Most Japanese Firms Fail to Fully Integrate AI, Reuters Poll Finds

A vast majority of Japanese companies have yet to fully integrate artificial intelligence into their operations, according to a recent poll conducted by Nikkei Research for Reuters. The findings suggest a significant gap in adoption that could undermine Japan's broader economic ambitions.

According to the survey, more than 80% of Japanese firms either do not use AI or employ it only in a limited capacity. The poll, conducted between July 29 and August 6, gathered 219 responses from a pool of 510 contacted companies. While some firms have begun experimenting with the technology, the depth of integration remains shallow. One manager at a wholesaler noted that while their company started using AI company-wide, its application is restricted to basic tasks such as document creation.

The Push for Productivity

This slow adoption comes at a critical time for the Japanese government. Prime Minister Sanae Takaichi has made AI, semiconductors, and quantum technology central to her Japan Growth Strategy, aiming to revive the economy and end a period of "excessive austerity." The government views these technologies as essential tools to boost productivity, particularly as the nation grapples with a shrinking population and a tightening labor market.

However, the transition from government policy to corporate execution appears stalled. The reluctance to embrace AI is not necessarily due to a lack of funding, but rather a lack of operational knowledge. An official at a real estate firm explicitly stated, "We don’t know how to put it in use," highlighting a gap in organizational capability that financial investment alone cannot bridge.

Financial Outlook and Strategic Risks

Despite the current lag in implementation, Japanese firms are planning to increase their spending on the technology. Regarding AI budgets for the next one to two years, 21% of respondents expect growth between 10% and 50%, while 4% anticipate an increase of over 50%. Another 30% project single-digit expansion, indicating a general trend toward higher investment.

This cautious financial approach is mirrored in a preference for domestic stability. An official at a machinery maker noted that the continued weakness of the yen has reduced the merit of investing overseas, suggesting that AI growth may be focused internally.

The Path Forward

If Japanese firms cannot move beyond limited use cases, the country risks a widening productivity gap compared to other global industrial powers. The challenge for the Takaichi administration will be moving beyond budget allocations to foster the actual technical expertise required to deploy AI as an integral business tool. Whether these planned budget increases translate into meaningful structural changes remains the primary question for Japan's economic recovery.