ⓘ Galápagos syndrome

                                     

ⓘ Galapagos syndrome

Galapagos syndrome is a term of Japanese origin, which refers to an isolated development branch of a globally available product. The term is used as an analogy to a part of Charles Darwins On the Origin of Species. Darwin encountered in the Galapagos Islands isolated flora and fauna, which had undergone evolutionary changes independently from the mainland. This phenomenon was a key to the development of evolutionary theory. Darwin stated that due to the differences in environment from one island to another, species adapted to make survival more viable in the local environment of each island. Similarly, a development of goods "in relative isolation from the rest of the world because of a focus on the local market" can lead to similarly differing products.

The term "Galapagos syndrome" has been used as a metaphor outside the field of business jargon. The term "Galapagosization", referring to the process of the isolation of Japanese "Galapagos-thinking", links this process to the Japanese island mentality.

                                     

1.1. Examples in Japan Mobile phones

The term "Galapagos syndrome" was originally coined to refer to Japanese 3G mobile phones, which had developed a large number of specialized features that were widely adopted in the Japanese market, but were unsuccessful abroad. Whilst the original usage of the term was to describe highly advanced phones that were incompatible outside of Japanese networks, as the mobile phone industry underwent drastic changes globally, the term was used to emphasize the associated anxiety about how the development of Japanese mobile phones and those in the worldwide economy went along different paths. A derived term is Gara-phone ガラケー, gara-kei, blending with "mobile phone" 携帯, keitai, used to refer to Japanese feature phones, by contrast with newer smart phones.

  • The term has since been used for similar phenomena in other markets.
  • "Japans cellphones are like the endemic species that Darwin encountered on the Galapagos Islands - fantastically evolved and divergent from their mainland cousins - explains Takeshi Natsuno, professor at Tokyos Keio University." "Japanese phones suffer from Galapagos Syndrome - are too complex to survive abroad.
                                     

1.2. Examples in Japan Cash machines

Across Japan, the majority of the 190.000 ATMs do not accept bank and credit cards that have been issued outside of the country. Currently, only about 20.000 post offices and convenience stores allow retrieving cash using non-Japanese bank cards. Due to pressure from the Japanese government concerning this issue, by 2020 the number of ATMs that accept cards issued outside Japan is estimated to increase from 48.000 to 80.000. Despite increasing numbers of international tourists in Japan, the country still attracts relatively few tourists according to the United Nations World Tourism Organization, which ranked Japan 27th in the list of most visited countries 2013.

                                     

1.3. Examples in Japan Wallet phone

In 2004 the wallet phone was introduced in Japan as a means to allow mobile payment alongside numerous other applications. In some ways the wallet phone can be seen as a predecessor of mobile payment tools that were later released on the global market such as Apple Pay or Google Wallet. The complete integration of multiple tools served to make the classical wallet redundant as the phone allows all types of payments, having train tickets or other everyday needs to be organized on the phone. In many ways the Japanese contactless infrastructure has been and is superior as compared to the current state in rest of the world.

                                     

1.4. Examples in Japan Kei cars 軽自動車

Kei Cars "light cars" are small four-wheeled vehicles/cars that have an engine of less than 660cc and enjoy preferential treatment in the form of tax advantages and lower insurance cost. Originally the Japanese government encouraged the use of those "light cars". This category of cars features a number of different car types including sport cars, minivans and commercial vehicles. However, Kei cars are not seen as profitable in export markets and therefore are only part of the Japanese automobile market. Despite no significant global success, major Japanese car manufacturers such as Suzuki, Mitsubishi, Daihatsu and Honda still produce models belonging into the Kei car category. Since the Kei car has a significant portion of Japanese car market, Japanese auto makers cannot ignore them. Although the regulatory differences between Kei cars and 1L cars are quite small, the tax benefit of Kei cars is considerable. Until the tax reform in 2013, the Kei cars vehicle tax rate was a quarter of that of 1L cars ¥7200 to ¥29500. This significantly lower tax rate gathered much criticism from European and US auto makers, and as such the EU, the US and Toyota do not make Kei cars. In 2013, the Japanese government revised the vehicle tax law. The new vehicle tax law became effective in 2015. With new vehicle tax law, the Kei cars vehicle tax rate is about 36% of that of 1L cars ¥10800 to ¥29500.



                                     

2. Handling the Japanese Galapagos syndrome

There are many associated issues with the inability to compete on the international export market. In order to revive the parts of the Japanese economy that have suffered from the "Galapagosization", affected businesses had to find the reasons responsible for the development.

The Galapagosization of Japan continues. According to a survey released today, a shocking two-thirds of the country’s white-collar workers said they didn’t want to work abroad. ever.

                                     

2.1. Handling the Japanese Galapagos syndrome Reasons for the issue and associated implications for businesses

Furthermore, this has led a number of Japanese companies to adapt their business strategies. Hiroshi Mikitani, CEO of e-commerce company Rakuten, sees the exclusive use of Japanese in workplaces at the centre of the problem. Following his belief that "a language will open your eyes to the global, and you will break free from this conventional wisdom of a pure Japan", the co-founder and CEO of Rakuten made English the main language to be spoken in the company. Dr. Gerhard Fasol, the only European member of Euro Technology Japans "Galapagos study group", stated that another reason for the non-success of some innovative Japanese products is Europes conservative standpoint when it comes to certain standards. In the belief that it will improve international competitiveness Tadashi Yanai, the founder and president of Fast Retailing, has decided to change the way the firm works against classical Japanese business methods. A shift of the production of some textiles out of Japan to Southeast Asia was a move to the low-wage-labour market, that aimed to enable to price compete on the international textile market. Another factor which McKinsey & Company points out is the need for Japanese companies to adapt to stronger competition when entering global markets. This should be done by accepting to think in "new and unfamiliar ways about organization, marketing, and strategy", whilst the traditional practices that helped the companies to become a big player in the Japanese market shall be discontinued. Despite the fact that companies have started to address the issue, which could have a link to the total value of exports increasing over the past five years, there are concerns about the future Galapagosization of Japan.



                                     

2.2. Handling the Japanese Galapagos syndrome Future threats

With the aging and shrinking Japanese population, the fact that fewer and fewer students study abroad to acquire a more internationally oriented university education is reason for concerns over the future of the Japanese economy. Furthermore, there is a conception that the younger generation could enhance the Galapagos effect due to a lack of interest in international education and work placements. Kiyoshi Takeuchi, sociology professor at the Sophia university, describes the young generation to have less "ambition and motivation" as a result from the fear that a wrong move could have negative effects.

                                     

3.1. Usage of the term referring to instances outside Japan China

  • Stephen Ezell and Robert D. Atkinson describe a similar phenomenon pointing out associated threats this could mean for the Chinese economy. The selling of a product in China could become more expensive for foreign producers due to the fact that they now have to incorporate the Chinese technology standards into their firm. In theory, this could be beneficial for domestic producers. However, this could also lead to an isolation of the respective domestic producers due to less international competitiveness. "China has made the development of indigenous technology standards. a core component of its industrial development strategy. But, by using indigenous rather than global technology standards for ICT products, China risks engendering a Galapagos Island effect that isolates Chinese ICT products, technologies, and markets."
                                     

3.2. Usage of the term referring to instances outside Japan Europe

  • Mark Leonard describes threats of how, against the predictions he made in 2005 in his book Why Europe Will Run the 21st Century, the political development of the European Union happened isolated and differently than in any other political system in the world. "Europe might now be facing its own Galapagos moment. It may be that Europe’s postmodern order has become so advanced and particular to its environment that it is impossible for others to follow. It evolved in a protective ecosystem, shielded from the more muscular, "modern" world where most people live."
                                     

3.3. Usage of the term referring to instances outside Japan United States

  • "It has been claimed that the indigenous American automotive industry has suffered from the Galapagos Syndrome – its products have evolved separately from the rest of the world."
  • The United States was slow to adopt the EMV standard for credit and debit cards as opposed to swiped magnetic stripe cards, which have been widely-adopted elsewhere, with merchants citing the cost of upgrading hardware and other systems to support it. Work to encourage transition began in 2015 following a series of high-profile retail data breaches involving credit card data. Payment providers implemented deadlines under which liability for fraud would shift to merchants if they did not begin accepting EMV payments by a specific date. As of April 2016, 70% of U.S. consumers had EMV cards, and around half of merchants were EMV compliant as of December 2016. However, the rollout has faced challenges, including merchants with EMV-compatible hardware that do not support EMV transactions due to a lack of certification or software support, and complaints that chip-based transactions took more time to process than swipe cards.