Why Did Futuristic Japan Fall Behind Digitally? | Insight

Key Concepts

Cyberattacks, MirrorFace, semiconductor industry, telecommunications, aerospace, legacy systems, digital transformation, ransomware, NicoNico, digital competitiveness, analog systems, マイナポータル (My Number Portal), 少子化 (declining birthrate), IT人材不足 (IT talent shortage), サイバーセキュリティ戦略本部 (Cybersecurity Strategy Headquarters), NISC (National center of Incident readiness and Strategy for Cybersecurity), 能動的サイバー防御 (Active Cyber Defense), 日米同盟 (Japan-US alliance), 特定秘密保護法 (State Secrecy Act), Society 5.0, 反抗 (Hanko/personal seal).

Cyberattacks Targeting Japan

• Alert Issued: In January, a joint alert was issued regarding cyberattacks mirroring the MirrorFace group, allegedly linked to China. Targets included the semiconductor industry, telecommunications, aerospace sectors, government, and mass media.
• Frequency: The government states Japan faces a cyberattack every 13-14 seconds.
• Lack of Awareness: Despite the high frequency, there's a perceived lack of urgency and awareness regarding cybersecurity risks within Japanese organizations.
• NicoNico Attack: NicoNico, a popular Japanese website for user-generated content, was targeted in a ransomware attack by the Black Suit group (Russian/Eastern European hackers). The ransom was paid (2.98 million USD), but personal data was leaked. System restoration took almost two months.
• Japan Airlines Hack: Japan Airlines was hacked, causing flight delays.
• Impact of Stolen Technology: Stolen technology weakens a company's competitiveness. Victims are often unaware of the cyberattack.

Japan's Digital Lag

• Digital Competitiveness Ranking: Japan ranks 31st in digital competitiveness, behind other advanced economies.
• Slow Digital Transformation: Japan's slow digital transformation is cited as a reason for its cyber vulnerability.
• Legacy Systems: A traditional culture of maintaining established systems (legacy systems) hinders digital adoption.
• Analog Preference: Many Japanese still prefer analog systems. A survey found over 40% of Japanese people rely on inkan (personal seals).
• Online Administrative Procedures: In 2019, only 7.5% of approximately 56,000 administrative services could be completed digitally.
• Reluctance to Adopt New Systems: A reluctance to embrace new systems and a preference for familiar methods contribute to the lag.
• Aging Society: Japan's aging population (almost 3/10 over 65) contributes to resistance to digitalization. A 2021 study found a third of older adults were lukewarm towards digitalization.
• Lack of Cyber Awareness Among Youth: Cyber awareness is not high among young people due to limited exposure to advanced technologies in their work environments.
• SMES and Digitalization: A quarter of companies with under 300 employees haven't begun digitalization, compared to only 3.4% of large companies (over 5000 employees). 99% of Japanese companies are SMEs.
• Budget and IT Talent Shortage: Lack of budget and IT talent are major obstacles. User companies lack internal capabilities to utilize IT effectively.

Cultural and Organizational Factors

• Emphasis on Harmony: Japanese companies prioritize industrial harmony and stability over efficiency.
• Decision-Making Process: Decisions are traditionally made through consensus among multiple executives, hindering rapid change.
• Seniority and Resistance to Change: Senior executives, successful with traditional methods, may resist new approaches.
• IT Department Role: IT departments are often focused on maintenance and operations, creating a gap between technical expertise and strategic business needs.
• Lack of IT Expertise in Leadership: Japanese companies often lack IT experts in leadership positions, leading to slow decision-making on IT matters.
• Age of CEOs: The average Japanese CEO is over 60 years old.
• ウクライナ線 (Ukraine War) Example: The video shows a boot patch used in the Ukraine war that destroys the OS and makes the computer unusable.

Government Initiatives and Strategies

• Cybersecurity Strategy Headquarters: The Cybersecurity Strategy Headquarters, composed of government ministers, experts, and academics, convenes regularly.
• NISC's Role: NISC (National center of Incident readiness and Strategy for Cybersecurity) serves as the secretariat for the Cybersecurity Strategy Headquarters and coordinates various government ministries.
• Active Cyber Defense Bill: Japan passed the Active Cyber Defense Bill, allowing proactive disruption of cyberattacks. This requires collaboration with telecommunication carriers and critical infrastructure providers.
• 人材育成 (Human Resource Development): The need to increase cybersecurity personnel through universities and private sector involvement is emphasized.
• 文部科学省 (Ministry of Education, Culture, Sports, Science and Technology): The Ministry of Education, Culture, Sports, Science and Technology is working to increase the number of students in information technology fields.
• Cybersecurity Rating System: The government plans to implement a cybersecurity rating system for companies, especially those in critical infrastructure sectors.

International Relations and Security

• Japan-US Alliance: Japan's security relies on the Japan-US alliance. Weak cyber defenses are a liability in this alliance.
• State Secrecy Act: The State Secrecy Act was created to address concerns about information leaks and build trust with allies.
• Cyber Threats from China, North Korea, and Russia: China, North Korea, and Russia are identified as major sources of cyber threats.
• MirrorFace Group: The MirrorFace group is believed to be targeting Japanese technology on behalf of the Chinese government.

Society 5.0

• Society 5.0 Vision: Japan aims to create Society 5.0, a highly integrated system of cyberspace and physical space.

Overcoming the Digital Deficit

• Need for Change: Overcoming the digital deficit is crucial for Japan's growth.
• Embracing Digitalization: The need for Japan to embrace digitalization to catch up with the rest of the world is emphasized.
• Foreign Workers in IT: The number of foreign workers in Japan's IT industry has increased, but challenges remain in attracting and retaining them.
• Minister's Comments: A minister's comments about not using computers were seen as potentially damaging to Japan's image.

Incident Response

• Slow Recovery: Japan's incident response and recovery processes are slow compared to other countries.
• Lack of Preparedness: Lack of preparedness and slow decision-making by leadership contribute to the delays.

Hanko (Personal Seal)

• Persistence of Hanko: The persistence of hanko and other outdated technologies is seen as a cultural issue.
• Practical Use of Hanko: Hanko are used for practical purposes, such as bank accounts and real estate contracts.
• 3-Piece Hanko Set: A 3-piece hanko set includes a registered seal, a bank seal, and a general-purpose seal.
• Digital Transformation and Hanko: Digital transformation is needed to eliminate the need for hanko.

Conclusion

Japan faces significant challenges in cybersecurity and digital transformation due to a combination of cultural factors, organizational structures, an aging population, and a shortage of IT talent. While the government is taking steps to address these issues, a fundamental shift in mindset and a greater emphasis on digital adoption are needed for Japan to remain competitive in the global economy.