Transcript Service innovation

Tokyo Club for Global Studies
 Innovation and Promotion Policies for the Service Sector in Asia
20-21 February 2003
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Service Sector Innovation and Policy Issues
in Japan
February 21, 2003
Nobuaki Takada
Nomura Research Institute, Ltd.
Copyright2002: Nomura Research Institute， LTD All Rights Reserved
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Introduction
• The weight of service industries has been increasing.
• Hopes are being pinned on the service industries to become
a key player in the rehabilitation of the Japanese economy.
• The service industries have failed to achieve demonstrative
increases in productivity through innovation.
“Service innovation” based on the development
and adoption of technology and know-how
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Growing Importance of Service Industries
Change in Japan’s Industrial Structure (% of GDP)
1978
1988
Agriculture, forestry and fisheries
3.7
2.6
Mining
0.5
0.2
Manufacturing
24.9
26.2
Construction
11.1
9.3
Total for secondary industries
36.5
35.8
Electric power, city gas and water supply
2.4
2.5
Wholesale and retail
11.2
12.6
Finance and insurance
4.1
5.6
Real estate
10.8
10.8
Transportation and communications
6.4
6.2
Services
13.2
13.9
Government service providers
9.7
8.0
Private non-profit service providers to the household
2.0
sector
2.0
Total for tertiary industries
59.8
61.6
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1998
1.8
0.2
25.9
7.8
33.9
2.9
12.2
5.0
11.9
6.3
16.4
7.2
2.3
64.3
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Sectoral Trends in Employment
1981-2001
(1981 = 100)
Service
Tertiary
Manufacturing
180.0
160.0
140.0
120.0
100.0
80.0
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Business-opening and Business-closing Ratios
in the Manufacturing and Service Industries
Business-Opening Ratio
M anufacturing
6%
M anufacturing
S ervice
4.7%
4.2%
1.9%
2%
1%
1%
1990
4.0%
2000
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2.9%
3%
2%
0%
4.8%
4%
2.8%
3%
5%
S ervice
5.3%
6%
5%
4%
Business-Closing Ratio
0%
1990
2000
5
Ratio of Business Services to the Total Economy
in Selected Countries
Percent of GDP
35
30.9
30
25
22.3
22.9
20.6
20
17.6
15
10
5
0
U.S.
U.K.
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France
South Korea
Singapore
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Growth Sectors of the Service Industry (1989-99)
Amount of Number of Number of
Business
output
employees establishment
Laundry, barbers and public bath
82.5%
18.7%
2.8%
Parking
96.0%
26.3%
3.1%
Other services related to daily living (Note 1)
62.9%
35.5%
19.1%
Inns and other accommodations
56.5%
18.2%
-13.6%
Entertainment (excluding movie and video production)
80.6%
49.4%
17.3%
Automobile maintenance
45.5%
21.2%
11.3%
Machinery and furniture repairs
150.7%
52.6%
11.9%
Rental of goods
81.6%
33.6%
12.6%
Movie and video production
81.2%
44.0%
51.3%
Broadcasting
63.6%
19.6%
0.7%
Information services and investigation
164.6%
42.3%
44.6%
Advertising
42.0%
7.2%
-3.5%
Professional services
121.1%
44.3%
23.9%
Other services for businesses (Note 2)
133.2%
64.3%
42.2%
Waste disposal
162.3%
60.7%
45.3%
Health care
207.3%
125.2%
29.1%
Public health and hygiene
244.3%
162.9%
88.1%
Social insurance and welfare
135.8%
103.7%
49.2%
Education
44.1%
24.9%
36.6%
Academic research institutions
-5.6%
33.3%
45.0%
Religion
66.0%
8.7%
2.3%
Political, economic or cultural groups
57.0%
21.7%
11.6%
Other services (Note 3
138.1%
95.0%
56.1%
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Growth Potential of Service Industries
Chart. Smile Curve
Rate of
return
R&D
R&D
Produc
生産
tion
Sales
販売
After-sale
services
Value chain
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Smile Curves for the Computer Industry
Value added ratio
Structure of the Value Added in the PC Industry
10％
1998
5％
0％
Other electronic
parts
Semiconductor
Computers
elements
and
integrated
circuits
Liquid crystal
Computer
auxiliary
equipment
Family
Family
Software
communications
communications
equipment
equipment
wholesale
retailing
Data
Computer
processing
leasing
and supply
services
elements
1988
10％
5％
0％
Other Semiconductor
electronic
elements
parts
and ICs
Computer
Family
auxiliary Communications
equipment
equipment
wholesale
Computers
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Reserved
Family
Information
communications services
Equipment
retailing
Computer
leasing
Production value
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Smile Curve of the Automobile Industry
Value added ratio
Chart. Smile Curve of the Automobile Industry
10％
1998
5％
Production value
0％
Auto parts
Engines
and
their parts
Auto assembly
Automobile
wholesale
Automobile
retailing
Auto
repairs
Leasing and rental
Autos
for hire
and taxis
Chassis
10％
1988
5％
0％
Auto parts
Engines
and
their parts
Auto
assembly
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Reserved
Automobile
wholesale
Automobile
retailing
Auto
repairs
Leasing and rental
Production value
Autos for
hire and taxis
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Implications from the Smile Curve
• The smile curve varies from industry to industry.
• Power relations among sectors make up the value
chains of industries.
• Value added as a whole fell between 1988 and
1998.
• It is possible to change the value chain through
innovation.
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Evolution toward a Service Economy
Factors on the users’ side:
Individuals:
•Graying of the population.
•Participation of housewives in the labor force.
•Increasing need for continuing education.
Businesses:
• Core competency and outsourcing.
Government:
•Fiscal rehabilitation
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Evolution toward a Service Economy
Factors on the suppliers’ side:
• Manufacturers focusing on after-sale services,
such as maintenance and leasing
• Companies spinning off head office administration
departments to create shared-service companies
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Rising hopes pinned on the service industries
 To create employment opportunities
 To realize a desirable international production
network with other Asian countries.
 To contribute to strengthening the
competitiveness of industries
 To realize a rich and worry-free life
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Policy measures by the Japanese government
The Cabinet Office:
•Council on Economic and Fiscal Policy
•Industrial Structure Council
Ministry of Economy, Trade and Industry:
•Service Forum
Japan Tourism Advisory Council
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TFP and the Rate of Increase in Employment
Average annual growth rate in employment 1997-2000
•Manufacturing
•Transportation, communications
•Mining
•Finance and insurance
•Services
Employment,
•(Workers,
%) %
•Electricity, city gas, water supply
•Construction
•Wholesale, retailing
•Real estate
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• Combining crime-prevention sensors and telecommunications
technology.
• Based on the information and communications infrastructure.
• Developed technologies in such areas as:
remote sensing,
image processing,
geographical information system (GIS),
and the application of information technology to finance
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• Based on the combination of a physical distribution and delivery
system and an information system.
“cool home delivery”
“time designation delivery”
“cash-on-delivery”
• Challenging the government-run postal business
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• Convenience stores supported by sophisticated physical distribution
and information systems.
• Offering a various services in addition to selling merchandise.
Services Available at SEJ Outlets
•Copying
•Fax transmission
•Photo developing
•Parcel delivery
•Sale of postage stamps, post cards, and revenue stamps
•Sale of waste disposal stamps
•Sale of ski lift tickets
•Printing of New Year’s cards
•Sale of automobile third party liability insurance
•Magazine subscriptions
•Pick-up of merchandise ordered via the Internet, etc.
•Sale of catalog gifts
•Sale of various prepaid cards
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• Barbershop chain operator.
• Based on the concept of \1,000 and 10 minutes.
• Eliminate shampoos, face shaves, and massages.
• Designed a shop system, including utensils and barber’s chairs,
that allows efficient and inexpensive service.
• Opened shops in Singapore.
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Application of Toyota-model production system
• Dry cleaning and laundry industry:
Adopting the “kanban” method to process small lots of
various types of clothing resulted in improved finishing,
fewer delivery errors, and less damage to clothing.
• Hospitals:
Reforming operations based on the concept of eliminating
waste, which is the core of the Toyota model, sharply
reduced waiting time for patients.
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Need for Japanese-model service innovation
• It is essential for service industries to raise labor
productivity.
• The development of markets and the creation of demand
through innovation should expand the markets for
services.
• Service industries need to do business abroad.
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The direction of service innovation
Product innovation
• Creating new service content.
• Requires developing technology to create new services
or developing technologies and know-how to offer
services more efficiently.
Process innovation
• Building systems that can meet diverse needs and be
efficient.
• Chain Operation is such a system.
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Future policies for the development of
service industries
(1) Develop service technologies
(2) Improve the market environment for service industries
(3) Develop service industry professionals
(4) Promote the internationalization of the service
industries
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Develop service technologies
Adapt technologies and know-how used in the
manufacturing industries.
Develop original technologies for the service industries.
• Ubiquitous network technologies -IC cards, RFID, etc.
• Data mining
• Other information processing
technology
• Sensor technology
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Improve the market environment for the
service industries
 Increase competition by eliminating monopoly and
removing entry barriers.
 Open markets that have been monopolized or heavily
regulated by the public sector
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Develop service industry professionals
Securing and nurturing manpower with professional
capabilities are essential for the development of these
industries.
 Enhance higher education in the field of services
 Develop vocational schools for re-training and reeducation of workers.
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Promote the internationalization of the
service industries
 Provide information to help businesses go abroad.
 Harmonize systems that affect the business
environment in various countries.
 Actively promote foreign direct investment in Japan.
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Country（Regional) Differences
Sectoral Share of GDP at Current Market Prices, 1980, 1990, 2000
(Percent)
China
Hong Kong
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Japan
Agriculture
1980 1990 2000
Industry
All Industry
Manufacturing only
Services
1980 1990 2000 1980 1990 2000 1980 1990
2000
30.1
0.8
24.8
14.9
…
25.1
1.3
7.7
23.2
48.5
31.7
43.4
41.3
…
38.8
38.1
45.7
28.7
27.0
0.3
19.4
8.5
15.2
21.9
0.4
4.2
12.5
15.9
0.1
16.9
4.6
8.6
15.9
0.1
2.1
9.1
3.0
2.0
41.6
25.3
39.1
43.1
42.2
34.5
34.4
41.2
37.2
50.9
14.6
47.3
42.7
51.7
31.1
34.3
32.4
41.7
41.0
36.0
Source: ADB, Asian Development Outlook 2001.
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44.2
23.7
11.6
29.7
…
25.7
29.1
36.0
21.5
37.0
17.6
20.7
28.8
24.2
24.8
27.1
33.3
27.2
44.3
5.8
26.0
31.5
34.3
22.6
26.5
26.3
33.4
28.0
24.0
21.4
67.5
31.8
43.7
…
36.1
60.6
46.6
48.1
31.3
74.5
41.5
48.4
42.6
43.6
65.3
54.6
50.3
33.2
85.3
35.8
52.7
39.7
52.9
65.6
65.6
49.2
56.0
62.0
World Bank, World Development Indicators 2001.
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