The Journal The Authority on Global Business in Japan

On a June morning about an hour after dawn, the sun is still low and the air cool. In Rinshi-no-Mori, a large park in eastern Tokyo, the elderly gather in their dozens.

By 6:30am, the starting time for Rajio Taiso, the early morning exercise program aired each day by public broadcaster NHK Radio, about 200 seniors have gathered to do their daily stretches and light calisthenics.

Further in the park, another group practices Tai-chi to the sounds of Chinese folk music. Nearby, gray-haired couples and groups of friends stroll.

These early hours at the park offer one glimpse of Japan’s future. A significant portion of the nation’s population, without the vim and vigor of youth, remains active and happy.

For some, however, the increase in the number of aged people does not bode well for the future. “People around here are getting too old; they don’t need to do dry cleaning regularly these days,” says Masae Sugimura, who has operated a family-run laundry near the park for about 30 years.

“We have started delivering some heavier things, such as blankets, that older people cannot carry by themselves. Or care workers will come and pick them up.” The number of customers using Sugimura’s dry cleaning service is decreasing: Young people are not replacing the old.

And beyond the most active, physical deterioration, loneliness, and dependence on helpers are all growing concerns that Japan must address.

Funding the care of a population whose needs are increasing almost daily puts strains on communities and government balance sheets. What some have called Japan’s “gray tsunami” is gathering pace, and will inevitably inflict huge costs on society.

Yet this gray cloud has a silver lining, and getting to grips with it offers opportunities for innovation, and in business, that can be transferred to other parts of the world as ageing becomes a global issue.

Opportunity knocks
Fewer babies were born in Japan last year than in any 12-month period since at least the early 1950s. A quarter of the population today is elderly and the proportion is expected to continue rising. By 2050, according to the Pew Research Center, the average age of the Japanese will be 53.

Japan’s health ministry, meanwhile, sees ageing causing four problems: labor supply will fall and the number of those on welfare rise; the savings ratio will drop; economic growth will become more difficult to achieve; and social security funds will be strained.

Abenomics, Japan’s policy mix for boosting the economy, is in part said to be an attempt to manage the nation’s graying population so that tax revenue rises, allowing the country to pay for its elderly and bring down the national debt.

Noriko Hama, an economist at Doshisha Business School in Kyoto, is among the pessimists. While the government is “making noises about demographics,” she says its policies are “anachronistic, looking backward instead of forward.”

This gives companies a chance to capitalize on what she calls the “vacuum” left by government. Unicharm Corporation is one such company. It is cashing in on the once-taboo subject of adult incontinence.

Unicharm diapers do well across Asia, where there are still plenty of babies, while its home market is more than stable because of sales of incontinence products to the elderly.

And as market research company Euromonitor International notes, “Demographic trends are expected to continue playing a role in terms of boosting demand for incontinence products in Japan for many years to come, considering how more mainstream the products have become in response to the needs of a wide variety of consumers.”

Food maker Kewpie Corporation is also seeing the benefits of a silver yen. Its “Gentle Menu” product line for the elderly offers softer food to older people that have trouble chewing and swallowing. The company makes popular Japanese dishes into purees or stews that are palatable to the elderly.

As Japan gets grayer, the market for such foods will grow. It was worth about $30 million last year. Kewpie and Unicharm have both addressed the problem of a graying Japan by adapting existing product lines to old people. Similar tweaks are seen across consumer industries.

“Almost all Japanese companies,” says William Hall of Ipsos, the global marketing company, “have now realized that the senior market is a huge and growing one.”

Cause for concern
As the fall in the number of customers seeking Sugimura’s dry cleaning service shows, however, graying populations can lead to a decline in business and force adaptations that are not always profitable. The implications of this are bad news for governments.

The older people get, the more treatment they need. And 26 percent of the elderly live alone. At some point, in Japan, where the average man lives to 80 and woman to 87, immobility and a decline in health becomes a risk.

The number of care workers in Japan increased from 550,000 in 2000 to 1.33 million in 2010, according to the government. All these workers need to be paid, and the money for their wages often comes directly from government coffers or those of insurance companies.

“It is . . . a big challenge to secure the necessary personnel, and to improve their working environment,” the government wrote in a report on social security last year.

The “majority of workers are female in the long-term care services; most of them work part-time for in-home services . . . while most workers in facilities are full-timers.”

Some immigration is inevitable, even if a population that, by and large, considers itself homogeneous is reluctant to open up the gates. The problem here, however, is those that enter as care workers face what Hama calls a “lack of infrastructure.”

Without social reform that would allow foreigners to integrate deeper into the economy, problems will linger.

Grabit’s robots can pick up a drinks can and other products, a feat with a number of applications.

Grabit’s robots can pick up a drinks can and other products, a feat with a number of applications.

The Age of Robots
That has some wondering if robots are a future solution. Emotion-reading and communicative robots—such as SoftBank’s Pepper, and other machines like it—begin hitting the market this year, but they cannot perform the essential housework with which the immobile elderly struggle. That will take time.

Many, however, are hopeful.

“I have been in the robot industry for around 35 years and I always dreamed of this kind of environment in the future. Well, it looks like the future is here,” says Charlie Duncheon who heads Duncheon Associates, a consultancy that specializes in robotics.

“It is just amazing how fast developments are coming about.”

CoverTable1 Duncheon co-founded and was CEO of Grabit, a Silicon Valley company with patented electroadhesion technology that allows its robotic grippers to pick up flat materials, such as fabrics, with which standard machines struggle. He remains on-board as an adviser. The company’s next target is e-commerce warehouses.

“We have built and demonstrated prototypes that can handle a bottle of shampoo, a can of soda, a bag of snacks, and CDs,” Duncheon says. “That’s the area we see ourselves going into in the future.”

How does this relate to the elderly? Think of the iPhone. It is made by Apple, but inside, the parts are from a vast array of companies. In robotics, components and technologies are also out there that have the potential to come together and change the way we live. Numerous developments suggest home-care robots are not as far-fetched as they once were.

Duncheon points to three factors driving the industry forward: lower costs for components, due to demand volume in consumer electronics; transferable advances in software and hardware for factory robotics; and the advent of “collaborative” machines that people wear, such as Cyberdyne Inc.’s Hybrid Assistive Limb (HAL), which supports human limbs and allows them to function better.

“The biggest impact that these emerging technologies can have in Japan is in elderly care in the home,” Duncheon says. “The more the elderly can be cared for in their own homes, and not in special facilities, the more efficient [the care] industry becomes.”

In particular, advances in artificial intelligence designed to allow robots to do the warehouse work for Amazon.com Inc.—that today is done by humans in a “high stress and turnover environment”—can be transferred.

“Over time, in either a virtual or physical environment, the robot can teach itself how to successfully handle parts. If that approach is taken to the warehouse or factory floor, it can then be transferred to the home as well. I think there may be some tweaking of what industry is already doing for the home.”

The future today
Better materials for robots than metals, sharper regulations to ensure safety, social acceptance, and numerous other obstacles must also be overcome, if grandma and grandpa are to be cared for by machines. But in all areas, work is being done.

Today, it is for the private sector to figure out automation for its immediate needs. Even if it does not do so, the country still needs some way to make sure the nation’s senior citizens are a boon rather than a burden.

Hama believes that immigration, government policy and the more futuristic aspects of care for the elderly would all be welcome. “Anything and everything is worth a try,” she says. “It is about getting the mix right.”

Fit and enjoying longevity, Japan's elderly represent both challenges and opportunities.

Fit and enjoying longevity, Japan’s elderly represent both challenges and opportunities.

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Richard Smart is a copy editor at the Nikkei who has been living and writing in Japan since 2002.

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[Japan] still needs some way to make sure the nation’s senior citizens are a boon rather than a burden.