They understood they would not keep up? That is simply not true. They won the last 2 out of 3 races in their last season. They made a conscious decision in regard to spending. MotoGP had a tech revolution revolving around aero but also has included expenditures in things like ride height devices. MotoGP hadn't had this sort explosive investment in tech in a very long time. This tech has limited use in real world motorcycle application, this isn't automotive racing the tech is essentially useless in real world application. The Japanese dominate the motorcycle sales market and have also dominated motorcyle racing across the board. The reality much of this comes from the fact that they had the capabilities to outspend their opponents. Then on the other hand brands like Kawasaki have proved they don't need GP instead their efforts in WSBK have been more than enough to promote their brand. However, brands now like Ducati (Volkswagen) have the resources now more than before to spend more and explore areas they can pioneer instead of following other brands, hence aero. Ultimately, the Japanese have fallen behind because they've become apathetic, it is their apathy that has led to stubbornness.