷ. Judgement Technology

Business Model ((3) )Business Model

3. (1) Create a roadmap of all elements needed to achieve the goal (regulation reform, business promotion policies, private business developments, etc.) (2)Carry out concrete short term reforms

Ⅳ. Ergonomics

Clarify purpose

Clarify spec of Platform map

International Standardization

Clarify business model (Subjects of the business, etc.)

3

Measurements * Keep in mind the possibility to use as a data Creation of platform map platform in later (complete highways) Creation of map system phases of the (incl. updates) project (phased increase in map Verification testing area, etc.) utilizing map system

2019

2020

Phased increase in map area

(Source) Autonomous cruising business review meeting “Future approaches” (March 23rd, 2016) METI

Start autonomous driving on local roads around 2020 at the earliest. (level 2)

Ⅲ. Social Receptivity

1

2018 Start autonomous driving on highways around 2018 at the earliest (level2)

Ⅱ. Communication

( Purpose )Purpose (1) (2) Spec ()Spec

Ⅰ. Map

2017

113

(2) Improving administrative services through the utilization of data Challenges •

Given the existing functions of the government, it is difficult for the government to respond to society’s needs due to financial and staffing constraints and improved productivity (enhanced added value and efficiency) of the government itself is needed.



Disclosure and utilization of data held by government organs need to be further promoted as well.

Basic Direction of Efforts •

The government, before the private sector, will utilize innovative technology to fundamentally change its operation processes for enhanced efficiency and the drastic improvement in the convenience of services they provide.



Disclose data held by the government for active and thorough utilization.

Short Term Efforts •

Take an integrated approach on the promotion of regulation reforms, simplification of administrative procedures, and adoption of IT, and work on reducing regulation and administrative costs, using a business operator’s point of view, with a target value and deadline.



Work quickly on enhancing productivity of administrative services and the creation of new services. ex.) Simplification of personal and corporate authentication, enhanced efficiency of administrative work by the utilization of AI (more advanced and efficient patent administration), new services utilizing the public personal authentication system (My Number), etc.



Conduct a meticulous research on the data held by government organizations (central and municipal). Actively disclose such data and promote utilization in the private sector (ensure administrative systems use API)

[PM’s statement at the 26th Council for Industrial Competitiveness] •

Drastically reduce administrative costs using a business operator’s perspective. In order to do so, reform of regulations, simplification of administrative procedures and adoption of IT will be carried out as an integrated effort. METI

114

Further utilization of government held data expected  Although currently undergoing work for further utilization, government held data have issues such as quantity and user friendliness, and hasn’t been able to sufficiently meet needs. Issues on the utilization of public data (multiple choice)

Problems with official statistics

(units: number of companies) (total number of answers) Doubts on accuracy 公表時期が遅い

インターネット上の Not readily usable on the Internet データの使い勝手が悪い

213

Doubts on accuracy 精度に疑問がある

154

Insufficient guides & comments, 手引・解説が不十分、 can’t understand how to use 利用方法が分からない

151

Interested in the surveyed area 対象分野に関心はあるが、 but 調査の存在を知らない don’t know what surveys exist

135

Not enough questions 項目が少なすぎる (insufficient content) (内容が充実していない)

42

Inappropriate processing of data 加工方法(実質化、 (conversion to real value, 季節調整等)が不適切 season adjustment, etc. )

データがすぐに活用できる Data isn’t provided in a readily usable format 形式で提供されていない 273 提供されているデータの Content of the data is not detailed 内容が詳細ではない データを提供する Data format differs by organization 機関毎にフォーマットが異なる 必要なデータをどこで Difficult to find where the data is available 入手できるかがわかりにくい 提供されている Low data update frequency データの更新頻度が低い データの検索や Limit to search and processing 加工に制限がある 関連データとの Cannot link with related data リンクができていない

39

Low publication frequency 公表される頻度が低い

データの著作権の Rules regarding copyright of data is not clear 取扱ルールが不明確である 50

30 29 25 23 21 15 14

利用に際して費用が発生する Cost is incurred for use

8 0

47

利用の用途が制限されている Purpose of use is limited

21

項目が多すぎる Too many questions (too detailed) (内容が細かすぎる)

49

100

150

200

250

300

Source: “Toward an accurate understanding on the current situation regarding official statistics and policymaking” (May 17th, 2011, Japan Federation of Economic Organizations)

Others その他

9 20

0 10 20 30 40 50 60 Source: “Infrastructure development for Japan’s society in the era of informational economy” (March 2014, Japan Users Association of Information Science/project commissioned by the Ministry of Economy Trade and Industry) METI 115

Utilization of AI for advanced and efficient patent administration 

List up each and all work from application to examination and research and analyze whether AI can be applied or not.



Collaborate with intellectual property related agencies of other nations with high interest in AI such the US and Australia, etc.

Patent Administration Work and the Application of AI Approximately 6,000 out of the approximately 300,000 applications are brought to the counter.

Submit Application

While 70% of the process is machine processed, complicated procedures such as fee exemptions are handled by hand by staff.

Formality Examination

(Documentation, fee payment, etc.)

Grant patent

Substantive Examination

Reject

Organize patent information Create search index for applications and organize as patent information.

Research related technology from the 100 million patent documents worldwide and other academic documents.

Understand content of invention Carefully read the application document, understand the content of invention, and grasp the scope the application wishes to get patented.

Conventional art research

Decision on Patentability

Decision on whether patent requirements are met (Main samples of requirements) ● Whether there has been a same invention in the past. (Novelty) ● Whether it is not easily invented. (Inventiveness) ● Whether the content of documentation is clear. (Written description)

Create a more advanced and efficient work process for patent administration

METI

116

(3) Enhancing the development of business overseas through strategic collaboration and cooperation among industries Challenges •

For Japan to ensure it obtains the fruits of the forth industrial revolution, it is important to actively promote stronger international collaboration, further international harmonization of related systems and connect such efforts to vitalizing innovation and gaining new overseas markets.

Basic Direction of Efforts •

In order to develop a global digital market toward the forth industrial revolution, promote the organization of basic concepts surrounding the utilization of data and the creation of an internationally harmonious regulation system.



Efforts to support the internationalization of infrastructure systems that cater to the needs of the forth industrial revolution will be promoted through strategic efforts under public-private collaboration, including the upgrade financing functions as needed.



Strategic efforts will also be made on the development of open innovation and international standardization.

Short Term Efforts •

Confirmation of the “free flow of data” rule, international survey on regulation systems regarding the utilization of data



Speedy and steady implementation of expansion measures for a “high quality infrastructure partnership” and further reinforcement of related efforts (promote the international standardization of “high quality infrastructure”, infrastructure planning and development of human resource capable of its evaluation, strengthen collaboration with the Asia Development Bank, faster and broader yen overseas loans, etc.). Support production at optimal locations corresponding to corporate strategies.



Consider reinforcing systems and functions of organizations that contribute to increasing the supply of risk money to support internationalizing companies.



Support the large area expansion of contents asset capitalizing on characteristics of a local area. METI

117

(4) Permeating the outcomes of the revolution throughout society

Challenges •

Although the forth industrial revolution has the potential of bringing huge benefits to individuals, the economy , and to society, naturally, the diffusion of new assets and services would be inhibited unless recognition and understanding of the innovative technology is gained by individuals and society.



Meanwhile, the Japanese are yet to understand these innovative technologies nor the merits they will bring.

Basic Direction of Efforts •

In order to gain social acceptance of the changes brought about by the forth industrial revolution, it is integral to create an environment for secure data utilization as well as attend to ethical issues the new technological revolution may present.



On top of all that, it is important to put in efforts for international collaboration as needed, and to specifically and directly communicate with society how they are integral and their merits through social verification and through dialogues.

METI

118

Word version

METI

119

1. Global economy in need of new growth engine 

There seems to be no driving force for the world economy as suggested that economy in developed countries remain stagnant for a long period after the failure of Lehman Brothers. Furthermore concerns about the future arise now that emerging economies such as China which was once boomed have weakened in recent years.



Despite this global economic situation, Japan has maintained almost full employment supported by Abenomics. In addition many companies reported high profit, and succeeded in resolving most of issues of corporate excessive capital investment.



However Japan to experience all-out economy based on population decrease will be faced with structurally suppressed growth both in supply and in demand. The failure to resolve such constrained growth might cause distinct stagnancy of economic growth, giving serious impact of long stagnancy on Japan.



To grow out of this stagnancy to shift to the new phase of growth, it is crucial to concurrently to realize :(1) improved potential growth rate through productivity revolution based on new innovation (supply side), (2) exploration of potential demand by designing new products/services that respond to social needs with innovation results (demand side).



The key to successful shift to the phase of growth is to aggressively reform economic and social system that properly identify and drive technological innovation such as IoT, big data, AI etc. which represent the Fourth Industrial Revolution regardless of developed or developing countries.

METI METI

120

2. What is happening now? - Impact of the fourth industrial revolution 

Competition is becoming fierce for the connection or use with data while a source of newly generated value is shifting to "data." In this competitive situation, persons able to create opportunities for business expansion in the years ahead can attract vast fund globally and swiftly and aspire for further growth by M&A etc., which eventually accelerates scale and speed of the competition. Thus we have already plunged into the word of competition of speed where "Winner takes All" is dominant.



Large scale competition involving a wide range of companies arises to all types of industries beyond their traditional boundaries. Therefore there is a possibility of drastic reform where it would be extremely difficult to predict the future for industrial/employment structure themselves. In this sort of reform its "light" and "shadow" exist with regard to smooth shift to new employment etc. while new opportunities are spreading globally. Ahead of occurrence of this reform redesigning efforts will be required for the entire system of economy and society including various legal systems.



In European countries and USA, especially global companies that are pursuing global strategies are sharply increasing in the number. In respect of global strategies USA is pursuing "from network to the real" using its strength in information domain for the utilization of "real data" at production sites whereas European countries are deploying "from the real to network" using their strength of manufacturing. However they have just begun to review economic and social system.



In order for Japan to quickly respond to these trends and to globally lead the world, it needs "compass" to show the way to overcome "market failure" coming from uncertainty of information and the way to how the public and the private can collaborate. METI METI

121

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure (1) Promising areas as new growth frontier 

Newly generated goods and services with the Fourth Industrial Revolution will create possibility of acquiring new markets in developed countries as well as in emerging countries (China, Next China countries etc.) expected to grow in the future.



Presently Japan less reliant on overseas demand has more potential for growth in overseas demand than any other developed economies (export dependency rate for Japan: 18%, 32% for world average, 28% for UK, 46% for Germany). It is crucial to acquire new markets by utilizing TPP which allows for giant free trade area.



Moreover we see possibility of resolving global issues with technological innovation in the Fourth Industrial Revolution To follow up on this, new markets will emerge to respond to "needs for resolution of issues" that spread worldwide.



Virtually global economy will hereafter experience the economy with decreasing population (majority of countries worldwide will be faced with the issue of decreasing population). Additionally we see the surfaced challenges of improving levels of medical/health and education, restrained energy/environment due to rise of developing countries.



Japan is supposed to be one of the developed counties faced with these challenges. In this respect we see possibility of Japan's securing competitive advantage in world market by realizing advanced reform for individual/company basis as well as social system ahead of any other countries in the world.



Responding to the Fourth Industrial Revolution is indispensable for both aspects of strengthening competiveness of Japan's economy for acquiring overseas demand on global basis and of resolving social/structural issues.



On the other hand these approaches are subject to competition of speed with other countries, and losing competition leads to no chance to utilize Japan's advantageous position that Japan has endeavored to secure. METI METI

122

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (1) Shift to new industrial structure through facilitating needs (1/2)



Social/structural issues (i.e. customer's true needs) which go beyond our capabilities can be essentially dealt with by utilizing innovative technology/data such as AI for the Fourth Industrial Revolution. Competition will be conducted as to who will discover or acquire this new frontier expected to be spread globally. ("Move," "Live smartly," "Keep healthy, support the elderlies, "Get smartly" etc.)



To this end source of new added value should be directed to "data." The key to secure competitive advantage relies on how speedily we can produce innovative products/services that can respond to true needs while functioning a cycle of collecting data, ensuring shift such data to big data and analyzing and utilizing them.



Some companies or industries can grow by exploring and acquiring new markets using deftly these data, but others cannot, which puts us in harsh situations.



Hereafter competition will become fiercer for such promising industrial sectors. We see possibility of totally new value to be generated where there is integration among data, technology, human resource, fund which exist within their traditional boundaries as per industry type, companies and business. So we might see reorganization between totally different industries or mutual entry instead of traditional reorganization between the same industry. As a result major changes of industrial structure will occur.

METI METI

123

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (1) Shift to new industrial structure through facilitating needs (2/2)

 Specifically, 

(1) New value chain and new industries will emerge beyond traditional boundaries of industry types in response to "customer's true needs (e.g. move conveniently)."



(2) In this trend we see significant growth in information service sector playing focal role in data utilization and customization service using customers' data. On the other hand the sectors of raw materials and intermediate input will be put into harsh situations.

 Japan is required to realize swift and flexible change in industrial structure to quickly respond to these reforms continuing globally.

METI METI

124

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (2) Shift to new industrial structure



We see progress of labor saving in non-regular workers besides regular workers with emergence of robot etc. This is generally expected to lead to the resolution of manpower shortage facing Japan to experience real population decline.



Additionally major reform of business processes themselves may bring about new needs of employment including jobs that create workplace where workers with good command of AI and robot etc. work together with them or jobs to focus on more value through more human communication/interaction than before.



On the other hand we see possibility of change in skills required for middle class workers who occupy core group in the entire employment. For example it is highly probable that jobs for traditional back office etc. will decrease on a large scale.



Changes in business process in line with the Fourth Industrial Revolution will bring about new needs of employment including middle skill workers. Therefore it is necessary to develop human resource in response to change in employment structure and to smooth switch over labor force to growth areas.

METI METI

125

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (3) Specific "Vision" of reform



As mentioned before the trend of the Fourth Industrial Revolution swiftly spreads to various fields, affecting an optimal economic/social system.



Thus it is extremely difficult to envision decisive scenario for actions for strategies in each field based on correct understanding of such reform as a whole.



Rather in this situation it is effective (1) to identify key domains in response to "global customers' true needs," (2) to envision multiple, long term scenarios as to who and how they envision new business models using technological reform, (3) to analyze impact ("light" and "shadow") on industry, employment and economy/society, (4) set specific med-term goals by identifying key turning-points, and (5) to develop road maps that describe tasks (regulatory reform, business promotion etc.) required for the public/private, going backward in time of such goals, and to perform short-term specific reforms based on road maps.



Besides it is crucial to follow up on such "Vision" in dynamic way as it is subject to change as per time goes on.



Hereafter we need to perform deep study on various fields including "Move," "Live smartly," "Keep healthy, support the elderlies, "Get smartly" etc.

METI METI

126

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (4) Estimates involving industrial and employment structures



We projected possibility as to what industries and occupations will grow or decline with economic model, making this projection help with identifying future direction of reform.



The projection was conducted for two scenarios: "As-is scenario" where reforms in line with the Fourth Industrial Reform are not mutualized continuing a state of low economic growth, and "Reform scenario" where there are dramatic improvement of productivity triggered by the Fourth Industrial Revolution, smooth transfer of economic resource to growth industries, jobs conversion as per change in business process. (For details on two scenarios see 4. described later.



<Entire vision /Macro economy>



"Reform scenario" reveals that high value/high growth sectors will be generated by providing new services and products that help resolve social challenges, responding to customers' true needs. Additionally it says that workforce's shift to jobs which require solely human element in harmony with machine/software will let workers enjoy high wage/salary.

METI METI

127

3. New growth with Fourth Industrial Revolution and reform of industrial/employment structure

(2) Directions of reform of industrial/employment structure (4) Estimates involving industrial and employment structures 





The scenario reveals significant increase in added value and number of workers in such fields as "Customer response type manufacture sector (production of final goods)" where enhanced value is expected by realizing customization to respond individual need based on customer data, and shift to new services etc., and "Information service sector" that plays core part in the Fourth Industrial Revolution and expands demand on the whole industry basis.



In addition to these, higher growth rates than average one will be expected in such sectors as "Hospitality type service (e.g. tourism)" expected to expand market by making potential demand etc. surface using customer data, and "Infrastructure network (e.g. transportation, telecommunication) " which creates new value by entering into different sectors through integration with other service industries.







The scenario reveals increase of workers in such occupations as "Upstream jobs (e.g. management strategy staff, R&D staff), "Sales" of product/service with sophisticated consulting capability which becomes source of competitive advantage, and with low possibility of replacement with AI/robot etc., "Services (e.g. attendant with exclusive restaurant) with high added value and low possibility of replacement where direct human interaction leads to enhanced quality/value, and "IT" which creates more demand on the whole industry basis.



On the other hand the scenario indicates further replacement with AI/ big data/IoT/robot and decrease of workers in such occupations as workers production line, corporate procurement management staff, salesperson with high possibility of replacement including cashier with supermarket, clerk at bank counter with high possibility of replacement and back office staff including staff of accounting/salary management.

METI

128