Japan's transformation aims at Web3, can it overtake on the curve?

Japan, ranked third in the world in GDP, has faced many challenges in recent years. Factors such as the recurring COVID-19 pandemic, a debt crisis that is difficult to alleviate, and an aging population have all put tremendous pressure on the domestic economy.

Japan is seeking to address these challenges through industrial transformation. Currently, the Japanese government is focusing on next-generation internet technologies represented by Web3, hoping to achieve an economic rebirth.

The Development History of the Japanese Economy: Coexistence of Fragmentation and Reorganization

Looking back at the history of Japan's economic development, it can be seen that it has undergone multiple phases of fragmentation and reorganization. After World War II, the Japanese economy fell into chaos, but through administrative intervention and geopolitical opportunities, it quickly achieved recovery and rapid growth. Starting in the 1970s, Japan began to shift its industry and implement internationalization strategies, gradually transforming towards technology-intensive industries.

After the bubble economy burst in the 1990s, Japan was once again severely impacted. However, through increased overseas expansion and strengthened fundamental research, the Japanese economy gradually stabilized, ultimately establishing its position as the world's third-largest economy. After several rounds of adjustments, Japan formed an industrial structure dominated by high-end manufacturing and technological research and development, occupying a leading position in multiple key areas.

The shortcomings of Japan's internet development

However, among Japan's advantageous industries, the internet is a clear shortcoming. Among the world's top 20 internet companies, Japan has only Rakuten. Even in traditional internet fields like e-commerce, Japan's development lags far behind countries like China and the United States.

The reasons for this situation include:

1. The explosion of the internet in the 1990s coincided with the burst of the Japanese economic bubble, missing the development opportunity.

2. The domestic market size in Japan is limited, making it difficult to support the growth of large internet companies.

3. A conservative culture is detrimental to the rapid innovation of the internet industry.

4. The offline business system has been improved, weakening the demand for internet services.

5. The aging population is not conducive to the spread of new technologies.

6. Over-reliance on foreign technology and lack of independent innovation.

These factors caused Japan to miss the opportunity in the internet era, making it difficult to occupy an important position in the global internet industry.

Japan aims for breakthroughs in Web3

Faced with the lag in the internet sector, the Japanese government has started to turn its attention to Web3. Recently, the Japanese government has frequently introduced policies to support the development of Web3:

• Prime Minister Fumio Kishida expressed support for the development of emerging digital services such as the metaverse and NFTs.

• Enact the world's first stablecoin legislation to provide legal protection for the development of cryptocurrencies.

• Approve relevant economic policies to improve the development environment of Web3.

• Promote the amendment of the bill to provide tax incentives for Web3 companies.

Japan's emphasis on Web3 stems from multiple considerations:

1. The pandemic has highlighted the importance of digital transformation.

2. The need for a lightweight economic transformation direction in the context of an aging population.

3. Web3 is still in its early stages, and Japan has the opportunity to overtake on a bend.

4. Japan's advantages in fields such as gaming and anime align with the development of Web3.

5. Web3 can extend the economic and cultural space of Japan.

With policy support, Japan's Web3 industry has begun to take shape. Several cryptocurrency exchanges have obtained licenses, and the number of merchants supporting crypto asset payments is continuously increasing. Some large enterprises and venture capital institutions have also started to lay out plans in the Web3 field.

Conclusion

Although Japan has ambitious plans in the Web3 space, it still faces challenges in achieving a leapfrog development in the short term due to factors such as market size and innovation culture. However, looking back at Japan's economic development history, it has undergone multiple rebirths driven by policy initiatives and forced transformations. Whether this Web3 transition can replicate past glories remains to be seen. Currently, while the prospects for Japan's Web3 development are hopeful, it will still face various difficulties in the short term.