GAFA or FAANG, the origin of the name
If you have been in the business world for quite a while, and especially if you are in the tech industry, you may have heard the term FAANG before. The term FAANG is a made-up word that combines the initial letters of Facebook, Amazon, Apple, Netflix, Google. FAANG was originally used to describe the rapid growth of stock prices in some major tech companies. You can read more about how the term was created here. (GAFA or FAANG. Origin of the name for Big Tech in Japan)
In Japan, FAANG is most commonly called GAFA or GAFAM if you include Microsoft. In this article, we will explain how GAFA and big tech companies impact the business landscape in Japan.
History of FAANG, GAFA in Japan
In Japan, GAFA is a big deal. It has garnered a lot of attention because of its scale of business and impacts it has on Japanese people and the landscape of the business in Japan. However, the attention towards the tech giants has only started recently. Below you can see the graph of how the Japanese people’s attention towards tech giants changed by year.
The Google Trend graph above indicates the transition of the attention towards GAFA, and you can see that it first gained a lot of attention in 2018. GAFA and its products have been around in Japan for a long time, but 2018 is when the Japanese people really started to see these companies as a major force that has the possibility to change the landscape of business in Japan.
GAFA and its hirings, offices in Japan
GAFA has had its offices in Japan for quite a while now. For example, Google has had its offices in Japan since 2001. In fact, the Tokyo office was the first-ever office outside of United States for Google. It has been operating for 20 years now and also has a big role to play in the Asia Pacific region alongside its Singapore office.
Amazon has been in Japan since the year 2000, and the Japanese people have been using the e-commerce site for about 20 years now as well. Although the prime subscription services were launched quite recently, a lot of people knew about the site for a while now. As the years went on, these companies have all grown their business rapidly and became successful in getting Japanese users to use more of their sites and services.
Amazon just announced that in 2021, they sold over $20,461 million in Japan which is a 27% increase compared to last year. With each of these FAANG companies growing its business in Japan, they also started to hire more and more as years went by.
In 2018, Amazon Japan announced that it will hire an additional 1000 employees, mainly engineers. Alongside this announcement, Amazon decided to open another office in Tokyo making its third office building in Tokyo. (All located in Meguro) Its new office Meguro Central Square will mainly host employees from Amazon Web Services, and workers from Amazon Music and Amazon Prime.
Although Google announced that it has suspended the majority of the new hires in 2020 due to Covid-19, they are also planning on expanding its hiring count in 2021. Previously, Google Japan announced that it will move its offices from Roppongi Hills to Shibuya Stream. Google Japan first opened its offices in the Cerulean Tower Tokyu (Shibuya) in 2001 and moved to Roppongi Hills in 2010. Now Google is coming back from Roppongi to Shibuya and this time, the new office will have the capability to fill twice the amount of employees which Roppongi Hills could. This indicates that they are also planning on expanding their hiring in Japan as well.
FAANG, GAFA and its competition in Japan
The compensation for software engineers in Japan is comparably low, compared to other countries. Since Japan has a long history of paying its employee based on their position or the year they have worked at the company, skilled software engineers would be compensated much higher if they worked at one of the FAANG companies.
Recently, because companies such as Google started to hire people from large Japanese corporations, a lot of major corporations are starting to pay slightly higher for their engineers. However, since the Japanese offices of FAANG still pay much higher than Japanese companies, a lot of engineers are jumping out of Japanese companies.
Therefore, like many other places in the world, the best software engineers in the country tend to work at one of the FAANG companies.
How business is affected by FAANG, GAFA
Because of the rapid growth GAFA or FAANG had in the Japanese market, a lot of companies are watching closely to what one of these companies’ next steps will be. For example, people have been talking about either Google or Amazon is going to start a banking business in Japan for a long time. A lot of people discussed that this was unlikely to happen because of the strict restrictions Japan has. However, in 2021, Google announced that it will buy a banking company in Japan, which allowed Google to jump over the hassle of clearing all of the restrictions.
Any small step a FAANG takes in Japan has the possibility to cause a big impact in its respective field. With more growth in business, they will be able to pay an even higher salary to Japanese workers, and there will be a major shortage of skilled software engineers.
A lot of Japanese companies are already in a shortage of people who can write and understand code, so they are training new-grads who studied law, or literature in college to be able to write code. That is how desperate they are.
Higher demand for skilled engineers in Japan
If you are a non-native Japanese speaker, and if you want to work and live in Japan in the future, it may be a good idea to start learning how to code. Demand towards engineers in Japan is only getting higher and higher, and Japan even made it mandatory for elementary school kids to start learning code in school.
Expect to see higher numbers of foreigners working in Japan as software engineers, and more companies trying to provide a suitable workplace for people with diverse backgrounds.
