2020 was one of the worst years in Japan’s post-WW2 economic history. Its economy’s service and consumer sectors lag far behind China and Korea in terms of digitisation while mild anti-Covid19 measures at the beginning of the year resulted in the subsequent prolonged lockdown with dwindling domestic consumption.
Moreover, the number of international tourists – an important revenue source for sectors like HORECA, Retail, Fashion, and Consumer Goods went down by 95%. The two factors combined put the sensitive sectors into a lengthy depression.(Japan Tourism Board)
Japan’s government and Industry have been looking hard for a way out of this economic debacle. Many traditional Japanese retailers and manufactures have been trying to get into cross-border e-commerce – a booming trend in China that has grown several-fold in 2020. The aggressive attempts to penetrate the burgeoning channel may seem like a 180 degrees reversal of the usual dismissal of the “undignified” channels by traditional Japanese businesses.
Some would call such a position “arrogant” in retrospect. However, many Japanese businesses are unwilling to take on the risks of encountering counterfeit products and grey imports. China – is the world’s biggest consumer market and the primary driver of the cross-border channel. It is also notorious for the sheer number, variety and ease of access to counterfeits of all shapes and sizes.
The USD 700 billion stimulus package (BBC) that the Japanese government unveiled in late 2020 comes at a very opportune moment. Moreover, its heavy emphasis on new technologies and digitisation can energise the stagnating traditional industries.
Without a doubt, Blockchain will be high in the list of priorities. After all, the security of digital records and supply chain are at the basis of the distributed ledger technology value proposition.
Japan is one of the most Blockchain friendly jurisdictions with quite a few projects originating or receiving backing from large internet companies such as Line and Rakuten. (Blockchain grows in Japan in 2020) Most of these projects are involved with cryptocurrency trading and exchanges. However, there are signs that Blockchain-as-technology is getting traction with more traditional businesses as well. For example, in the summer of 2020, one of Japan’s oldest department stores opened up a cross-border e-commerce channel with China. The key feature of the project was blockchain-powered merchandise protection, developed by the retail’s technology partner.
Many more such projects will commence in 2021 and 2022. Japanese government departments ranging from Tourism to Agriculture have already started featuring public-private partnership schemes to promote export initiatives.(Japan Ministry of Agriculture)
Blockchain will be a natural choice for a lot of these projects. When this happens, the technology will receive a further boost in legitimacy, and – what is probably infinitely more valuable at this stage – mainstream adoption.