Could Japan be about to run out of beer? Or at least of one of its favourite brands Asahi, whose ‘Super Dry’ is the number one best seller in this nation of hop heads? This is the alarming and looming prospect in the country after a cyber attack on Asahi forced the company to close its production facilities. There are rumours of only a few days’ supply left in the convenience stores and izakayas (Japanese style pubs). If true, and if Asahi can’t solve the problem quickly, panic buying is a distinct possibility in a country with a per capita consumption of 34.5 litres a year. Then, with no indication of when production will restart, Japan really will be super dry.
This isn’t the first such scandal to hit Japan. There has been a plague of such events in recent years. A cyber attack on the auto-parts maker Kojima in 2022 led to the suspension of all Toyota’s domestic production, impacting a third of its global output at a cost of $375 million (£279 million). There have also been major attacks on a Toyota subsidiary Denso and the confectioner Morinaga. A survey by research specialist Teikoku Databank from this year found that 30 per cent of Japanese firms had experienced a cyber attack of some sort. A key period seems to have been 2022 to 2023 when the National Police Agency (NPA) reported a 58 per cent increase in ransomware.
The idea of Japan being a high-tech superpower is an outdated fantasy
UK business leaders will be following the Asahi hack story with anxious interest given the similarities with the attacks that have taken place on Marks & Spencer and Jaguar this year, but in truth Japan may be particularly vulnerable.
What the Asahi security breach embarrassingly reveals is that the idea of Japan being a high-tech superpower is an outdated fantasy. The country was ahead of the curve in the distant past (the 1970s perhaps) but is now lagging far behind. As Britain’s Post Office scandal, where the shonky software of Fujitsu led to a cascade of dreadful consequences, showed, the idea of large Japanese companies leading the world in cutting-edge technology is for the birds.
Many believe that the root of the problem is that Japan is still essentially a hardware country with a mindset that still reveres manufacturing at the expense of software expertise. Age-based promotion in structurally ossified traditional companies leaves companies ill-equipped to deal with the challenges of rapidly changing technology that require quick and nimble and probably young minds. The humble software engineer is still looked down upon in companies where the top level of management has ascended automatically through age.
Salaries for software engineers in Japan lag well behind those in Europe and the US (one survey found that Japanese earn around 70 per cent of English-speaking specialists). Many companies – Fujitsu is an example – outsource their coding to subsidiaries with a consequent drop in quality and control. Whether these factors were relevant to the Asahi hack remains to be seen, but you could hardly find a more traditional company (it was founded in 1889 and trades on its Meiji-era heritage).
The Asahi hack is an embarrassment not just for the company but for the Japanese government, which has long championed a great digital leap forward to propel the country’s faltering economy back into the global fast lane. The grand plans are spearheaded by a faintly sinister entity called the Digital Agency, tasked with parcelling every last item of personal information onto a single card known as ‘My Number’. This has been something of a flop so far, a major scandal over leaked data making it a model Keir Starmer with his ‘Brit Card’ would be ill-advised to follow.
The government’s cyber defences have proved porous in recent years with repeated incursions attributed to a Chinese hacker group known as ‘MirrorFace’. The National Police Agency (NPA) announced on 8 January that the cyber attacks, where information related to security and advanced technology had been stolen, were organised with the involvement of the Chinese government. The NPA further determined that 210 firms, institutions and organisations had been attacked since 2019, largely with impunity.
None of this bodes well for Japan’s corporate future or domestic governance. Assaults on state agencies and such emblematic firms as Asahi and Toyota undermine any confidence there might be in the government’s utopian digitisation plans or in hopes for any recovery for Japan’s sclerotic economy, which the country’s leaders see as entwined. If neither the corporate big boys nor the government can keep the hackers at bay, what chance has anyone else?
Comments