Japan in the Bay Area: Collaboration and Transformation

December 20, 2019

The Bay Area plays an increasingly important role in Japan’s strategic economic future, as large firms and industrial groups shift to embrace outside partnerships in the pursuit of high-value activity in software, platforms, and services. Underlying this shift is the concern that many of Japan’s core manufacturing industries face disruption by technological change, much of it originating in the Bay Area. As Japan’s economy endeavors to transform by embracing digitalization, open innovation, and deeper engagement with entrepreneurs, collaborations with Bay Area companies are increasingly seen as critical to Japanese firms’ future competitiveness. The visit of Prime Minister Abe to the Bay Area in 2015 was a pivotal event in this process, demonstrating the high importance placed by Japan on developing strategic partnerships in the region. That visit, which included a public address at Stanford University, visits to major Bay Area companies such as Tesla and Facebook, and meetings with leading technology executives, reflected a surge of Japanese corporate interest in Silicon Valley, and the beginning of a new chapter of deep engagement.

Today, Japan is undergoing accelerated change with the development of an active startup ecosystem and a growing venture capital industry. Japan is also attracting renewed US interest due to the shifting geopolitical environment in Asia and in what is now being called the Indo-Pacific region (which includes Asia but also extends to India). This is a good time, therefore, to reconsider the US economic relationship with Japan and its potential for new and invigorated partnerships. The Bay Area and Silicon Valley will play a unique role. As a highly globalized economy with strong ties to Asia, and as the global epicenter for innovation, entrepreneurship, and technological change, the Bay Area serves as a key resource for Japan’s strategic shift, extending the scope of interaction well beyond traditional patterns of US-Japan trade and investment. This is evident as Japan has moved from being not just a competitor but also to being a deep collaborator, through research as well as integrated services and supply chains and growing venture capital activity.