Japanese Market’s Opportunities
Japanese are famous for the astonishing contrast in their reverent approach to thousands-years-old traditions and at the same time enthusiasm for innovations. They are the first to develop some disruptive technology or adopt and upgrade what was invented by someone else.
Japan is ranked third among the largest economies of the world, following the US and China, which is quite astonishing for a country with the population of only 120 million people. Success should be credited mostly to the innovations driving Japanese economy forward. In fact, according to a Forbes analysis, Japan is home to almost 10% of the world’s most innovative companies.
In 2016, European Patent Office (EPO) registered almost 160,000 applications for patents, Japan taking the third place with 13% of patents after the European countries calculated together and the US. Taking into consideration the Japanese population, it is about 175 patents per million people, which is quite an outstanding rate. The result was driven, among other factors, by a cooperation of all branches of innovative movement — research centers, government, and international companies, small and medium businesses. R&D Bloomberg Index gave Japan the second place, all aspects considered. High-tech achievements allow Japan to stay on top, compensating lack of natural resources, promoting unique high-quality products in the global market and ensuring high living standard for the Japanese.
All these considered, you should not be surprised at how eagerly Japan grabbed at the opportunities offered by cryptocurrency. In 2016, the government issued a law on cryptocurrency exchanges activities. The platforms seeking to explore this area have to apply for a license to the Financial Services Agency (FSA) and meet a number of requirements such as a minimum amount of authorized capital. As at 30 June, FSA received 50 applications for launching cryptocurrency exchanges. There are still some doubts expressed by the men of weight, but the majority tends to agree with the Yoichiro Hirano, chairman at Blockchain Collaborative Consortium (BCCC), who believes that cryptocurrencies (bitcoin in particular) are safe and has a great potential in the market. Once approved, it caused an increase of cryptocurrency use in the trading volume, which grew from one percent to as high as six percent, and Japan has begun to account for more than half of all Bitcoin trade volume on some days.
On the back of new law coming into operation Japanese banks plan to tap into blockchain technologies. For that purpose, the Japanese Bankers Association (JBA) by April 2018 will develop a new testing platform for state as well for local institutions. The project will be supervised by the Bank of Japan and FSA. The ultimate goal of the project is working out the procedures to use blockchain technologies for interbank payments to reduce the costs, primarily due the fact that banks wouldn’t have to pay for the servers to store information on all operations. Japanese experts expect that the success of that experiment will reduce transfer costs by 5%, leading to lower banking fees and higher demand for banking services from customers.
In summer 2016, Tokyo — Mitsubishi UFJ (BTMU) invested around $10.5 m in Coinbase, the US cryptocurrency operator in order to create a new system of fund transfer that allows to convert cryptocurrency into cash in the banking accounts.
According to a Nikkei report, the cryptocurrency industry Japan is about to grow exponentially with new exchange platforms — trading bitcoin and other virtual currencies — seeking to enter the market. Success seems near at hand: according to the existing data, over 260 stores agreed to accept payments in cryptocurrency.
According to the Fuji Chimera research center data, in 2015 trading volumes of cryptocurrency reached $1.67 bn in Japan. But the experts project this amount to grow ten times by 2020. The most promising area is deemed to be mobile payments in online stores. On top of that, there is a popular system of points that buyers receive when shopping online. For instance, Rakuten, the largest online retailer in Japan, issues credit cards. Once a purchase is paid via such card, a buyer gets certain amount of points, which can be used as tokens to shop on Rakuten website. Customers can also perform other payment procedures with Rakuten cards, for example, paying utility bills.
This is a vivid illustration of one of the promising fields for cryptocurrency usage — e-commerce. As for e-commerce, it’s a highly developed industry in Japan: it’s market volume is around $79.33 bn. Around 97% of Internet users prefer online shopping to brick-and-mortar stores. 76.9 million people shop online, and online expenditure per capita is on average $ 82 per month. Japanese customers have high expectations towards service. This opens a wide range of opportunities for online retailers.
The three biggest e-commerce sites in Japan, in order of market share, are Rakuten, Amazon Japan, and Yahoo Japan Shopping. Taken together, these sites account for roughly 50% of total Japanese annual e-commerce revenue, which is $ 85.4 bn, expected to reach $ 119.4 bn by 2020. Three separate categories boast high revenue generation in the Japanese market, showing the willingness of customers in this country to shop for multiple items online. Personal electronics lead the charge generating, second place is fashion and accessories generating $ 21.6 bn, with toys and hobbies close behind, though fashion is expected surpass all other markets by 2020, generating $ 33.3 bn.
Japanese market players were quick to recognize the benefits offered by blockchain technology and cryptocurrency usage. Recruit Lifestyle, a partner of Coincheck cryptocurrency exchange, added to Mobile Payment for Air Regi app an option that accepts bitcoins.
The importance of Japanese market for the companies focused on cutting-edge technologies cannot be overestimated. Cappasity plans to enter the Japanese market soon to explore the potential of e-commerce industry eagerly supporting blockchain initiative. We have already made the company known to the public, and hope for successful cooperation with the top players of the Land of the Rising Sun.