Japan, one of the world's technology powerhouses, has seen a progressive increase in the smart home market in recent years. Demand for smart home solutions have increased with the rise of consumers’ technological knowledge and changing environmental consciousness. This article provides a snapshot of the Japanese smart home market and business opportunities in the region's fast-growing market.  

The Current Situation of Japan’s Smart Home Market 

The Japanese smart home industry has seen a steady growth in the past years, fueled by the needs of the aging society, increasing energy consciousness, and interest in the convenience of home automation. 

According to Statista, revenue in the Japanese smart home market is projected to reach US$9.4 billion in 2024, with an annual growth rate (CAGR 2024-2028) of 13.78%, resulting in a projected market volume of US$15.8 billion by 2028. Household penetration will be 39.6% in 2024 and is expected to hit 83.2% by 2028. 

The average revenue per installed smart home is expected to amount to US$422.50. A global comparison reveals that most revenue in this market is generated in the United States, reaching US$38.8 billion in 2024.

Major Players in Japan

The major players in the Japanese smart home market are the electronic giants Sony, Panasonic, and Sharp and the telecommunication players NTT and KDDI. They provide smart home solutions like smart lighting, smart security, smart energy, and smart home entertainment. 

Moreover, quite a few newcomers and small businesses provide solutions that satisfy the demands of Japanese consumers. For instance, Nature Remo is a company in Tokyo that designs a smart home hub with which users can control home appliances and energy usage.  

Relevant Solutions

Smart home technology in Japan encompasses a diverse range of solutions. The following are the most popular applications. 

Smart Lighting: Smart lighting systems can be controlled manually as well as automatically, increasing convenience and helping with power conservation needs. 

Smart Security: High-tech security solutions like motion detectors, smart locks, and surveillance cameras, enable home owners to monitor their houses from a distance and immediately detect potential break-ins. 

Smart Energy Management: Devices such as smart thermostats and smart plugs to help control energy usage and save energy. 

Smart Home Entertainment: These types of smart home solutions enable users to control home entertainment devices such as televisions, audio systems, and other media players. 

Smart Appliances: Smart appliances for the home, like washing machines, refrigerators, and water heaters, with the ability to control the devices from a remote location. 

Health Applications: The growing elderly population benefits from technologies that allow them to live with more freedom and security. Home health applications such as remote health monitoring systems, emergency alert systems and electronic pill dispensing systems ensure elderly individuals can live comfortably in their homes. At the same time, their health status can be easily monitored. 

Circumstances Fueling The Japanese Smart Home Market 

Several favourable circumstances present opportunities for foreign businesses looking to enter Japan’s smart home market.

Aging Population: Due to the increased rate of aging population, there is a need for smart home technology in the area of independent living and healthcare. 

Energy Efficiency: Due to the recent energy conservation policy set by the Japanese government, reduction of home energy consumption has gained attention. This is increasing the demand for smart energy management solutions.

Technology Adoption: Japanese consumers are fairly advanced when it comes to picking up on new technologies. Looking for increased convenience, people are therefore open to adopting smart home solutions.

Population Density: The increasingly limited living space in urban areas encourages the adoption of smart home solutions that help optimize living conditions and improve comfort within constrained spaces.

Key Factors for Market Entry

When entering the Japanese smart home market, several crucial factors should be considered in order to avoid major issues.

Certifications: Ensure that your products do not violate or contravene any Japanese safety and regulatory policies dictated by institutions like the Ministry of Internal Affairs and the Japan Industrial Standards. 

Local Partners: It may be advisable to work with local dealers or importers when entering the Japanese market. These are familiar with the requirements and expectations of customers, any relevant regulations, and have access to a local business network, which provides invaluable advantages.

Trade Fairs and Events: Industry events provide great opportunities to learn about the latest trends in the local smart home market, present your own solutions, and network with potential business partners. The most relevant events in Japan include the Smart Home EXPO and CEATEC.

Language and Localization: It is essential to localize products and services for the Japanese market in order to succeed. Local demands might differ from those in your home country, and Japan is known to have high standards of customer service, which is key to winning Japanese customers.  

Privacy and Security: Japanese consumers value the privacy and security of their information. Thus, make sure your smart home solutions enshrine these two factors. 

Smart Home Trends in Japan

As the smart home market continues to evolve, several trends are shaping the industry in Japan.

Voice Control: Hands-free control and interaction with smart homes are now becoming easier with the integration of voice assistants, as demonstrated by Amazon's Alexa and Google Assistant. 

 AI and Machine Learning: AI and ML technologies are being applied to developing smart home systems capable of learning from user behavior and their propensity. 

Sustainability and Energy Efficiency: Smart home solutions simplify life, and home resources can be easily managed. 

Integration and Interoperability: Smart home users want their devices and systems to work together; this calls for standardization and compatibility. 

Health and Wellness: Home appliances designed to support and enhance people's health, like air cleaners or fitness trackers, are emerging as promising segments.  

More growth and development is expected for the coming years. The 'Japanese smart home market' will see the incorporation of AI and machine learning in 'smart home' systems, to allow for increased user-friendliness by understanding users' behaviors and preferences. 

Government Initiatives and Regulations

Smart home technology soon earned the appreciation of the Japanese government, and different programs were introduced to facilitate operations and the acceptance for related businesses. 

One such program is the "Smart Home and Building" project introduced by METI, which aims to create and market new forms of energy management, security, and health monitor systems provided at 'smart homes.' 

Further, the government introduced measures and norms for 'smart home' products in the Japanese home automation market, to secure and guarantee their viability. The Electrical Appliance and Material Safety Law (DENAN) and the Radio Law set the standards and specifications on safety and electromagnetic compliance for 'smart home' products and equipment with high quality and performance. 

In addition, fiscal and financial incentives are provided by the government. These include subsidies for companies undertaking research and development around smart home technologies.

Partnerships in the Japanese Smart Home Market 

Bilateral relations and associations have played a critical role in the market growth of smart homes in Japan. Smart home systems are reportedly being adopted by homebuilders and real estate developers in new construction projects. For instance, Panasonic has entered into a strategic alliance with some Japanese home builders to make smart homes the default package in newly constructed homes. 

Also, telecom operators are partnering with connected home providers to offer smart home services to their Internet and mobile services client base. For example, NTT has agreed with Nature Remo to provide a complete solution for making homes 'smart'. 

Inter-industry co-operations are also appearing, and various healthcare, energy, and retail industries are gradually developing interests in the smart home industry. Such alliances provide product designing objectives for creating new smart home solutions that meet customers' requirements. 

The Role of Renewable Energy

With global energy saving efforts increasing and new solutions being developed, the application of smart homes utilizing renewable energy is gradually expanding. Smart home systems can for example be integrated with solar panels and other renewable sources to help homeowners in control of minimizing their energy usage, resulting in fewer greenhouse gas emissions. 

Also, smart home concepts can include local energy storage devices like home batteries for storing extra energy from renewable sources for future use. This helps to advance energy independence and stabilizes the energy infrastructure. Solutions are being developed that can incorporate renewable energy resources like smart inverters, energy Management Systems, and Intelligent load balancing products.  

Final Words

The Japanese smart home market offers great business opportunities, with favorable regulatory, technological and public trends.

Although the industry is still in its infancy, the future prospects are promising. Entering the market now means businesses can take part in shaping the smart living environment in the country. 

If you are not sure how to enter the Japanese market, or need a local partner, we are here to help. GlobalDeal specializes in making your entry into the Japanese market seamless. As a comprehensive solution provider for global expansion, we handle everything from localizing or developing your online presence and digital products, to developing targeted business and marketing strategies. If you're seeking connections with Japanese business partners, we're here to help. Don’t hesitate to contact us for a free consultation and start your journey to success in Japan!