Tokyo, Japan – Ryuichi Ueki, like most restaurant owners he knows, only accepts cash.
Ueki, the fifth-generation owner of Asahi, a ramen restaurant in Tokyo’s historic Asakusa district, doesn’t want to pay credit card fees or bother trying to get to grips with digital payment platforms like Apple Pay and LINE Pay.
“I do have some customers who ask to pay by credit card because they say they don’t have cash. I tell them to go to the convenience store and get cash from the ATM,” Ueki, whose restaurant first opened in 1914, told Al Jazeera.
Despite the growing popularity of cashless payments worldwide, Ueki has no plans to change that any time soon.
“It’s not necessary because we’re happy with what we have,” said Ueki, explaining that things have been done the same way in his family business since “ancient times.”
“When I think about it, it’s kind of weird, but I never thought about it,” he added.
Ueki’s preference is characteristic of his compatriots.
While cashless payments in Japan have more than doubled over the past decade — reaching 36 percent by 2022, according to the Ministry of Economy, Trade and Industry — the share lags far behind regional peers like South Korea and Singapore, where most transactions are cash. are. free.
Japan’s abiding love of cash is just one example of the East Asian giant’s inertia when it comes to the digital economy.
Japan, immortalized in the Western imagination as a futuristic society thanks to sci-fi classics like Blade Runner and Akira, remains a world leader in high-tech fields such as robotics.
Yet the world’s third-largest economy remains firmly in the past in many other respects.
Many Japanese government services are still not accessible online and rely on paper forms or a visit to a local government office. Fax machines are often used in workplaces in place of email, while physical seals known as “hanko” are preferred over digital signatures.
Japan’s Digital Agency, the government agency responsible for leading the country’s digital transformation, has estimated that 1,900 intergovernmental proceedings rely on legacy storage technology such as CDs, minidisks and floppy disks.
During the COVID-19 pandemic, a local official in Yamaguchi Prefecture made headlines after sending a floppy disk containing citizen information to a local bank to distribute aid payments, resulting in a mix-up in which a resident mistakenly charged a lump sum of 46. 3 million yen ($331,000).
In the latest World Digital Competitiveness Ranking published by the Institute for Management Development, Japan ranks 29th out of 63 economies, behind Singapore, South Korea, Hong Kong, Taiwan and China.
Martin Schulz, chief economist at IT services company Fujitsu, said Japan’s reliance on legacy systems is due in part to its success in achieving world-class efficiency using analog technology.
“If your train systems work like clockwork to the second, to replace them with a digital system that would achieve that, but have huge switching costs with no significant additional profit – the calculation is very different than if you have a rather messy system where you tell me to clean it up now,” Schulz, who is also an adviser to the Japanese government, told Al Jazeera.
The Japanese government has long recognized the need to address the country’s digital laggard status, which threatens to undermine efforts to boost productivity and revive its $4.9 trillion economy.
In a 2018 report, the Ministry of Economy, Trade and Industry warned that Japan was facing a “digital cliff” due to companies’ failure to adopt digital systems, causing companies to lose up to 12 trillion yen ($86.1 billion) each . years after 2025.
Japanese Prime Minister Fumio Kishida has pledged to accelerate the country’s digital transition, including spending 5.7 trillion yen ($42 billion) to improve digital infrastructure in regional areas, where labor shortages due to aging populations are increasing. of the country is felt most strongly.
Retaining a position held by his predecessor Yoshihide Suga, Kishida also appointed a dedicated digital minister, Taro Kono, who has declared “war” on floppy disks and sarcastically joked about his fax machine jamming despite living in a “remarkably advanced society” .
For Japan, the pandemic was a wake-up call.
While other countries further down the path of digitization could have used the crisis to explore new ways of doing business, Japan found that it had merely “laid the foundations” for the digital age, according to Schulz.
“People like to meet, prefer face-to-face meetings. That all changed with the pandemic and the idea was ‘Oh wow we know we’ve been kind of backward but now we’ve made a big leap in terms of digitization so this will be a big win and a game in a way changer’. said Schultz.
“[But ] the result was that, compared to other countries, Japan’s digitization was actually much slower,” said Schulz. “The overall impact of digitization in terms of new services, new added value was more limited compared to other countries.”
Japan’s aging society suggests that its digital transformation could become an uphill battle.
After decades of low birth rates, the government expects a shortage of 450,000 information and communications technology workers by 2030.
Japan’s rigid bureaucracy is also seen as resistance to change.
In an article marking a year since the Digital Agency was founded last year, the Yomiuri Shimbun newspaper reported that work had “stalled” due to opposition from other agencies. The uncooperative departments reportedly included the Department of Justice and local governments, which had objected to plans to implement cloud-based management systems by 2025.
Ueki, the owner of the ramen restaurant, said many Japanese share his ambivalence about striving to get ahead or shake up the status quo.
“Because we were trained in school to play by the rules, I think we still have the mindset that we can’t do anything wrong,” Ueki said.
“I think I’m a lucky person because this is the attitude I have,” he added. “I’m okay with my business and my day-to-day life, which is comfortable the way it is.”