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Japan Internet Report No. 65 Summer 2002
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In this issue:
- Bright and Happy Summer Issue
How to:
- Extract money from naked consumers swimming in coffee
- Be successful in Japan
- Evaluate the number of "Internet users" in Japan
- Feedback with style
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Bright and Happy Summer issue
How do you extract money from naked consumers swimming in coffee? How
can you be successful in Japan, both online and off? How can you
ascertain the real number of "Internet users" in Japan today?
You demanded responses to these and other burning questions, and by
golly, we've got the answers in our Bright and Happy Summer "How to"
issue. After our "Doom and Gloom" report (www.jir.net/jir5_02.html),
one reader suggested I need a long sabbatical. Another told me I should
take a hike. Still another hinted that I will do better to start
looking at the glass as "one-third full rather than two-thirds empty."
Points taken, even if the sabbatical and hike are not.
A Japan-savvy buddy who comes to Tokyo for a month or so each year posed
the question: Why are people so concerned with pointing out Japan's
social foibles and not, say, the problems faced by France? Aside from
its economic clout, why does Japan alone engender so much discussion of
what's wrong with Japan and what should be done about it?
I don't have a good answer. What do you think?
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How to extract money from naked consumers swimming in coffee
Last month I witnessed a shining example of a Japanese entrepreneur's
innovative application of technology. I visited Yunessun, a sort of
high-tech hot springs in Hakone, that has found a practical use for the
electronic wallet technology that technology providers, financial
institutions, and retailers have been trying to push on reluctant
consumers for at least a decade.
Visiting a Japanese onsen has always been a primal experience, the
reward for an arduous excursion to a rustic and remote mountainous
region, where one typically finds oneself surrounded by wizened Japanese
seniors seeking the transformative powers of soaking in natural mineral
waters.
Of course Japan's harried young families and office ladies can't be
bothered with the pursuit of such challenging traditions, so with the
help of technology, they are flocking to a more updated, high-tech
onsen, a bizarre mixture of old and new.
Yunessun bills itself as a Japanese style public bathing space and
Mediterranean Style Spa, but think sprawling Las Vegas-style water theme
park, with some of the tackiest souvenir shops and Turkish-themed baths
you can imagine. Nevertheless, once I overcame my gaijin aesthetic
bias, I quickly found myself impressed with the numerous hot springs and
saunas.
The real genius of the place is how Yunessun has exploited smart card
technology to solve the age-old problem of carrying around one's money
and locker key when visiting a swimming pool. Upon entering and paying
a basic entry fee, I was handed a waterproof wristband along with my
towel and pool jacket. The wristband acts as both a key and a debit
card. Reaching the locker room, I simply waved my wristband over the
corresponding locker to open and shut the door, a system that makes it
possible for visitors to return to and use their lockers as frequently
as they wish.
Next, clad in my bathing trunks, the handy pool jacket, and my
wristband, I spent over two hours exploring the theme park, floating on
the salt baths, relaxing under the waterfalls, energizing in the coffee
baths, and racing several seven-year old boys down the serpentine water
slides.
Hungry from my efforts on the water slide and in need of caffeine, I
swam over to one of the many snack bars, waved my wristband over the
point of sale register, and was promptly handed my iced coffee and
kurage (jellyfish) snack, just like being at the pool bar of an
exclusive resort and charging the drink to my room. The debit card
system obscures the fact that the customer is spending money, and I
found myself purchasing far more than I would have had I been fishing
cash out of my wallet or even using my Visa card. I almost ended up
splurging on a mud bath and massage as well.
Refreshed and ready to leave, I waved the wristband over an exit
machine, which displayed my surprisingly high 8,800 yen bill. Upon
inserting my payment I received an exit card, which allowed me out of
the gate. The exit system was a bit cumbersome, but overall this was a
case where technology made my life easier. For more details on
extracting money from naked consumers who are swimming in coffee, or to
experience the thrill yourself, see www.yunessun.com.
Jay Johannesen
Kamakura-based writer and entrepreneur
jay@jayjohannesen.net
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How to be successful in Japan
Here are two ways to become a huge success in Japan: 1) do something
that no one has ever done before, or 2) do something that everyone else
says is impossible.
The former case seems to be more common. There are hoards of creative
people in Japan constantly coming up with first-ever goods and services.
A standout among foreign firms is Citibank, which pioneered after-hours
availability of ATMs and other innovative banking services.
The latter case - doing something that everyone else says is impossible
- seems a particularly promising approach for foreign firms.
An example: When Starbucks decided that all of its stores in Japan would
be no smoking, many predicted its market entry effort would fail. While
the no smoking policy certainly isn't the only reason for Starbucks'
spectacular success to date, it has turned out to be a powerful plus.
It may seem counterintuitive, but in our experience Japanese consumers
love it when companies do something that goes completely against the
grain.
But how does this translate into the online world, where text and
images, not coffee and bank notes, comprise the initial medium of
interaction with a corporation?
One way is to be open and forthcoming with your information and offers,
rather than closed and exclusive. Japanese companies tend to be
secretive with their information and overly wary of transacting with new
customers, even as a vendor.
As an example, I recently went online to buy a multifunction, home-use
facsimile/copier/scanner/printer. I started off at www.askul.co.jp, a
leading Japanese office supplies retailer, but they cheesed me off
mightily by requiring me to "register" before I could do anything useful
on their site. So I tried another domestic competitor. Same story,
plus lousy usability.
I threw in the towel and trotted off to www.officedepot.co.jp, who, to
my great satisfaction, promptly and efficiently succeeded in parting me
from nearly U.S. $600 in a transaction accomplished entirely in the
Japanese language (incidentally, the Canon MultiPASS C70 is a great
machine).
The point is simple: Open your offer to everyone and make it easy for
anyone to buy. Forcing potential purchasers to register before they can
even view merchandise online is the equivalent of shaking down visitors
before they even step inside a shopping mall. (That happened to me in
the Philippines once, but they were looking for guns, not trying to
assess my ability to pay).
A big part of the success to date on the part of companies such as
www.officedepot.co.jp and www.amazon.co.jp is their open,
democratic, non-membership approach to information-sharing and
merchandising. Instead of making you register in order to gain the
privilege of shopping online, they just do it the commonsense away: let
you walk all the way up to the cash register with your merchandise, then
make the "registration" simply part of the purchase. This logical,
commonsense approach to buying online has been established and visible
in the U.S. for seven years, but many online Japanese retailers remain
stuck in a misguided "membership" mode - designed to do what? Keep out
the riff-raff? No wonder Amazon has become the top online book retailer
in Japan, despite being late to the market and publicly exposing its
merchandising methods for years beforehand.
Some may say that the membership model better fits the group-oriented,
security-seeking Japanese psyche, and that I have a normative bias
regarding how the Internet ought to be used ($25 word donated by Bill
Underwood, it means "using one's own cultural beliefs as a yardstick to
judge something in a different culture"). But in our experience, when
it comes to convenience-driven online shopping, consumers viewing the
Internet through PCs in Japan, Taiwan, Korea, and the U.S. are quite
consistent in their preferences regarding function and usability.
Rather than "over-localize" and emulate domestic firms, an approach that
would have resulted in undifferentiated offers, U.S. online retailers
here in Japan have stuck to their open, forthcoming approach with
tremendous success.
This is an example of success in a narrow category and not meant to
imply that to be a success in Japan you should do things the U.S. way.
In fact, U.S. companies are notoriously poor at localizing effectively
for Japan, and their online efforts fail more often than not.
But when open sharing of information is combined with an approach that
everyone says is impossible, the results can be dynamite.
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How to evaluate the number of "Internet users" in Japan
How many "Internet users" are there in Japan today?
According to the government, the figure has already topped 55 million.
Meanwhile, government architects of the "e-Japan Strategy" that proposes
to make Japan the world's premier information technology superpower by
the year 2005, claim that more than 50% of Japanese households have PCs,
and 44% enjoy access to the Internet.
There is a lot of survey data to support these estimates, and the
conclusions tend to be readily accepted, even by foreign residents of
Japan who should know better. But like Japanese expatriates in the
West, PC and Internet usage is disproportionately high among foreign
residents of Japan, and their friends and acquaintances tend to be
highly "wired" as well. The result is a perception that Japan is very
tech-savvy and has a high incidence of Internet usage.
But look closely at the lives of ordinary Japanese citizens and quite a
different picture emerges.
For example, when a breakout group of five mothers of children in a
private kindergarten in an upscale district of Tokyo have only one
computer at home between them, you have to wonder about the 50% plus
household diffusion claim.
When a buddy is having a custom home built in a pricy Tokyo neighborhood
by one of Japan's leading housing manufacturers (a company that builds
thousands of homes each year), and the project manager in charge is
bewildered by his first-ever request for throughout-the-home LAN
cabling, you have to wonder: Is Japan really wired?
And when InfoPLANT finds that half of all consumers polled have never
even heard of the government's "e-Japan Strategy," and only one in
twenty-five can explain what it is about, you have to wonder whether
this country will indeed be the world's leading information technology
superpower less than three years from now, as the architects of the
e-Japan Strategy claim.
What's the big flaw in the Internet user data? What accounts for the
enormous discrepancy between official statistics and empirical
observation? One answer is that many of the surveys count subscribers
to Internet-enabled mobile telephone services as "Internet users."
Now I don't for a minute deny that these telephones do indeed give
consumers access to the Internet. What's important to understand,
though, is that for the vast majority of Japanese consumers, this usage
is of a fundamentally different nature compared to use of the Internet
via personal computers. For most consumers, these telephones are
combination e-mail/walkie-talkie/electronic Yellow
Pages/GameBoy/calculator/clock devices rather than tools for job
hunting, personal research, careful investigation of major purchases,
and so forth. While the market has certainly evolved, I stand behind
what I wrote about this nearly two years ago in "Wireless access still
more "phone" than 'Net" (www.jir.net/jir8-9_00.html).
Foreigners who are active users of Internet-enabled mobile phones here
in Japan tend to have a different view of the mobile market, largely
because they are inevitably users of PCs as well as mobile phones, and
compared to the typical Japanese mobile phone user they tend to treat
their handsets more like alternative Internet access devices. But those
of us who are in the business of trying to reach Japanese consumers via
online channels know from hard-earned experience that there is a world
of difference between "Internet users" who go online primarily via
mobile phone and those who go online via PCs. The application overlap
is very poor, to the extent that most firms will be better off treating
these two groups as entirely separate audiences. Just last week, for
example, the Electronic Commerce Promotion Council of Japan announced
findings that mobile phone users spend only ten percent of their time on
"Internet surfing." For most of the clients Ion Global works with, the
PC channel is far more important and effective.
So when you start wondering how many "Internet users" there really are
in Japan today, who are you going to believe: The architects of the
e-Japan Strategy, or a cynical analyst writing in a free e-mail zine?
;)
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Reader feedback
Last month's Doom and Gloom issue drew record response from readers.
Here are some samples, reproduced with permission:
=====
I am dismayed to find you airing such gaijin concerns about Japan's doom
and gloom, and even more so because you are amplifying Alex Kerr, who
has received plenty of coverage in the Japan Times. I believe the main
theme of your JIR newsletter is far removed from concreting Japan,
unless you are changing your focus to opining about Japan in general.
I look forward to more of your frequently interesting issues on
technology and market reality.
Seth A. Reames
sarjamin@tkg.att.ne.jp
=====
In mentioning the Japanese destruction--I mean construction--industry,
you neglected to mention that Japan has paved a substantial portion of
its coastline. Also, the yakuza's drain on the Japanese economy is not
discussed much, but it's particularly serious in the construction
industry. (Good thing the Mafia hasn't moved in on the U.S. construction
industry, huh.)
Regarding Japan's dwindling population, the trends are ominous, but I
would be careful about straight-line extrapolations. History has a way
of surprising us. That the Japanese government is concerned is evident
at www.ipss.go.jp/English/ppfj02/top.html.
They expect half the population to vanish. Remember, though, that after
half of Europe's population was eliminated by the Black Death, Europe
experienced the Renaissance...
David Govett
=====
As a former long-term resident of Japan, Dogs and Demons also hit me
like a gong. Not that I was particularly shocked by it all; exploring
and exposing the bull**** nature of 'things Japanese' has long been
sport, entertainment, and a useful form of survival therapy, I suspect,
for veteran Japan hands who care. But the sheer scale and mindlessness
he documents -- and writes about so well, from the perspective of one
who personally cares -- rips open a wound that in your darkest moments
suggests your own life has largely been made an illusory waste of time
by those who also made it so wonderful.
A telling story from my own experience there adds salt to this wound of
irony. A gaijin friend I had worked with there, five-plus years in Japan
at the time, had given up on learning Japanese after only a year or so,
despite the fact that in my judgment, he clearly had the 'ear' for
language, and could have acquired excellent command of Japanese had he
applied himself to it (I was the resident 'speaks great Japanese' guy in
a gai-shi-kei brokerage with him at the time). We spoke about this over
beers often, and I did my best to encourage him to still make the
effort. He stopped me cold once with this comment: "Yeah, but isn't the
downside that you DO understand everything?" He was, in a way, right,
and Dogs and Demons is just a fascinating real-life exposition of that
same thought.
So how does one conclude a well-intentioned but thoroughly depressing
message like the one I've just spent three beers on? My friend who
never learned Japanese was wrong, even though I agree with him.
(Name withheld)
=====
I understand your frustration with concrete and Japanese politics, but
consider too you may have lived too long in Tokyo. Here in Kansai the
depressing vistas you describe exist, but there's a whole lot more
variety in terms of green in between.
Also, you may find that China is a much worse horror story, and the
Midlands of England in their day, 1880s through to 1950s, were a horror
story in terms of urban environment. Japan is still a recent developing
country, too.
Finally, the Internet was hyped - important it is, but not the end of
history - and when it hit the reality of the Japanese "way" - long
meetings and so forth - it met its match. But it's still a very handy
tool, and it is still making all sorts of nice improvements to doing
business in Japan, as elsewhere, so I'm personally not complaining -
it's only the people who believed in their own massive expectations -
like the telcos - and their investors - who are really suffering!
Alex Stewart, Principal
Kansai Capital Access
=====
Your May report hit the nail right on the head! You highlighted -- in a
few, succinct words -- the problems that have been plaguing Japan and --
similar to your personal feelings -- getting me damn depressed about
this once lovely, beautiful country. It'll never change... ;-(
Keep doing a great job of chronicling Japan and emphasizing the truth
behind the smoke.
Daniel Scuka
daniel@japaninc.com
=====
I read Alex Kerr's book. A good read, a reminder of all the stuff you
hate about Japan, but he loses credibility when he goes overboard.
Japan has its own rules and it works. It doesn't fit our values as much
as we'd like, but it ain't our country.
Ray Klein
=====
I just read your spring issue. It's pretty discouraging reading. True
things are often discouraging. Like you, I came here in 1984. I have
had my ups and downs regarding Japan. Somehow I always seem to come out
feeling pretty positive about this country. My wife, a Japanese, says
I'm nuts. I have invested a lot of my life (and my savings) here.
I think the Japanese are going to get it together. There is a ton of
work to do, reform on so many levels it's hard to count. I can't guess
when or how long it will take or if I'll live to see it, but someday
these people will make it work.
Ted Gregory
tedd-g@246.ne.jp
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Japan Internet Report is a publication of Ion Global. Entire contents
copyright 1996-2002. Reproduction in whole or in part without express
written permission is prohibited, but feel free to pass along or quote
with URL (www.jir.net).
To subscribe to JIR, please use the online form:
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To unsubscribe from JIR, just click the link below:
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Copyright 2002 by Ion Global. All rights reserved.
Tim Clark
Strategy Director, Japan
Voice 813.5777.3810 Fax 813.5777.3814
Ion Global <http://www.ion-global.com>
strategic e-business integration
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