Korean AI businesses tap into Japanese market

South Korean artificial intelligence (AI) companies are expanding their presence in the Japanese AI market to leverage explosive growth opportunities in the local market. Many view that the lack of information technology (IT) manpower and infrastructure compared to the increasing demand, combined with the active support of the Japanese government, has emerged as a ‘land of opportunity’ for Korean companies to successfully penetrate the market.

According to the IT industry on Sunday, LG CNS recently signed a business agreement (MOU) with Aeon. This education service provider operates about 300 language schools in Japan, targeting the Japanese public education market. This agreement between the two companies was reached at the request of Aeon, which took note of LG CNS's technological capabilities. The Japanese government policy of providing one laptop and iPad per student to elementary and middle school students since 2019 resulted in a device penetration rate of 99%. Still, there is not enough AI-based content available in the market. LG CNS plans to develop ‘AI Tutor,’ an English conversation application (app) for public education, with Aeon and target the Japanese education tech market by upgrading online learning platforms.

South Korean companies are heading to Japan due to its high growth potential. Market research firm Statista predicted that the Japanese AI market will grow at an average annual rate of 28.48% from 8.12 billion dollars in 2024 to 36.52 billion dollars in 2030.

BHSN, an AI legal solution startup that established a Japanese subsidiary in September of last year, is expanding cooperation with Japanese law firms, accounting firms, and consulting firms based on its technological capabilities to process laws, policies, and administrative documents in various languages. The company is preparing to launch an ‘AI agent (secretary)’ that can respond to questions in Japanese on legal matters such as laws and guidelines.

The Japanese government’s openness to attract AI startups is also good news for Korean companies. Japan's Ministry of Economy, Trade and Industry invested 118 billion yen (approximately 1.0965 trillion won) in direct support for the AI business this year. Software development companies using AI will be offered corporate tax deductions of up to 30% until March 2032 in recognition of copyright profits from intellectual property (IP) commercialization. The recently established Startup Strategy Bureau supports overseas startups' advancement into Japan, including the deregulation of the establishment of Japanese corporations by foreigners.


남혜정 namduck2@donga.com