Ranking Japan (cont’d)
If you have been following us for a while, you know that we like to follow the various country & city rankings. While one might argue with the methodology applied by any one study, in aggregate a solid picture emerges.
Among our favorites are the annual IMD competitiveness rankings, where Japan ranks 35th in overall competitiveness, 32nd in digital, and 43rd in talent. Another is Z/Yen’s semi-annual Global Financial Centers Index that has Tokyo in 19th spot and Osaka in 47th. Both of these studies have been long-running and are methodologically sound.
As everyone coming down from their sugar high post the SusHi Tech events, the above post came up in my LinkedIn feed, and it made me want to take another look at recent rankings. Sure, you can have a great party if you give away 50,000 tickets (you did not pay for your entry, did you?), but who is going to measure the impact? These tiny booths for no-name startups have never made sense, not at the Singapore FinTech Festival, where they start being deserted on Day 2, and not at SusHi Tech. Well done, Hong Kong, England, and Switzerland (?) for organizing a larger country presence, those big stands were impressive.
We also do not want to be overly critical, as Japan does need change, and you cannot fault anyone for trying. It does feel at times like the Dallas Mavericks hoisting up desperation three pointers while facing elimination in the NBA finals (which I am watching while writing). The question is, are you taking high percentage shots? And in reference to the above LinkedIn post, how many startup, go-to-market, and acceleration consultants does Japan need at the national, prefectural and city level?
Alright, let’s review some of the most recent publications.
StartupBlink — Global Startup Ecosystem Index
The 2024 edition of StartupBlink’s Global Startup Ecosystem Index sees Japan dropping out of the Top Twenty. While the report recognizes that the point differential among those ranked 19th to 22nd is quite small, this tends to be true for many rankings, and certainly for the Global Financial Centers Index, where even the difference from 20th to 5th position is not too substantial.
As we have pointed out before, though, there is a difference between absolute and relative improvement, which tends to obscure some of these discussions in Japan. Yes, Japan is changing, but the world outside of Japan is changing faster. So in many point systems, Japan accrues a better absolute rating, but still drops in the rankings, because other countries/cities got better faster.
While Tokyo managed to hold steady in 14th place, all the other vaunted “startup cities” (except Kyoto) have lost ground, some of them substantially. Osaka (minus 15), Fukuoka (minus 28) and Sapporo (minus 80) do not have much to show for their efforts.
Startup Genome — Global Startup Ecosystem Report
Better news comes from the annual Startup Genome Global Startup Ecosystem Report, which sees Tokyo moving up five ranks and into the Top Ten. Startup Genome is much less comprehensive than StartupBlink, it does not provide country rankings, and it does not cover any other city but Tokyo (although, allegedly Startup Genome is engaged in advisory work with Fukuoka, another reason why we value the purity of the IMD and Z/Yen work).
The leading Asian centers area clustered here from seventh to eleventh, with Singapore leading Beijing, Seoul, Tokyo and Shanghai.
Z/Yen — Smart Centres Index #9
In addition to the Global Financial Centers Index, Z/Yen also publish a Smart Centers Index, which seems inherently relevant to Tokyo in the context of the SusHi Tech positioning. Here Tokyo shows up at 33rd position, actually down a notch both in absolute score and relative ranking. Osaka comes in 50th.
World Economic Forum — Global Gender Gap
It might not seem fair to conclude this article with the World Economic Forum’s Global Gender Gap Insight Report, however, it was published over the last month, like the other studies referenced here, and despite the usual poor performance, there is actually an improvement in the Japan ranking, up seven spots to 118th, now surpassing Burkina Faso, Ivory Coast, and Sri Lanka.
It has been 25 years since Kathy Matsui published her first Goldman Sachs “Womenomics” research report, so anyone expecting things to change quickly in Japan, “hold my beer”.
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