The next chapter of Ontario-Japan business will ride the new wave of innovation

By: David Perdue, Senior Economic Officer, Japan

When COVID-19 arrived on Japan’s shores via the Diamond Princess cruise ship about a year ago, the tension brewing around me at the Canadian Embassy in Tokyo was familiar. I was also working at the Embassy almost 10 years ago during the March 2011 earthquake, tsunami and nuclear disaster, and just like then, I could feel that our lives were about to be turned upside down, for a while at least.

In 2011, at the outset, most of us shifted our work to focus on the initial crisis response, including by helping Canadians in Japan in need. As was the case 10 years ago, we then wiped the board clean, cancelled our previously planned initiatives and soon after started to adapt our business plans to the changed realities on the ground.

As the head of Ontario’s Trade and Investment Office located in the Canadian Embassy in Tokyo, I am now leading a small team that focuses on promoting trade, investment and science and technology linkages between Ontario and Japan. Japan has long seen Ontario as a good place to invest and as a quality source of imports. That said, achieving success here is rarely straightforward, not least because of the cultural and language differences, but also because of the importance of developing relationships through face-to-face contact despite the long travel times, and the time-consuming process of building of consensus before deals are done.

I thought that in the absence of business travel in both directions and the related loss of face-to-face contact due to COVID-related restrictions, our work would fundamentally suffer. In many ways, the pandemic has made our work more difficult, but it has also accelerated some positive trends and changes that were starting to gain momentum before the global crisis.

From my perspective, the most important of these changes, and the one that may offer the most opportunity for Ontario, is the change in the way that Japan is approaching innovation.

It is well known that Japan is a hub for innovation. Whether it is how we listen to music at home or on the go, record our memories through photos and videos, drive and navigate our cars or even use the washroom (I am thinking of those miraculous toilets), Japan’s innovations have changed countless people’s lives across continents and generations.

When I was here 10 years ago, Japan’s mega-companies were almost exclusively using a “closed” model of innovation that relied on in-house teams of engineers or programmers to create new ideas and technologies, which they then incorporated in products sold under their brands to consumers around the world. Japanese companies also used mostly fixed supply chains consisting of trusted domestic partners even in overseas locations, which meant in many cases that it was next to impossible to get our foot in the door.

However, what has started to change Japan’s innovation dynamic is that disruptive technologies, like artificial intelligence and the connectedness of everything and everyone, have meant that almost no company, no matter how large or insular, can stay competitive in the long term without taking a more “open” approach. Even conservative Japanese companies have come to recognize this.

What this means is that Japanese firms are becoming more open to collaborating with innovative foreign companies large and small and investing overseas to benefit from innovation-driven ecosystems. While places like California and Israel have been the focus of initial attention, there has been increasing awareness of what Ontario has to offer. The province is known for having an innovation ecosystem that is just as dynamic as our most famous competitors, but with lower costs and other distinct advantages—from easy access to skilled and diverse talent to quality of life and more.

Despite COVID-19, or maybe in part because of it, we have noticed that the demand from the Japanese business community to connect with Ontario’s start-up and innovation ecosystems is now higher than ever.

To name just a few recent examples:

• NTT Data and Sumitomo Mitsui Banking Corporation entered into partnerships with Toronto’s MaRS to create pipelines to access technologies from MaRS’ start-up community through “open innovation” challenges.
• Fujitsu has established a “Co-Creation Research Laboratory” at the University of Toronto with a focus on solving complex problems associated with quantum computing.
• Toyota established an Internet of Things-focused innovation laboratory at Kitchener’s Catalyst137 and is partnering with the University of Waterloo to help shape the future of engineering in Ontario through an Engineering Innovation Challenge program and an accompanying major investment.
• Landing Pad Tokyo, a new small and medium-sized enterprises-focused business accelerator, formally partnered with Toronto’s DMZ, and separately with the University of Waterloo’s Institute for Nanotechnology, to create pipelines for companies to access each market and for start-ups to establish themselves in both locations.

While this interest in Ontario continues to rise, it is important to remember that the challenges associated with doing business with Japan are still here: this is an evolution, not a revolution. It is our team’s job to help provide advice to these businesses, especially as we pivot our focus in the year ahead. We want to work together with our partners to meet the innovative opportunities that the pandemic is accelerating.

No matter where in the world you are reading this from, I hope that this illustration of how Japanese companies have been turning their attention towards Ontario’s innovation ecosystem will inspire your company to do the same. If you are representing an Ontario company, I hope you may be inspired by Japanese firms’ increased openness to explore new opportunities.

Whether you had asked me last year or 10 years ago, I certainly could not have predicted how a global pandemic would have accelerated a wave of innovation-focused business opportunities with Japan. The good news is that Ontario has a unique set of advantages that will allow us to thrive in this new era, and I am excited to see the new pathways opening up for business with Japan. Despite all of the challenges we have faced this past year, I am confident that the Ontario-Japan business relationship will emerge even stronger on the other side as we ride the new wave of innovation together.

To find out more about how Ontario, Canada would suit your business expansion, connect with us.