ExportIT Japan: ExportIT Japan Jim Golsen, Office of Information Technologies Richard Paddock, Office of Telecommunications Technologies


ExportIT Japan: ExportIT Japan Series of Market Overviews by the International Trade Administration, other reports include, Mexico, Central Europe, Western Europe, Latin America, China. ExportIT Japan to be published around 6/1/02


Isn’t Japan in a Recession?: Isn’t Japan in a Recession? Yes, but there are some signs of a rebound as business confidence in the latest Tankan survey was not negative for the first time since 2000.


Japan’s IT Market: Japan’s IT Market Despite Japan’s economic woes it is still the world’s second largest IT market after the United States. Japan’s total IT market was valued at $108 Billion* in 2001 compared to the next highest in the region, China at $15 billion. IDC 2002


Difficulties in the Japanese Market: Difficulties in the Japanese Market Relationship based Requires substantial invest in both time and money Long term benefits Cultural differences Government involvement


Advantages of Japanese Market: Advantages of Japanese Market Lucrative in the long term, the second largest market in the world Despite it’s reputation, American companies of all sizes have succeeded in Japan E-Japan, more later.


Ways to Crack the Market: Ways to Crack the Market Highly specialized product line Customize product to local market, strict adherence to Japanese business rules. Joint partnerships Local staff Commercial Service


E-Japan Strategy: E-Japan Strategy Formation of the world’s most advanced information & telecommunications networks Facilitation of e-Commerce E-Government Promotion of education and development of Human Resources Ensuring Security and reliability networks Crosscutting issues


E-Commerce: E-Commerce


B2C: B2C Current value is estimated at $13 billion Expected to grow to $98 billion by 2005 Real estate and automobile industries account for 46% of the total B2C market in Japan Travel, finance, food, gifts and entertainment are all narrowing the gap.


B2C Market Size: B2C Market Size METI 2001


B2B: B2B Most medium to large sized Japanese companies are currently looking at B2B as one way to cut costs, reduce inventories and streamline operations Current valued at $151 billion, expected to grow to $870 billion by 2005 Dominated by the electronics and automobile industries which account for 90% of the total market.


B2B Market Size: B2B Market Size METI 2001


B2C Market Size by Industry: B2C Market Size by Industry METI 2001


B2B Market Size by Industry : B2B Market Size by Industry METI 2001


E-Commerce: E-Commerce Payment methods-One way some Japan-focused B2C sites have addressed these issues is by working with convenience stores, or konbini, as a medium Smart Cards Internet Security


Internet: Internet


Household Internet Use: Household Internet Use Household Internet users are increasing 1.7 times every year The number of household Internet users in 2000 was 35M, of which 70% can access Internet in mobile environment


Broadband Internet access: Broadband Internet access The number of subscribers of broadband Internet access is 2.4M in 2001. The ADSL users rates increased sharply in 2001 after introduction of unbundling of local loop in December 2000, which facilitated price reduction (Y7,100, >Y2, 460)


Internet Users2001: Internet Users 2001 United States 148 million 28% Japan 48 million 9% China 38 million 7% Germany 24 million 4.5% South Korea 24 million 4.5% UK 20 million 3.8% eTforecast 7/2001


Japan Broadband Market: Japan Broadband Market MPMHAPT 2001


Hardware, Software, Services: Hardware, Software, Services


PC Market: PC Market 14.1 Million units in 2001, increase of only .3% from 2000 Enterprise market stagnant Small growth in the Home market Will broadband demand drive PC demand? Various sources


Japan ASP Market: Japan ASP Market Vertical Applications expected to grow 407% by 2005 Total ASP market is expected to grow by 175% Various sources


CRM/ERP Market: CRM/ERP Market “despite the current economic downturn, end-user organizations continue to recognize seamless technology integration as being critical to their organizations' ongoing business strategy and success” “there is a plethora of small- to medium-sized business, bilingual CRM packages that are easily customized or ERP packages that are module specific are attractive. “ “With this market, cost effectiveness and fast ROI are critical. “ J@pan Inc. 2002


Software Market: Software Market 91% of software imports are from the U.S. High percentage of customized software Great dependency on imported software Reliance on foreign programers JISA 2002


IT Service Market 2000-2005: IT Service Market 2000-2005 Consulting + 6.8% Development and Integration + 8.3% Education and Training + 8.3% Management Service + 11.4% Transaction Processing +5.8% Total IT Services +7.4% Total Market $78 Billion by 2005 Various sources


Market Opportunities: Market Opportunities Supply Chain Management CRM/ERP E-commerce solutions Unique technologies Internet Security E-Government/E-Education IT Services


Key Contacts: Key Contacts Steven Knode, Commercial Officer, United States Embassy, Tokyo, Japan 81-3-3224-5066 steve.knode@mail.doc.gov Richard Paddock, Office of Telecommunications Technologies, US Department of Commerce 202-482-5235 Richard_Paddock@ita.doc.gov James Golsen, Office of Information Technologies, US Department of Commerce 202-482-0551 James_Golsen@ita.doc.gov


Resources: Resources AsiaBizTech- http://www.asiabiztech.com/ J@pan Inc.- http://www.japaninc.com/ Commercial Service Japan- http://www.buyusa.gov/japan/en/ Office of Information Technologies-http://www.exportit.ita.doc.gov/ USG Gov’t Export Programs http://export.gov


Telecommunications: Telecommunications Wireless and Wireline Equipment and Services


Telecom Market 2001: Telecom Market 2001 2001 Marked by decline in export, import and overall production. Total import market and local production shrank 7.6% and 3.3% respectively. Exports declined by 18.4%. Reasons include continuing domestic economic woes and global IT recession.


Telecom Market 2002: Telecom Market 2002 Projections for aggregate market vary by source, market segment. Overall projections range from 7% decline to modest growth. Growth inconsistent - gap between growing and declining markets expanding.


Telecom Equipment Market: Telecom Equipment Market Japan already leading in wireless Internet access, now rolling out one of world’s most advanced nationwide broadband networks. Strength of wireless 3G investment supporting overall market. DSL Exploding. Broadband/Fiber and 3G wireless markets expected to lead recovery in 2003.


Telecom Equipment Market($ Million): Telecom Equipment Market ($ Million)


Network Equipment Market($ Millions): Network Equipment Market ($ Millions)


Telecom Eq: 2001 Supplier Share: Telecom Eq: 2001 Supplier Share NEC and Fujitsu have more than half. Focus on Optical, Wireless and IP network gear. Ericsson main supplier to 3G providers Nortel, Motorola struggling, but plan recovery.


2001 Foreign Supplier ShareWireless: 2001 Foreign Supplier Share Wireless Foreign suppliers reportedly had 34% of market in 2001. Ericsson had lion’s share with 20%. NEC and Fujitsu share 53%.


2001 Foreign Supplier ShareWireline: 2001 Foreign Supplier Share Wireline Again, NEC and Fujitsu dominant with 55%. Foreign suppliers have about 19%. Lucent, Nortel and Cisco major suppliers.


NTT Network Conversion Plans: NTT Network Conversion Plans Convert entire nationwide network into IP within ten years. IP networks use lower cost equipment, routers instead of expensive circuit switching. Discontinuing CAPEX and R&D in exchanges and technology used in existing network.


Wireless Market Drivers: Wireless Market Drivers Usual Suspects: deregulation, competition, technological advances, aggressive marketing, government support. PLUS…. Cultural phenomenon, innovative uses, I-mode’s creative business model, 2.5G, JAVA, BREW.


Wireless Operators: Wireless Operators NTT DoCoMo: Japan’s (and world’s) largest. KDDI: Created by merger of DDI, IDO and KDD. J-Phone: Now owned by Vodafone.


Subscribers by Operator: Subscribers by Operator


Wireless Internet Users by Operator: Wireless Internet Users by Operator DoCoMo I-mode 32 Million Subs “Walled Garden” KDDI EZ Web: 10 Million Subs J-Phone J-Sky 9.6 Million Subs TOTAL: 51.9 Million


Third Generation Wireless: Third Generation Wireless Three licenses awarded without auction DoCoMo first in the world with FOMA Initial total investment of $2-3 billion DoCoMo predicts 1.5 million users, $8 billion investment by 2003 KDDI, J-Phone delayed 3G launch Some niche players