Japan’s AI gamble: Can technology offset the cost of an ageing society?

Japan is pursuing artificial intelligence as a strategic response to one of its most pressing economic challenges: a rapidly shrinking workforce driven by demographic decline. Beneath Tokyo's Otemachi business district, Marunouchi Heat Supply Company operates an extensive 30-kilometre network of heating and cooling pipelines serving major commercial and transport facilities. The company has partnered with Tokyo-based AI firm Preferred Networks to implement PlantPilot, an advanced system trained on historical operational data and the accumulated knowledge of experienced engineers.

The PlantPilot system analyzes sensor data and forecasts future conditions to provide operational recommendations aimed at improving efficiency while preserving decades of technical expertise. According to Hidetaka Yagi, assistant general manager of the Development and Engineering Department at Marunouchi, the initiative addresses a critical concern: "Our biggest challenge is securing skilled personnel. As experienced workers retire, we face the risk of losing valuable operational knowledge. AI can help preserve that expertise and pass it on to the next generation."

Japan's approach to AI differs markedly from concerns in other developed economies about automation displacing workers. Instead, the country is positioning artificial intelligence as a complementary tool that extends human capabilities rather than eliminates employment. The Marunouchi project exemplifies this philosophy by retaining engineers in decision-making roles while leveraging AI's capacity to process vast data volumes and support faster, more informed decisions.

Beyond addressing immediate labour shortages in manufacturing, logistics, energy, and healthcare, Japan is also seeking to strengthen its competitive position in the global technology race. Despite its historical reputation as a technology leader, Japan has produced relatively few globally influential digital companies. The United States hosts approximately 690 unicorn start-ups valued above $1 billion, while China has roughly 160. Japan, by contrast, has only about eight such companies, revealing a significant gap between its technological standing and its start-up ecosystem. Companies like Sakana AI, a closely watched Tokyo-based artificial intelligence start-up, represent efforts to narrow this disparity through rapid expansion and innovation.