Why Japan’s Companies Are Lagging in AI Adoption

Despite severe labour shortages, an ageing population and persistent productivity problems, Japan remains relatively slow to adopt artificial intelligence (AI) in the workplace.

AI use among Japanese workers is significantly lower than in the United States and the United Kingdom. An OECD report published last year found that only 8.4% of Japanese workers use AI in their jobs, compared with 50% in the US and 32% in the UK. In Singapore, the figure is reportedly 56%.

So why are Japanese companies moving so cautiously?

Risk-averse corporate culture

Experts say one major factor is Japan’s conservative and consensus-driven corporate culture.

Austin Xu, co-founder of US-based AI startup Kuse AI, which recently opened an office in Japan, said Japanese companies often take longer to make decisions and have very little tolerance for mistakes, particularly in client-facing roles.

“Some would rather leave a position vacant than allow a machine to handle it,” he said.

In the US, companies are increasingly willing to experiment with AI, initially using it as an assistant before gradually expanding its role. Japanese companies, by contrast, often demand stronger evidence that AI systems are reliable before adopting them widely.

Parrisa Haghirian, a professor of international management at Kyoto University of Advanced Science, said the reluctance to adopt AI reflects the broader difficulty Japanese companies face when introducing major changes.

Because generative AI can still produce inaccurate results, many Japanese businesses limit its use to relatively low-risk tasks such as drafting documents, summarising information and conducting research.

Its use in core operations, decision-making and broader business processes remains much more limited.

Outdated digital systems

Japan’s digital infrastructure is another obstacle.

The healthcare sector, for example, remains heavily dependent on paper records, with some hospitals yet to fully digitise patient information.

Prof Yasushi Ogasawara, an expert on technology and Japan’s social system at Meiji University, said the country also lacks sufficient workers with advanced technology skills.

Japan could face a shortage of nearly 800,000 IT professionals by 2030, according to an estimate released earlier this year.

Many companies also continue to rely on legacy computer systems, with around 60% reportedly more than two decades old. Such systems can make the integration of modern AI technologies difficult.

Government seeks faster adoption

The Japanese government has recognised the problem and is seeking to encourage greater AI adoption.

Parliament last year passed Japan’s first AI Promotion Act, adopting a relatively light regulatory approach intended to encourage investment and innovation.

Tokyo has also pledged to make Japan one of the world’s most AI-friendly countries for developing and using the technology.

The government sees AI as a potential tool for addressing Japan’s weak productivity growth and growing labour shortages.

Japan’s Ministry of Finance says 75% of companies now use AI, compared with just 11% five years ago. Critics, however, say this figure does not necessarily reflect deep integration of AI into business operations, as many employees use the technology only for limited tasks.

Signs of change

Some Japanese companies are beginning to change their approach.

Major trading company Kanematsu, for example, is hiring graduates with strong AI skills. New employee Uta Yamaguchi said she uses AI to draft emails, summarise complex documents and record and summarise meetings.

However, AI systems capable of independently performing multi-step tasks remain uncommon in Japan compared with the US. Even companies seen as relatively progressive are only beginning to introduce such systems.

Ogasawara said Japan’s preference for gradual and low-risk reform could continue to slow the transition.

For Japan, the challenge is not simply adopting AI but creating the digital infrastructure, workforce skills and corporate culture needed to use it effectively. Without a greater willingness to experiment and embrace change, the productivity gains Japan urgently needs from AI may remain out of reach.