17% of Japanese people have passports. Think about that for a moment. The figure for US citizens is around 50%. For the UK, another island nation, it’s about 77%. So, what gives? 

Japan has always been a very homogeneous, insular country, looking inwards rather than embracing internationalism. This leads to group think and an emphasis on continuity across all areas of society rather than challenging the status quo. It has led to a generation with little interest in exploring the outside world. 

However, in 2025 that world is making itself felt more strongly than in many decades, and the country is struggling to respond. A weak yen, soaring inflation and the threat of tariffs on key industries is putting pressure on a weak government and prime minister with a record low opinion rating. Elections are highly likely in the coming months. 

But how likely is a new government to be any different? While the recent Tokyo Metropolitan Assembly election saw the largest number of candidates in decades, nationally the Liberal Democratic Party, though weaker is still dominant. The majority of politicians are old, Japanese men, targeting a large, older electorate who keep them in power, with an agenda tailored to their sensibilities. Hence Japan ranking 118 globally in terms of gender equality and it being the only G7 country that still does not recognise same-sex marriage. Even efforts allow women to choose their surname after marriage has been bogged down in legal debate for months and seems to be going nowhere. In short, change is slow. 

This results to more fundamental business issues. Japanese companies across many industries have been slow to adapt to new technologies and global challenges. There is little discussion around climate change, for example, and the mighty Japanese auto industry has found itself on the back foot when it comes to new energy – just look at Nissan which reported over 670 billion JPY in net loss for FY2024 – while China gains ground.

Then there is AI and associated technologies – while there has been some local success in this area, chip maker Rapidus, for example, innovation and leadership is still coming primarily from the US and… China again. Is Japan set to take the supporting role? 

And yet… Japan is experiencing an unprecedented tourism boom – the country’s rich culture, history and cuisine combined with a weak yen has made it a top travel destination. To the point where tourism revenue out-performed IP exports for the first time on record. 

This has led to a booming hospitality industry. That tourist influx combined with comparatively cheap real estate and lower interest rates has attracted a range of global hotel and asset management brands who see an opportunity to disrupt what has been a very traditional industry. This has resulted in a near quadrupling of foreign investments in Japanese real estate this last quarter alone.  

Disruption can also be seen elsewhere with activist investors pressuring traditional companies to modernize, resulting in unprecedented unravelling of cross shareholding between companies as well as record share buyback of over 18 trillion JPY, nearly doubling from 2023. 

And then there is that cultural IP, maybe a nod here to Netflix, but Japan has finally woken up to the potential of the global love for its manga, anime and design and now seems serious about monetising this. Overseas sales of anime alone has grown from 2 trillion JPY in 2012 to 15 trillion JPY within a decade.

And course there’s the Switch 2, which sold at record pace twice as fast as the original Switch.

Is it still Cool Japan or a nation in crisis?

Eat is 25 this year. That’s 12 prime ministers, so we’re old enough to have seen a lot of change and much that has stayed the same. However, 2025 seems a little different. Japan seems to be at an inflection point. The decisions it makes in the coming few years set to determine its role in the world in the coming decades.

So instead of just patting ourselves on the back for surviving so long, we thought we would channel that experience working across cultures into a series of essays on how we see different aspects of Japan today, as well as opportunities for the future. We’ll bring together opinions from both our Japanese and foreign team, the oldies and the youngsters.  

If there is one common thread through all of this, change often happens in Japan in response to external pressure and when the country does engage globally, good things seem to happen. But for this to work, there is a need for effective communication and alignment at every level. This is something Eat champions every day through the work that we do, and we look forward to supporting this positive change in the years to come.