Why Japanese firms are being so slow to use AI

Japanese firms have been slow to embrace artificial intelligence (AI), despite the nation facing acute labour shortages, an ageing population and productivity issues. Compared to countries like the US and the UK, where AI adoption in workplaces is more common, Japan's usage remains cautious. A report from the Organisation for Economic Co-operation and Development (OECD) shows that only 8.4% of Japanese workers use AI in their jobs, versus 50% in the US and 32% in the UK. In Singapore, AI use is even higher, with 56% of workers employing it multiple times a week.

Austin Xu, co-founder of US start-up Kuse AI, attributes Japan's reluctance to adopt AI to the country's conservative and risk-averse culture. Many companies are hesitant to let machines handle client-facing tasks, fearing errors. US companies appear more willing to experiment with AI, allowing agents to gradually integrate into workflows. However, Xu believes Japanese firms need more evidence of AI's reliability before fully trusting it.

Prof Parrisa Haghirian, a professor of international management at Kyoto University of Advanced Science, agrees that Japanese companies' risk aversion hinders AI adoption. She notes that the challenges of implementing AI are similar to those of any change within Japanese firms, highlighting their sensitivity to error, uncertainty and reputational risk. According to Haghirian, AI is primarily used for low-risk tasks such as writing and summarising in Japan, but less for core operations or decision-making.

Japan's healthcare sector lags significantly in AI adoption, with some hospitals still relying on paper documents. The Japanese government has attempted to address the AI adoption gap through its AI Promotion Act, which aims to encourage businesses to invest in AI through light-touch regulation. The government hopes that increased AI usage will help Japan improve its productivity, currently the lowest among the G7 nations.

While the Ministry of Finance reports that AI adoption has increased among businesses, critics argue that the extent of AI usage remains limited, with only a small portion of staff actively employing the technology.