Strong majority of Japanese firms have yet to fully embrace AI: Reuters poll

A Reuters survey conducted from July 29 to August 6 has revealed that more than 80% of Japanese companies are utilizing artificial intelligence (AI) only in limited capacities or not at all. This limited use of AI could potentially impede the country's efforts to boost productivity.

Approximately 60% of the surveyed companies stated that AI is being used in some parts of their operations or in limited ways. Meanwhile, 18% of companies have yet to decide whether to introduce AI into their workforce, and 6% have no intention of adopting AI. The remaining 16% of companies have fully integrated AI into their operations, although its use is still confined to specific tasks.

For instance, a manager at a wholesaler mentioned that their company has started using AI company-wide but primarily in tasks like document creation. Similarly, an official from a real estate firm expressed uncertainty about how to implement AI in their operations.

Japan's lagging AI adoption has been highlighted by a government report, which stated that only 86.4% of local firms are using generative AI for at least one task. This compares unfavorably to China's 98.1%, Germany's 91.6%, and the United States' 90.9%.

When asked about their AI budgets for the next one to two years, 4% of respondents expect annual growth of 50% or more, 21% anticipate an increase between 10% and 50%, while 30% project single-digit expansion. Other 14% said their AI budgets would likely remain largely unchanged, with 31% undecided about future AI spending.

In terms of resource allocation, 82% of respondents favored domestic investment over overseas investment. This preference aligns with Prime Minister Sanae Takaichi's growth strategy, which emphasizes domestic investment in areas like AI, semiconductors, and quantum technology. Takaichi has also vowed to end excessive austerity and boost domestic investment to revitalize the Japanese economy.

Many companies, particularly those with major production facilities concentrated in Japan, see little merit in investing overseas due to the weak yen and higher costs associated with foreign investments. Some managers among the 18% who favor overseas investment believe that growth potential abroad is stronger than in Japan, which faces a shrinking population.

Regarding domestic investment, about 41% of respondents plan to increase their domestic investment in the business year to March 2027 from a year earlier. In contrast, 9% expect a year-on-year decline, while 50% intend to maintain the same level of domestic investment.