State of play of Japan’s space program in the New Space Economy era
Although the next generation H3 rocket launch fail was a major setback in Tokyo’s space program, the East Asian archipelago is currently amongst the most active spacefaring nations. Aside from having an independent access to the “final frontier”, Japan also has one the highest government expenditure on space programs. Yet, growing dependence on space technologies for advanced economies coupled with strategic concerns over China’s militarization of outer space have compelled Japan to adapt its traditional State-led model of space exploration to current needs.
The first landmark reform to keep pace with the shifting transformations taking place in outer space was the introduction of the Basic Space Law. As required by article 6 of the 2008 legislation, Japan’s exploration of outer space is based on a multilateral approach aimed at strengthening international cooperation. As such, the Japanese Aerospace Exploration Agency (JAXA) is currently engaged in several international projects, such as the Artemis and the International Space Station programs.
The onboarding of Japan in the lunar Gateway Program of the Artemis campaign is especially important for Tokyo’s future initiatives in outer space. The program aims at building a human habitable outpost orbiting the Moon to support NASA’s most ambitious project in decades. If successful, the goal of landing “the first women and men of color on the Moon” would boost Japan’s confidence in strengthening its recent successful achievements, beefing up its importance as a key partner for successful collaborations in space.
Aside from traditional State-led programs, Japan has also been experiencing a significant growth of its entrepreneurial participation in outer space activities. Several factors have paved the way for the rise of this new industry. From the increasing pressure to produce cost effective technologies to the growing interest of private tycoons to invest in space programs, outer space is increasingly becoming the new frontier for cutting edge progress in science and technology. According to Josephine Millward, Head of Research at Seraphim Capital, “For the first time in history we have the private sector leading financing and innovation”. Japan is therefore adapting to a global trend toward privatization in space exploration.
The rise in public-private partnerships
Perceived game changing opportunities for its space strategy have led Tokyo to build a more inclusive and friendly ecosystem for private entrepreneurship. The government has recently set up a USD 940 million fund to boost space start-ups as part of Tokyo’s initiative to double its market size by 2030. Enabling private entrepreneurs to grow and thrive is therefore a key driver behind the goals set by the government for 2030.
Tokyo’s commitment to strengthening public-private partnerships appears to have hit an all-time high. In 2015, JAXA established the Space Exploration Innovation Hub Center (TansaX) to bolster collaboration amongst institutions and foster innovation in the industry. The space agency is also partnering with twenty private companies to develop a “space business” aimed at boosting commercial opportunities. The growing public-private partnership is best exemplified by the KIBO experiment module which is part of the International Space Station (ISS). JAXA allows private companies to use the KIBO module to run experiments and expand commercial spin-offs from JAXA technologies to the private sector.
Two cases of “made in Japan” space startups successes
Japanese startup companies currently cover all segments of space activities, such as transportation, exploration, or spacecraft. One of the most well-known Japanese initiatives in space is led by private company ispace. The Tokyo based startup has focused its core business on sustainable lunar resources exploitation. As such, it has developed a commercial lunar exploration lander program named after the white rabbit who lives on the Moon in Japanese mythology, Hakuto (Hakuto-R).
Carried on SpaceX’s Falcon9 rocket, the “white rabbit” was scheduled to land on the Moon at the end of April 2023. Despite ispace’s careful planning, the spacecraft missed the mark and crashed on the lunar surface. According to the company, the failure was due to an altitude miscalculation that led Hakuto-R to run out of fuel. Although the first Hakuto-R mission ultimately ended in failure, ispace remains committed to its mission of becoming the first ever private company to land a rover on the Moon. Hakuto-R Mission 2 and 3 are scheduled for 2024 and 2025, respectively. After the US, China, Russia and India, Japan might therefore be the fifth country to successfully land on earth’s closer celestial body. Should the next landing be successful, Japan’s entire space industry might benefit from the Hakuto experience, paving the way for new commercial opportunities and partnerships.
Another Japanese “success story” is GITAI Japan, Inc. (GITAI), the world’s leading space robotics startup. Established in 2016, the stated goals of the company include labor reduction costs in space by 100 times, the development of cutting-edge robots to build and maintain space assets, such as satellites and space stations and, finally, infrastructure building on the Moon and Mars.
GITAI’s current landmark project is the development of a robotic arm for a crewed pressurized rover, called “Lunar Cruiser”. Led by a joint research agreement between Toyota Motor Corp. and JAXA, the “Lunar Cruiser” is a key part of NASA’s Artemis Program. GITAI joined the program in 2021 after signing a joint research contract with Toyota. Planned for the late 2020’s, the lunar rover will enable astronauts to travel on the celestial body’s surface up to 45 days. GITAI’s robotic arm is expected to be a key asset of the vehicle since it will be tasked with carrying out multiple assignments under harsh environmental conditions such as exploration and maintenance.
Innovative thinking coupled with proven expertise in robotics have also enabled the Tokyoite company to expand internationally. The opening of its American branch, called GITAI USA, Inc., has recently secured a USD 30 million funding to speed up technology development and expand its business overseas. The US expansion plan began after GITAI secured its first purchase order from a leading undisclosed American space company.
Becoming a regional hub with an eye on China
The development of new space services aimed at creating a space-based economy also requires advanced infrastructures. The realization of “spaceports” to set up space hubs and state-of-the-art launching facilities is therefore part of Tokyo’s plan to secure a stronger role in outer space. The project of developing spaceports has become a mainstream topic in Japan, with a tiny Hokkaido town currently planning the completion of a spaceport by 2025 and a team of Japanese architect’s concept of a futuristic space facility equipped with runways to be built in the bay of Tokyo.
Aside from its uncertain short-term feasibility, the claimed goal of the Japanese government to turn Japan into a regional space hub for other Asian countries is likely to have a more geopolitical purpose than meets the eye. As Japan is currently engaged in an investment race over infrastructure building investments in Southeast Asia with China for strategic reasons, space might become a new breeding ground for future competition between the two Asian leading economies. the stated commitment of the Japanese KIBO-ABC initiative, “to share knowledge and drive cooperation with other Asia-Pacific countries” seems to stress the competitive nature of space projects for regional influence with China.
Although Japan still retains an independent access to space, new dynamics are increasingly constraining Tokyo’s space race in the twenty-first century. The rise of strong commercial actors on the industrial stage has compelled Japan to develop new policies for outer space and boost its entrepreneurial initiative. Despite significant improvements in diversifying its business industry, Japan’s commercialization of space technologies still faces some hurdles.
Tokyo still needs to enhance the competitiveness of its space-based economy and create a strong private participation. The absence of wider business opportunities has multiple causes. First, the lack of a strong commercial request for space technologies has led the whole sector to be highly dependent on public orders for survival. According to some data, Japan is still 90% dependent on government demand for its space industry. In addition, in a similar fashion to its native defense industry, outer space remains a small part of Japanese public conglomerate’s business portfolio. In other words, unlike entities solely focused on the development of space assets, such as America’s SpaceX or France’s Arianespace, Japanese “mammoth corporations“ have less incentives to invest in cutting edge space-oriented research programs. Second, the total absence of a military program for several decades meant that dual-use technologies that might have originated from military R&D programs could not be developed.
Aside from the aforementioned, cost advantages of economies of scale are likely to be Japan’s greatest systemic constraint related to space technologies. The reason is twofold. First, Japan’s domestic market is too small to become self-sufficient. Second, the highly protectionist nature of space businesses doesn’t allow Japan to increase its production and become more efficient by selling its space devises on a large scale to other advanced economies, such as the US or Europe. In other words, the strategic nature of cutting-edge technologies required for space exploration, coupled with the strong interconnections between space industries and defense programs, discouraged the creation of a free market where prices of goods only depend on supply and demand, free from government intervention.
Notwithstanding these limitations, Japan’s options to expand its space economy are by no means insignificant. First, venture capitalism is on the rise in Japan. The importance of private equity investors in the space sector can hardly be overestimated. For instance, venture capitalists are currently the leading investors in European space companies, one of the strongest space industries in the world. Examples of domestic investors, such as Skyland Ventures and Global Brain, financing local startup GITAI demonstrate confidence over the high growth potential of the Japanese space industry.
Second, the “Lunar Cruiser” has shown that big corporations, such as Toyota, are increasingly interested to seize new market opportunities derived from space technologies. Third, Japan’s growing concerns over Chinese military buildup will likely lead to more domestic military and dual use technologies development down the line. Through the conversion of military assets into high performance commercialized products for civilian markets, Japan could turn its space industry into a more profitable and sustainable business. Finally, Japanese excellence in electronics and robotics, coupled with current rethinking business model strategies to overcome three decades of sluggish growths can contribute to maintain Japan’s status as one of the most active “spatial middle power”.
Picture credits: JAXA