Expanding University Research/Education Market in Japan – JETRO Los Angeles Seminar

Takahiro MIYAO (Professor, GLOCOM, and Head, Japanese Institute of Global Communications)

Summary of Prof. Miyao's presentation at the JETRO Japanese Market Seminar held in Los Angeles, California, on July 1, 2004.
His presentation was reproduced with MPMeister on July 23, 2004. (http://www.glocom.org/special_topics/
colloquium/20040727_miyao_expand/index.html)

Professor Miyao gave a talk to local business people in Southern California on "Expanding University Research/Education Market in Japan" at the JETRO Japanese Market Seminar on July 1, 2004. The following is a summary of his presentation (also see Powerpoint Slides):

Incorporation of National Universities

These days Japanese universities are rapidly changing, partly due to university reforms underway in recent years. The question is: Which way are the university reforms going: toward a more academic orientation or a more business orientation? Clearly the latter is the answer for now. The direction of Japanese university reforms is such that a more competitive environment, university autonomy and transparency, as well as their interaction with society and business, are emphasized.

Keywords in Japanese university reforms include (1) Incorporation of nation universities, (2) industry-academia cooperation, (3) professional graduate schools, (4) graduate law schools and (5) COE (Centers of Excellence) Program and GP (Good Practice). These concepts are explained in detail in government publications such as the 2003 While Paper on Education, Culture, Sports, Science and Technology (www.mext.go.jp/english/news/2004/05/04052401.htm). While (1) incorporation of national universities and (4) graduate law schools are highly publicized, they are mostly institutional and legal changes, whereas the other three (2), (3) and (5) may be more important from the business point of view.

Japan's national universities have just been incorporated, effective April 1, 2004, and no longer are a part of the government organization but instead have independent corporate status. Patents and other research results therefore are attributable to universities, rather than the government or individual researchers. Private sector-type management is being introduced into university administration, especially for the purpose of promoting and utilizing academic research results. Probably the most important change for individual researchers is that the public servant-type personnel system no longer applies, and researchers may have more than one job if approved by their university.

Business-related Activities

It is important to point out, however, that national university-private sector cooperative research has been increasing rather sharply, even before national universities were incorporated in April, 2004. In fact, the number of joint national university-business research ventures jumped from about 3000 in 1999 to about 7000 in 2002.

Furthermore, private universities are generally more active in joint research, technological transfers and venture business than national universities. For example, Tokai University and Ritsumeikan University have long been well-known for their emphasis on patent policy, and Waseda and Keio have been encouraging venture business more successfully than other schools. Now these universities are setting up TLOs (Technology Licensing Offices) to strengthen their policies in this area. On the other hand, national universities are just introducing such policies by setting up Intellectual Property Management Headquarters and utilizing TLOs and JST (Japan Agency of Science and Technology: http://www.jst.go.jp/EN).

Regarding university-based venture businesses launched by university researchers (or students) using their technologies, the number almost tripled from 1999 to 2002, and has been increasing to date. The most active schools in this field are Keio and Waseda, and national universities such as Tokyo, Osaka and Tsukuba are catching up with those private schools in terms of university-based venture business.

Similarly, Keio, Waseda and Nihon Universities have very active TLOs with 57, 48 and 38 cumulative technology transfers , respectively, while the cumulative numbers of patent applications at 440, 1,865 and 439 respectively, much more than any other schools in Japan. While the number of TLOs has been increasing for the last several years, very few of them are doing well in technology transfers, and some of them are taking up other tasks such as technology-related consulting for local businesses.

Establishment of Professional Schools

One of the most important developments in this whole university-related field is the establishment of professional graduate schools to train professionals with specialized skills. The Ministry of Education, Culture, Sports, Science and Technology (MEXT) started granting professional degrees in various masters programs in 2003, and five national universities such as Hitotsubashi, Kobe and Kyoto opened up new masters programs in business administration, finance, social health or other professional fields, while private schools such as Waseda, Chuo and Aoyama Gakuin focused on international management, accounting and other business-related areas. These programs are now expanding rapidly and attracting a lot of attention at home and abroad.

Graduate law schools, which started in April, 2004, might be regarded as representative of such graduate schools, but actually they are somewhat different in nature. The new law school system is a compromise between the legal community, which wishes to limit the number of lawyers, and the government-business coalition that is pushing legal reforms to train more qualified lawyers in Japan. For the 2004 academic year, 68 law schools were established with 3,417 admitted to 3 year programs and 2,350 to 2 year programs for law degree holders. Those students, if successfully graduated, will be allowed to take new national bar exams that will start in 2006 to produce 1,300 lawyers in addition to the existing quota of 1,500 coming out of old bar exams. This old exam system will continue until 2010.

Probably more significant for university research and education may be the 21st Century COE (Center of Excellence) Program and GP (Good Practice). In the COE Program for the academic year 2003, 133 projects offered by 56 universities were selected as "Centers of Excellence" by an independent committee to be supported by the government up to the amount of 500 million yen per project per year for a total period of five years. In the Good Practice program, 88 projects were selected as "good educational practices" to be supported with a total budget of 1.3 million yen for the academic year 2003. These programs are particularly noteworthy, because they are evaluated and determined by independent committees and yet involving a huge amount of public funds to foster creative research and education activities in Japan from the long-term viewpoint.

MOT and e-Learning

It should be noted that there are tremendous business opportunities in offering programs to meet business needs in Japan. For example, MOT (Management of Technology) programs are proliferating to train engineers in management and/or train managers in technology, and more than 70 schools and companies are or will be offering courses in MOT. Some schools such as Waseda and Shibaura Kodai are providing degree programs including MOT courses, while some other universities as well as private businesses are offering single courses in MOT.

One of the most promising areas is e-learning, where university programs are rather slow to utilize e-learning methods, partly due to government regulations. In the private business sector, however, e-learning is expanding rapidly, especially in the areas of English language and company training. The market for e-learning was only 50 billion yen in 2002, but is expected to increase to 200 billion yen by 2006. In fact, the government ministries METI and MEXT together with Tokyo University, TEPCO, NTT Data and JR East are planning to support an educational NPO, perhaps Industrial human resource colleges, to create some 2,000 e-learning centers all over Japan for working people to learn IT, Business English, etc. for 1,000 yen per hour.

As explained above, Japan's research/education market seems to have been expanding rapidly for the last few years and will continue to do so in the foreseeable future due to government-business-academia cooperation in Japan. So it is time for U.S. businesses and investors to take this market seriously.