Tech innovation: How China and Japan shape future of industry

Editor's note: 

The international symposium "Green Transformation Determines the Future of Industry," hosted by Tokyo Keizai University, was held on Nov. 30, 2024, in Tokyo. In the second panel discussion on innovation-driven green transformation, Zhou Muzhi, a professor at Tokyo Keizai University; Suo Jixuan, former chairman and senior director of CAS Holdings; Toshio Iwamoto, former president and senior advisor of NTT Data; Koichi Iwami, president of Elecom and former co-president of Transcosmos; and Daisuke Kotegawa, chairman and president of Oita Prefectural College of Arts and Culture and former IMF executive director for Japan joined the panel discussion. They discussed the green transformation of Chinese and Japanese companies, and explored the possibilities of China-Japan cooperation on green transformation.

Leading enterprises driven by Moore's Law 

Zhou Muzhi called the present as the "Moore's Law era" at the beginning of the panel discussion. Moore's Law, proposed in 1965, predicted that the number of transistors in a semiconductor could double every 18 months, while the price could be halved. Since then, human society has evolved at an unprecedented speed driven by Moore's Law. The continuous evolution of semiconductors has contributed to the advent of numerous products and services. From hardware like computers and mobile phones, to internet services like emails, web pages, search engines, social media, streaming platforms, online shopping platforms, digital currencies, to AI applications and autonomous driving — all of these did not exist before.

Zhou said that in the Moore's Law era, high-tech innovation provides the greatest driving force for social development. In the same vein, tech advancement is crucial to green transformation. Zhou said, efforts to reduce the burden on the environment and improve energy efficiency will rely on technological innovation.

Suo Jixuan said, as the Chinese government is actively moving toward the goals of carbon peaking and carbon neutrality, the Chinese Academy of Sciences (CAS) has laid out a comprehensive plan for scientific research to achieve the goals, taking China's realities and global factors into consideration. The CAS, he said, places special emphasis on innovation and breakthroughs, and values close collaboration between research institutions and enterprises. 

For basic research, and key technological breakthroughs and application, China has established an action plan. China has become a pacesetter in various fields such as the transformation and clean utilization of fossil energy, renewable energy, nuclear energy systems, and global climate change, as the country achieved demonstration application for an array of major projects and fostered a legion of innovative tech enterprises.

Suo also introduced several research achievements from the CAS — addressing technical challenges in coal-to-oil conversion to improve the clean and efficient use of coal resources; laying the groundwork for the development of the lithium battery, which is set to be used in fields such as new energy vehicles, drones, electric ships, and energy storage.

Toshio Iwamoto introduced that NTT Date became independent from NTT in 1988 and has grown into a digital conglomerate with a sales volume of JPY 4.4 trillion, over 200,000 employees, and bases in more than 50 countries.

Iwamoto said that NTT Data will leverage technological innovation to support green transformation, disaster recovery and reconstruction, infrastructure construction, and the protection and utilization of human heritage.

Koichi Iwami said that since its founding 38 years ago, the company has developed into a large electronics supplier spanning a wide range of fields. Currently, nearly 93% of its products are manufactured in China, but only 3% of its sales come from overseas markets. He said he hopes the overseas sales ratio will reach 20% in the next three years.

Iwami also presented Elecom's green transformation initiatives to promote forest regeneration and solar power utilization and reduce the use of plastic products. According to him, the company has also launched a new brand, "think ecology," based on the concept of using renewable and environmentally friendly materials.

Win-win results for environmental policies and industrial competitiveness

Daisuke Kotegawa pointed out a rising force against excessive environmental policies in Europe, citing the recent turmoil in German politics. Radical environmental policies have already forced many German companies to relocate to other countries. Thus, Germany will be likely to prioritize economic growth over environmental policies as well as aid to Ukraine. The impact brought by this change will inevitably affect the whole Europe and even the world.

Echoing Kotegawa's views, Zhou stated that the key challenge facing the U.S. and Europe is whether they can improve their domestic industries' competitiveness while implementing environmental policies. In recent years, China's electric vehicle and renewable energy industries have developed rapidly, achieving a win-win situation for environmental policies and the development of their industries.

Entrepreneurial spirit makes a difference 

Zhou revealed a fact: During Japan's economic boom in 1989, seven out of the top 10 companies worldwide by market value were Japanese companies in sectors such as banking, telecommunications, and electricity. However, by 2024, the top 10 global companies by market value are dominated by tech companies such as Microsoft, Apple, Nvidia, Tesla, Alphabet, Meta, and Amazon. With a combined market value exceeding $12 trillion, these seven tech giants are products of Moore's Law. 

Zhou said that Moore's Law has provided immense space for technological innovation, and the success of tech companies is attributed to imagination, creativity, and the spirit of challenge. In contrast, many traditional large enterprises, due to their overemphasis on risk-averse operations, have stifled imagination and creativity. As a result, in the Moore's Law era, tech companies have become the strongest entities changing the world.

Zhou went on to point out that among the top 100 companies by market value in China and the U.S., many are tech enterprises founded after the 1980s, with many founders still playing leadership roles today. Technological capability and the entrepreneurial spirit are crucial to the development of enterprises, and green transformation also requires the entrepreneurial spirit.

Suo introduced the close cooperation between Lenovo, founded in 1984, and the Chinese Academy of Sciences. Lenovo transformed into a global enterprise through innovative moves such as converting the English operating system to Chinese and the bold acquisitions of IBM's PC division and Motorola from Google. This success symbolizes the entrepreneurial spirit and innovation, marking an important step in driving China's industrial transformation.

Iwami, who has served as a director and advisor to over 200 companies, emphasized that the most important aspect of a company is its vision — what kind of company it aims to be in 10 or 20 years determines its future direction. Without vision, concepts like corporate culture and strategy are just empty talk. Markets and technologies are ever-changing, and the ability to devise strategies and tactics to respond to these changes is a crucial part of the entrepreneurial spirit. Hence, the ability to make rapid decisions is key to success, especially for startups, where speed is of utmost importance.

IOWN in action: Green transformation of data centers

Iwamoto stated that as AI technology develops, the power consumption of data centers will increase significantly. AI learning requires a large amount of electricity, especially large data centers using Nvidia GPUs, which consume vast amounts of power. To enhance the efficiency of data centers, NTT has proposed the Innovative Optical & Wireless Network (IOWN) initiative, based on optical communication technology. This optical communication infrastructure features low power consumption and low latency, capable of efficiently handling large volumes of data. By implementing IOWN, carbon emissions can be drastically reduced, playing an important role in green transformation.

Zhou pointed out that in the global AI boom, data centers consume massive amounts of energy, and cooling the heat generated is also extremely costly. The energy consumption of data centers is growing exponentially and becoming a main bottleneck in AI development. In order to quickly increase power supply capacity, the U.S. is likely to prioritize nuclear power development. The IOWN initiative, aimed at reducing energy consumption significantly and achieving the green transformation of data centers, could become an extremely important innovation. If this highly impactful innovation is successful, NTT may for the second time become one of the most valuable enterprises in the world.

China-Japan cooperation highlights green transformation

NTT Data has about 10 offices in China, with more than 4,000 employees. Iwamoto, who has visited China over 100 times, stated that the collaborations with Chinese enterprises have built a solid foundation of trust. Going forward, NTT Data will continue to deepen relationship with China, promoting exchanges between the two countries in business, culture, and green transformation.

Iwami suggested that cooperation with China to expand global markets should rely on China's manufacturing capabilities and technology. In advancing green transformation, cooperation is the most important factor, especially with Chinese manufacturing partners. This cooperation is built upon common goals and concrete measures. He called upon China and Japan to work together to build new value chains, enhance their competitiveness in the global market, and achieve green transformation.

Kotegawa pointed out that China and Japan are geographically close and have close economic ties, and there is a need to further strengthen their friendly relations in the future. However, there is a significant influence from the United States behind Japan, and the stance and policies of the U.S. can sometimes be difficult to understand. The U.S. always prioritizes its own interests over rules and ethics. The relationship among China, Japan, and the U.S. is very delicate, and the key to the future is how to deepen cooperation for mutual benefit.

Zhou pointed out that both the U.K. and the U.S. are "island nations" outside of the Eurasia continent and the U.S.'s Eurasian policy sticks to the "Heartland Theory" proposed by British strategist Halford Mackinder on how island nations can control Eurasia. However, isolationist thinking is also deeply rooted in the U.S. The re-election of Donald Trump as U.S. President reflects this oscillation. The key to green transformation is being clear about what we need to do and striving to remain unaffected by the pendulum swings of U.S. policies.

Zhou noted that nearly 10 million Chinese tourists visited Japan in 2024. He said he believes that with the continuous expansion of cultural exchanges, Sino-Japanese relations will further improve. If, in the near future, the number of Chinese tourists visiting Japan each year could reach 30 million or even 50 million, many of the thorny issues between China and Japan might be resolved.