Japanese R&D

Just what you need to get through a crisis: a svelte model who smiles on demand, answers simple questions and avoids pesky ones such as: “So, where’s the bonus?” Welcome to Japan’s latest invention, a $200,000 “fembot”, on sale in October.

Famed for its technological prowess, Japan owes its ascent from war-ravaged nation to the world’s second-biggest economy in large part to gadgetry. And it is still cranking them out. Japan is at the front of the pack in terms of its research and development spending: this accounts for 3.4 per cent of gross domestic product and 17 per cent of all R&D expenditure in OECD countries. It also files more patents than anyone else, according to the World Intellectual Property Organisation, with some 500,000 applications in 2006, compared with fewer than 400,000 by the US.

As the Fembot shows, however, not all of this translates into commercial applications. There are several obstacles – minimal venture capital among them. Deprived of big military budgets – typically a breeding ground for practical, if more gruesome, innovations – Japan has, instead, put its faith in the private sector. Japan Inc accounts for more than three-quarters of the country’s total R&D spend. Even so, capital misallocation is not uncommon.

Take the Maglev, a $52bn magnetically levitating train project being developed by the Central Japan Railway Company and due for completion in 2025. At a time when many boards of directors will not hazard full-year outlooks, JR has a 25-year view. Assuming, boldly, that enough passengers cough up to halve the duration of an already quick trip, JR reckons its average annual pre-tax income in the decade to 2035 will be $1.4bn. That, however, is two-thirds the amount it expects to make this year. Investors should leave fast trains and robotic girls to the geeks.

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