‘We Don’t Get Out’

If you take a look at the percentage of the value-added of anything, it's much more software, information, knowledge, rather than hardware. We often end up citing the example of the iPod; our Japanese manufacturers make a lot of the components, but they're such a small proportion of [the value]. The value is much more in the information, in the software, the conceptual part. That's what people are much more willing to pay for.

The Japanese tend to focus a lot in this discussion on the United States. But isn't the real innovation challenge that Japan faces the one from emerging economies?
I don't think that notion is so strong here. The reason why the United States and the European Union are so keen on implementing their innovation stuff is because they feel so threatened by India and China—innovation rather than labor costs. Yet there isn't that notion in Japan at all. I think people here still feel—though it's changing a little bit—that India and China are behind. [Masamoto] Yashiro of Shinsei Bank said it clearly, and I agree. He said that most of the Japanese tend to think in stereotypes, which was good 50 years ago, or 10 years ago. But in the past five or 10 years the world has changed completely. Because we stay inside—we may go physically outside but we don't really see it—we are completely behind. We don't understand how we've lost presence. And it works both ways. We have a lot of great technology we should be much more proud of. But because we don't get out we don't know what we're missing.

© 2007