Japan is one of the world’s most advanced economies. In some ways, however, its economy is quite isolated. This is a result of both geography and history. Japan is both an island alone and a former colonial power heartily disliked by its immediate neighbors.
This is different from most other advanced economies. Any Western country has close links with the rest of the West. Take the United States. American culture is fairly similar to Western culture, and there is a deep degree of mixing between the Anglosphere, the United States, and Western Europe. In that sense the market for American companies is not just 300 million people, but rather 800 million people.
Japan is different. Japan should have just as close a connection with East and Southeast Asia as the United States has with Western Europe and the Anglosphere. But due to its colonial past, it doesn’t. In a sense Japan is like Israel, surrounded by hostile neighbors. The irony is that there are a lot of similarities between Japan’s culture and its path of development compared to those of its neighbors. But its neighbors would rather pretend that this similarity doesn’t exist.
So Japan is left isolated. But Japan is also a big and wealthy country, with well over 100 million people. It can afford to remain splendidly isolated. Japanese companies can market to the 125 million Japanese consumers and ignore the rest of the world.
This is bad for both Japan and the rest of us. Japan, in its isolation, has developed a number of unique practices and products. Some are better than the rest of the world’s; some are worse. In an ideal world we would copy what Japan does well, and Japan would copy what we do well.
This happens, but not enough. For instance, Japan has incredibly advanced cellphones. Long before Apple came up with the iPhone, you could check your e-mail, pay for your groceries, surf the web, and watch TV on a Japanese cellphone. In fact, in the United States you still can’t do some of these things with the iPhone! Unfortunately, consumer tastes in the West were too different for Japanese electronic companies to penetrate. The natural thing for them to do would have been to market to China and Korea, and from there spread the technology to the rest of the world. Too bad China and Korea hate Japan.
The opposite story holds true with something surprising, the fax machine. Today faxing is almost a relic in most of the world. Few young people even know how to use a fax machine, and I am not one of them. In their splendid isolation, however, Japanese companies are still highly dependent on the fax machine. An enormous amount of energy, paper, and time is wasted faxing in Japan. Here Japan would do well to copy from the rest of the world and abandon this increasingly unique Japanese practice.
In an ideal world, Japanese companies would have spread the smart-phone to us years before Apple came up with the idea, and our advances in technology would have convinced Japanese companies to abandon the wasteful fax machine years ago. Both sides would have been better off. Alas, this hasn’t happened. Instead, Japan and the rest of the world continue to remain too far apart, to the detriment of both.