Terrie's Take 558 -- Web Companies Fuel Exports, ebiz news from Japan

Mon Mar 22 12:39:20 JST 2010

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, March 21, 2010 Issue No. 558

+++ INDEX

- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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+++ WHAT'S NEW

Online exporters to the world.

While Japanese small and medium-sized manufacturers are
suffering mightily from competition from China, over the
last 12 months help has appeared on the horizon -- in the
form of ambitious Web marketing and export logistics
firms. Indeed, just suddenly over the last few months
export by small and medium sized companies (SMEs) has
become all the rage, and the firms which are facilitating
such exports have names that you may have never heard of,
such as Navibird, Tenso.com, and rinkya, as well as a few
you will have heard of, such as Alibaba and Rakuten.

Japanese SMEs have always had problems exporting their
products. The reasons are many, but near the top of the
list are their inability to transact in languages other
than Japanese, an inability to market internationally, an
addiction to letting others do their thinking for them and
working as subcontractors, and an unwillingness to modify
products so that they will appeal to a larger audience. The
root cause of these problems is probably a lack of profits
over at least the last 15 years as well as a general fear
of the unknown.

Traditionally large and mid-size trading companies have
filled the gap of exporters for the nation's manufacturers.
However, as China has risen, these trading firms have found
it easier to do business with Chinese manufacturers than
with the folks back home, so this has left a hole for
manufacturer representation, a hole which has gotten more
obvious over the last 2-3 years. Although up to 5% of all
online shopping at Japanese websites has been from people
living abroad, the language and logistics issues were seen
as being too painful to deal with profitably.

But while consumption is dropping within Japan, in China
and the other Asian economies rise, the "Made in Japan"
label still holds great cachet and people want to buy
Japanese products -- particularly clothing, cosmetics,
accessories, food, and health remedies. This trend has not
gone unnoticed, and there are now 3 main players who are
providing workable solutions for foreign buyers to shop in
their own language, purchase with confidence, and to get
their products delivered abroad.

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[...Article continues]

The most visible player in the Japanese SME online
expansion abroad is Rakuten. This company has for a long
time been accepting orders from people abroad, most
commonly Japanese expats working overseas, and has provided
services to export shipments on the behalf of those
clients. In 2007 Rakuten launched a foreign-language site,
and once you get past the difficult machine translations,
there are thousands of products available for purchase.

In January this year, Rakuten announced a tie-up with
Chinese search giant Baidu. The two companies said that
they would jointly invest US$50m over the next 3 years to
build a B2B2C shopping mall for China -- B2B2C meaning that
they will provide the structures, software, marketing, and
logistics to enable Chinese store owners to sell their
products on the new mall -- much the same as Rakuten does
in Japan for over 30,000 merchants selling more than 40m
different products. It doesn't take much imagination to see
that once the new mall gets off the ground, that there will
be opportunities for Chinese shoppers to buy Japanese goods
from the Chinese-language pages of Rakuten's Japanese mall
as well.

Two other much smaller companies which are really changing
the SME export landscape are Navibird and Tenso.com.
Navibird is an Osaka company that operates a Japanese expat
shopping service called www.jshoppers.com. This website
sells goods from about 50 Japanese manufacturers, as well
as goods from mail order firms such as kaunet and Cecile --
thus significantly increasing Navibird's reach in the
vendor universe. Navibird is also helping other SMEs to
join its network and sell abroad, providing marketing and
payments solutions, as well as handling foreign customs
requirements, shipping, and other logistics issues.

Jshoppers.com is doing really well and reportedly has
300,000 members around the world, 80% of whom are female.
Actually, we'd take that 300K membership with a grain of
salt, since there are only 1m or so Japanese expats totally
worldwide according to the Japanese Foreign Ministry.
Nonetheless, just how well Navibird is doing can be
ascertained from their rapidly increasing sales volumes --
now at JPY500m for FY2008 ending September 2009, and by the
tie-ups that they are doing. They already have a Chinese
website, anticipating that China's eCommerce sales will
probably double this next year.

Navibird announced a tie-up with Baidu in 2009 which had
jshoppers.com content echoed on the Baidu site. That
project doesn't seem to have gone anywhere, but the
relationship with Baidu back in China appears to be strong
enough that a Navibird related company, Direct Mail giant,
Nissen, is now planning to target Chinese customers. No
word yet on how Navibird will be tied into Nissen's push
-- but given the Nissen is a leading investor in Navibird,
it's a given that they will be there.

The second company you probably haven't heard of,
Tenso.com, is a subsidiary of Shinagawa-based Netprice.
This company is a logistics firm that delivers Japanese
purchased goods to more than 30,000 registered users
located in 55 different countries around the world. The
company doesn't care which site you bought from, and
provides you with a Japanese shipping address and payment
solutions so that you can get anything online and get it
sent onwards to you. This service has been incredibly
popular with Japanese expats living abroad, and
Tenso.com's business is growing by leaps and bounds. The
company is apparently already shipping more than 10,000
packages per month.

Of course for non-Japanese speakers, finding the products
online in the first place may be a challenge, due to
language difficulties. Netprice has come up with an
ingenious way of getting more stuff listed in overseas
buyers' native languages without having to create a huge
team of translators themselves. Instead, they have created
a website called www.flutterscape.com, which provides the
tools for foreign residents in Japan to pick up products
that are already on offer at various sites, then to include
that product information in the person's native language.
The producer of such localized pages could be doing this at
home while working a day job or studying as a student, and
they make a percentage of each product actually sold.

Another site which makes it possible for foreigners to shop
in Japan, this time at Yahoo Auctions, Rakuten, and some
other online stores, is www.rinkya.com. This company
provides an English interface and shopping assistance
service to people living abroad.

So what about Softbank and Alibaba? Well, Softbank
Investment has 41% of Veritrans and therefore its
Chinese-language www.buy-j.com website. Veritrans has
access to many SMEs through its payment gateway service and
this shows from its solid line-up of products. However, we
think it will be some time before it can provide a decent
sized base of SME Japanese products to offer for export
simply because Veritrans is not set up as a
reseller/shipper to any great extent yet. Interestingly,
though, Veritrans' is an investor in Navibird, so Softbank
is well covered indirectly.

...The information janitors/

***------------------------****-------------------------***

------------- Be Part of Metropolis' Future ---------------

Metropolis is considering bringing in private investors to
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off-line as well. We wishes to survey our readership to see
whether there is any interest by potential investors in
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This is not solicitation to sell shares, however, if you
have an interest in private investments within Japan and
wish to participate in this survey, please contact
Metropolis at isurvey at metropolis.co.jp.
-----------------------------------------------------------

+++ NEWS

- Big insurance IPO coming up
- JETRO survey on international operations
- Domestic violence surges
- Food self-sufficiency target of 50% by 2020
- Emergency SME business loans hit 1m

-> Big insurance IPO coming up

Major insurance group Dai-Ichi Mutual Life plans to do
Japan's largest IPO for the last two years, on April 1st.
The company hopes to raise about JPY1.08trn (approx.
US$12bn) from the listing. The listing will be carefully
watched by investors, as the performance of other large
IPOs around Asia in the last two quarters has been
disappointing. If the Dai-Ichi listing is a success,
bankers are saying that in Asia ex-Japan there could be as
many as US$120bn of planned IPOs lined up. This supply is
expected to be met by well cashed up Asia-based funds
needing to find big names to invest in. ***Ed: Thus, there
is some optimism by bankers for a surge of regional
listings if Dai-Ichi goes well.** (Source: TT commentary
from nytimes.com, Mar 18, 2010)

http://tinyurl.com/yfcc2v2

-> JETRO survey on international operations

The Japan External Trade Organization (JETRO) has released
its annual survey profiling what Japanese multinationals
are doing abroad. The latest survey covers 935 firms
operating globally and has found that of those companies
with overseas operations, 74.9% are in China, 44.8% are in
the U.S., and 38% are in Thailand. Further, 56% of
companies plan to expand their international business
investments in the next 3 years, up 5.7% from last year's
survey. China was the main country of expansion, followed
by Asian newly industrialized economies and Indonesia and
Vietnam. ***Ed: Lots more good info in this survey.**
(Source: TT commentary from pressreleasenetwork.com, Mar
13, 2010)

http://www.pressreleasenetwork.com/newsroom/news_view.phtml?news_id=3141

-> Domestic violence surges

According to the National Police Agency (NPA), the level
of reported domestic violence (DV) incidents jumped 11.7%
in 2009 to 28,158 cases. This number includes 2,429 cases
serious enough to warrant restraining orders being issued
by courts against partners and others, and 44 cases
involving either murders or attempted murders. The number
of DV incidents is believed to substantially under
represent the actual level of domestic violence. A 2008
government survey found that only 33.2% of 1,358 women
subject to domestic violence actually reported the acts to
the police. Of the other 66.8%, about half told no one and
a full 36% apparently felt that they were to blame for what
happened. ***Ed: This is just the tip of the iceberg.
Japan through pressure of population and tradition requires
people to repress a lot of feelings and emotions.**
(Source: TT commentary from monstersandcritics.com, Mar 18,
2010)

http://tinyurl.com/ygwpp44

-> Food self-sufficiency target of 50% by 2020

The Ministry of Agriculture has announced that it has set
a food self-sufficiency target for Japan of 50% by fiscal
2020, up from the 41% rate today. The government plans to
increase self sufficiency initially by providing income
support to farmers, thus encouraging them to stay on their
land despite aggressive price competition from China and
other nations. ***Ed: Yeah, let's give more money to 70-
and 80-year old farmers... how shallow is this move? What
would make a lot more sense would be to fully open up the
farming sector to private ownership and competition. Even
the OECD is saying to Japan to get serious about
competition and rationalize its farming sector:
http://www.oecd.org/dataoecd/26/45/42791674.pdf.**
(Source: TT commentary from nikkei.com, Mar 20, 2010)

http://e.nikkei.com/e/ac/tnks/Nni20100319D19JFA24.htm

-> Emergency SME business loans hit 1m

To get some idea of just how much the government is bailing
out the corporate sector, look no further than the 1m
small-business loan applications to the government's 2008
emergency funding program. Apparently JPY18.56trn worth of
loans have been made under the program already, amounting
to an incredible 3,000 such loans a day...! ***Ed: For more
information on Japan's loan guarantee system, go to:
http://www.zenshinhoren.or.jp/pdf/English_Annual_Report.pdf.
(Source: TT commentary from nikkei.com, Mar 20, 2010)

http://e.nikkei.com/e/ac/tnks/Nni20100319D19JFA03.htm

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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+++ CANDIDATE ROUND UP/VACANCIES

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+++ UPCOMING EVENTS/ANNOUNCEMENTS

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-----------------------------------------------------------

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors at terrie.com.

*** In TT557 we ran a news item about officials in Narita
considering to install full body scanners. We think it's
a total invasion of privacy, despite assurances from
authorities abroad that scanner output is not retained.
Now, as a reader comments, the first incident of operator
reproduction of an image has occurred. There will be a lot
more...

=> Reader: Thought you'd find it interesting to discover
that there have already been Body Scanner operator misuse
incidents, as reported in a recent news reports. Here is an
edited version of one report:

"Claims on behalf of authorities that naked body scanner
images are immediately destroyed after passengers pass
through new x-ray backscatter devices have been proven
fraudulent after it was revealed that naked images of
Indian film star Shahrukh Khan were printed out and
circulated by airport staff at Heathrow in London.

Khan told the BBC’s Jonathan Ross, 'I was in London
recently going through the airport and these new machines
have come up, the body scans. You’ve got to see them. It
makes you embarrassed – if you’re not well endowed...'

Read more about Khan's experience at:
http://tinyurl.com/yahorbv

***********************************************************
END

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+++ ABOUT US

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