********************************************************** Japan Internet Report No. 30 September 1998 ********************************************************** In this month's issue: - Is it really news? - Interview with John Stern of Japan Market Engineering - Book of the Month - Japanese packaging issues & more - Heard on the grapevine - What do you like? - This month we welcome... ********************************************************** Is it really news? Thirteen years of reading Japanese newspapers every day of the week has helped me develop a finely-tuned BS detector when it comes to evaluating Japan-related "news." I have to admit that for the first few years - enchanted by the ability to rapidly comprehend what was a mysterious and inpenetrable source of information to many foreigners - I took nearly everything in the newspaper at face value, even when, intuitively, something just didn't seem right. Now I know better. As Ivan Hall says in our Book of The Month: "In professional terms, a privileged group of Japanese journalists and corporate media monopolizes and regulates the flow of news, a commodity that in all other industrialized democracies would be viewed (beyond narrowly defined safeguards of national security and privacy) as an unrestricted public resource... Even more disturbing is the blithe manner in which newspeople in a supposedly free country have arrogated to themselves the information-control functions characteristic of government in authoritarian societies." Many of the articles you read in the Japanese press are barely-touched press releases, heavily spun at the source. You've got to be cautious about interpreting them, especially if you are monitoring the Japanese press for marketing and/or business research purposes. This is especially true now that there are more and more English language translations of Japanese news articles available, sometimes produced by eager translators with better language skills than business savvy. Other newspaper nonsense: After reading an article in the local press recently, I phoned a Tokyo-based "multimedia association" that produced a report on Japan's Internet market, since I couldn't find their Web site and was interested in hearing more about the report. Turns out they don't have a Web site... Tokyo-based ThinkPlan had a big article in yesterday's paper touting a search engine they sell to online shops, but its own site isn't searchable... Consultancy LinkManage, also of Tokyo, offers "Web Evaluation, a service clients can use to check the strategic effectiveness of their Web sites," but its own site on the day the article appeared was an object lesson in poor design. And these are the companies that get press in Japan's biggest newspapers? ********************************************************** Interview with John Stern of Japan Market Engineering John Stern is one of the most experienced Japan-hands you're ever likely to meet. A 14-year resident of Tokyo, he set up both the Tokyo and Beijing offices of the American Electronics Association (AEA), and ran the 3,200-member Tokyo AEA organization for 11 years. Today he heads Japan Market Engineering, a firm devoted to dismantling political and strategic barriers to Japan market entry on behalf of foreign clients. John holds B.A. and advanced degrees from Princeton and Harvard, respectively. I first met John in Tokyo in 1986, and vividly remember him as one of the few senior U.S. expatriates with the ability to rapidly read Japanese newspapers. We enjoyed several telephone and e-mail discussions to compile this month's interview. - It's a common notion that "lobbying" as we know it in the U.S. doesn't exist in Japan. Does it? How specifically do you go about "lobbying" government agencies (or other organizations) in Japan on behalf of overseas firms? Lobbying not only exists in Japan, it is vital to the budgets, programs and promotions of many central ministry bureaucrats and big company executives. These are the people I bump into in the corridors: they are usually shocked to see me there. Perhaps you mean, lobbying expertise available to foreign companies? Foreign-capital companies can indeed use political communication to improve their business environment, as I have demonstrated to a wide variety of information technology and health care firms. As to how JME goes about it, I have published on this subject, and readers who are interested can contact the firm. Briefly, we seek to cater to legislators' personal, intellectual or political interests and align our foreign-capital clients' presentations with those interests. We do not make political contributions or otherwise "buy influence". A foreigner speaking fluent Japanese is so rare a visitor to the halls of the legislature that JME is almost universally welcomed. In contrast, a Japanese citizen advocating the interests of a foreign company is sometimes viewed by government officials like a turkey advocating Thanksgiving: an advocate inherently lacking credibility. - What opportunities do you see in Japan for foreign firms to leverage the Internet in business-to-business applications? Extensive opportunities, provided that foreign firms do not rely too heavily on duplicating the advantageous financial settlement, volume purchasing or leased line benefits they enjoy in the U.S. The Internet can cut right through layers of collusive dealings and oligopolistic practices, and in some cases even sidestep regulatory problems. Japanese Internet sites of the bigger companies tend still to be static billboards, but we already see interactive commercial sites in such areas as used cars, travel agencies, music distribution and other less-prestigious, but perhaps hungrier, lines of business than the famous names. On-line interactive marketing and sales remain areas in which foreign firms with an interface that appeals to Japanese can save hundreds of thousands of dollars in startup costs and still retain full control of their customer lists and marketing channels. Japan's "Big Bang" is already a big bust, but rather than foreign competition, the financial straits of many Japanese financial services firms will eventually force them to cut their incredible overhead and move to online banking and customer service. There have been some attempts by major Japanese booksellers to protect their market from Amazon.com by going online themselves. Many of the routine calls to companies' engineering or customer service call centers in Japan could be handled by putting more information on line: our firm has had positive feedback from potential customers in Japan who see the Internet as an opportunity to offer 24-hour customer service without overtime costs. - You say Japan's "Big Bang" is already a bust - could you elaborate? Japan's Big Bang is already a big bust because it has been too tentative, too grudging, too underfinanced and too narrow to propel Japanese financial institutions into striking range of foreign competitors, who themselves are constantly lengthening the distance by which Japan trails. One can't have a "Bang" without an explosion or a collision, but Japanese financial regulators have continued to view their job as sheltering Japanese industry from sudden changes. - What one question do you wish your clients would ask you more than any other, but don't? Can't I leapfrog the market development process by acquiring a Japanese company? Most clients don't ask this question because they assume you can't acquire a Japanese company. It is true that hostile takeovers have mostly failed in Japan. However, a number of companies, including EDS and Intuit, have acquired Japanese information technology firms on mutually friendly terms. Some of the smaller Internet providers, for example, are willing to be bought out during the current market shakeout. Some Japanese software companies, headed by engineers who just want to write great software, need the extra capital to do more and recognize that a merger with a larger US company would provide that capital. A fair percentage of private company founders, in the current poor business environment, desire to sell out in their 60s and retire, rather than leave the company in the hands of a less capable son. - What would you say to a client who wants regulators to approve the business his company has in mind? I have been getting foreign-capital high technology companies over, around or through blocking regulatory regimes for 14 years. The methods will vary with the ministries involved and the client's interest in a high or low profile on the issue, but we usually produce a status that our clients find acceptable within two regular sessions of the Diet. - When will Japan abandon metered-rate local telephone service? NTT has a few fixed-fee plans for dialing to a limited set of pre-registered numbers, and launched the OCN access network that your newsletter has reviewed in past issues. However, a group of foreign-capital information technology firms in Japan headed by the former President of Compaq K.K. recently issued a white paper in which they called NTT's lack of reduced-price charges for Internet access one of the greatest stumbling blocks to Internet development in Japan. This white paper was favorably reviewed in the monthly journal of Japan's major electronics trade association, where it was noted that many Japanese computer firms privately agree and would publicly say the same thing if they did not have large divisions devoted to NTT as their sole customer. John Stern ---------------------------------------------------------------- Japan Market Engineering Internet: jme@consultant.com Fax: +81-3-3484-8366 Telephone: +81-903-253-6481 (in Japan, 0903-25-36481) Online Firm Sketch: http://www2.gol.com/users/starmax/ Mailing Address: Suite 404 Soshigaya 3-11-1 Setagaya-ku, Tokyo 157-0072 JAPAN Specialists in the business development, technical standards and government relations issues of the information technology and health care industries ---------------------------------------------------------------- ********************************************************** Book of the Month Cartels of the Mind: Japan's Intellectual Closed Shop, by Ivan P. Hall W.W. Norton & Company; ISBN: 0393045374 This book has been sitting on the headrest of my sofa for the last few weeks - the place for stuff that actually gets read. For JIR subscribers who have spent much time in Japan, this book will elicit a succession of knowing "ahas" and "naruhodos." For those who haven't, it's a real eye-opener with respect to the "soft," or cultural barriers surrounding Japanese society, as opposed to the "hard," or trade/strategic barriers around markets. It's probably a better book for academics and intellectuals than for businesspeople, but the section on Japanese media alone is very important for those who rely on the local language press for market information. More reviews and ordering information is available at: http://www.amazon.com/exec/obidos/ASIN/0393045374/5231685 ********************************************************** Japanese packaging issues & more If you're interested in Japanese language software packaging, querying Japanese visitors to your Web site, or Japanese language Web production in general, take a look at: http://www.headcount.com/expert/index.htm The guy there tends to repeat himself a lot, but he makes some pretty good points. ********************************************************** Heard on the grapevine Boris Yeltsin, Pope John Paul and Keizo Obuchi die in the same plane crash. They are wafted up to the Pearly Gates, where St. Peter says "Because each of you is so illustrious, you will be allowed to ask one question before going to your heareafter." Yeltsin asks: "Will Russia ever have true democracy?" God replies, "Yes, but not in your lifetime," and Yeltsin walks away dejected. Pope John Paul asks "Lord, will there ever be true peace on earth?" and God replies "Yes, but not in your lifetime," and the Pope walks away sadly, with sunken shoulders. Obuchi asks "Excuse me. Will Japan ever have true competition in its domestic telcommunications market?" and God replies, "Yes, but not in MY lifetime!" ********************************************************** What do you like? Please tell us - a questionnaire with two multiple choice questions is available at: http://www.tkai.com/jir/survey.html We will be grateful to all JIR readers who can take a moment to respond and help us improve the quality of this newsletter. Filling out the survey shouldn't take more than 15 seconds, unless you have lots of free-text beefs to air, in which case who knows how long it might take... ********************************************************** This month we welcome... ...new JIR subscribers from Nokia, Kodak, British Telecom, Grey Daiko Advertising (those agency guys are smart :) , Cisco Systems, Adobe, Digital Equipment, Netscape, Virgin, Digex, AC Nielsen, Whistle Communications, Lands' End, Dun & Bradstreet, and from India, Korea, Taiwan, France, Australia, Sweden, Hong Kong, Singapore, Japan and elsewhere. Thank you for subscribing. We are honored that you take the time to read our newsletter. ********************************************************** Tim Clark Editor To subscribe or unsubscribe to JIR, send any message to: subscribejir@tkai.com unsubscribejir@tkai.com Copyright 2002 by Ion Global All rights reserved ------------------------------------------------------------ Ion Global (USA) Japanese e-business specialists http://www.tkai.com/ Tel. (503) 235-4433 Fax (503) 235-4422 ------------------------------------------------------------