JAPAN'S INDUSTRIAL INCUBATOR Government readily assumes leading role in research and development for private sector


TSUKUBA CITY, Japan -- The camera scanned Dr. Nobuyuki Otsu's face and within 15 seconds encoded his features in a computer's memory. He typed in his name.

Someone else sat in front of the camera. The computer responded instantaneously, "not Otsu."

Dr. Otsu sat down. "Otsu."

Dr. Otsu, one of Japan's leading researchers in artificial intelligence, directs the machine-understanding project at the Ministry of International Trade and Industry's Electrotechnical Laboratory here.

He says several Japanese companies, including Hitachi Ltd., have shown interest in his software. It may wind up in all sorts of telecommunications and security devices.

"We have come up with what I believe is the fastest and simplest program," he said. "Pattern recognition and face recognition are very difficult for conventional computer software programs."

Even though Japan's record in basic science, while improving, still substantially trails the West, it has surged to the forefront in the gray area of scientific research in which new knowledge is turned into commercial products. Much of that work is done here in government-funded national labs.

The electrotechnical lab is one of 16 national labs run by the Ministry of International Trade and Industry, the agency frequently credited with leading Japan's postwar rise to economic prominence.

Unlike U.S. national labs, MITI puts commercial concerns at the heart of its research mission.

MITI has been so successful that the European Community plans to copy it by earmarking billions of dollars for research on promising technologies and industries such as telecommunications.

Japan has no ideological debates about government $ 1/8 involvement in industrial policy, and no complaints about the government picking winners and losers.

"The projects we choose should have some relationship to establishing some new industrial area," said Motoi Suwa, director of the lab's research planning office. "It should be sowing the seeds of a new industry for the 21st century."

The relationship between government research and development and the private sector in Japan amounts to a well-oiled machine for moving new technologies into the marketplace. At the national laboratories, government researchers work in close consultation with their industry counterparts.

The government owns any patents that come out of the labs and shares them widely with interested companies. Three decades ago, MITI set up a special not-for-profit group -- the Japan Industrial Technology Association -- to scour the labs for worthy inventions and move them into the private sector.

Indeed, what can be said for MITI -- which spends about $2 billion, or one-eighth of Japan's research and development budget -- can also be said about the rest of the government.

The Japan Research Development Corp. regularly contacts the 85 national research institutes run by the Science and Technology Agency and the ministries of Post and Telecommunications, Education and Construction. It publishes lists of patents useful to industry and gives grants and loans to develop the technologies.

Of course, most research in Japan is run by private companies, which focus almost exclusively on the development of their latest products, constant refinement of their old ones and their manufacturing processes.

But for the next generation of industries -- the critical pre-competitive research into new products and technologies -- Japan Inc. usually leaves it to the government. That type of research is expensive, long-term and risky.

"The research we fund is pre-precommercial," said Masahiro Kawasaki, senior vice president of Japan Research Development Corp. He worked at MITI and the Science and Technology Agency before amakudari (literally, descent from heaven) into his current critical post.

But it's not as if industry isn't involved. "We put together teams from companies, the universities and the national institutes," he said. "The companies say it is good training for their researchers.

"Fortunately, Japan has a long tradition of marriage brokers, and we act as the marriage broker. Technology cannot transfer itself," he said.

When the projects turn out something useful -- and the agency claims an 80 to 90 percent success rate -- "we usually license it to as many companies as possible," Mr. Kawasaki said.

"Sometimes we just give it to one company for three to five years to develop the technology," Mr. Kawasaki explained, "but then we license it broadly.

"From a U.S. perspective, that might seem like they've thrown away their money. But mostly they look in favor of widespread use because that will expand the market and everyone will benefit," he said.

Not everything picked by the government turns into a commercial success. MITI's notable failures include a 10-year project to develop fifth-generation computing, which failed to outflank developments in the supercomputing and parallel-processing fields.

But it also can claim its share of winners. Among other things, MITI is credited with helping Fujitsu Ltd. and NEC Corp. develop their first mainframe computers.

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