Start-Up

Our first Internet traffic officially began with Free Internet email June, 1994. Our business is Japan based and most of our services are in Japanese, but we support Chinese, Korean and English.

I hope to contribute my opinions on measures to support and nurture the venture business spirit of the Japanese economy. It is my belief that certain Japanese industry and governmental structural issues are at the heart of the lack of economic gain seen in Japan from this new "Electronic Global Society". These issues in Brief are:

1. JPNIC - Japan Network Information Center.
2. NTT phone rates
3. Lack or non-existence of real venture capital
4. Lack of computer education urgency in Japanese schools
5. No fast-track NASDAQ IPO market
6. 7% for small business Credit Card clearance.
7. Ringi committees.

There are also many bright spots in the Japanese Internet market and much to be excited about being an entrepreneur and involved with this business here. In paticular it appears that a few Japanese powerhouses, namely Son of Softbank and Shigeta of Hikari Tsushin, who are setting their sites for big plays on the Japan Internet. Big American venture capital funds (of one billion dollars or more) are poised to launch from April here.

Over the coming weeks I hope to keep my comments and ideas short and concise. I am looking forward to heated debate and development of some useful recommendations for the Japanese government and poeple from this forum.

I would like to discuss how a news site like NIKKEI NET can participate in e-commerce and find ways to make it work in Japan. I look forward to hearing comments about it in this conference.

First I make reference to a Japan Fair Trade Commission Complaint I filed on December 19, 1997 titled -- Antimonopoly Act - unreasonable restraint of trade by a trade association. The JFTC declined to investigate this issue. Maybe this forum can raise it again.

You can find the English document at http://jpnic.co.jp/jftc/indexe.html
You can find the Japanese documnet at http://jpnic.co.jp/jftc/index-p.html
I know these are old documents, but I think they still hold their weight today.

The Internet in America is fueling economic growth because of its "Wild West" nature. Now almost 3,000,000 .com domain names are registered compared with a paltry 38,000 .co.jp domains. Please note that 70-80% of the .com names registered belong to Americans.

Please remember that trademarks are protected and in no means do I condone or wish the registration of trademark domain names by parties other than their rightful owner. Saibancho has this job and Internic's policy of protection of trademarks is working.

I am very interested in this panels opinions on the effectivness of JPNIC as the guardian of the Japanese Internet. Should computer engineers(read:JPNIC) determine Japan's most important economic issue -- the Internet?

I need to verify this, but I am starting to feel that there are differences in the development patterns of EC between the US and Japan. For example, the use of non-credit card settlement seems higher in Japan than in the US... Is this a beginning of a divergent development course, or is it simply a transient phenomenon? It would be interesting to compare what is going on, and explore why the differences exit, if they really do exit.

(4) Jiro Kokuryo
I need to verify this, but I am starting to feel that there are differences in the development patterns of EC between the US and Japan. For example, the use of non-credit card settlement seems higher in Japan than in the US... Is this a beginning of a divergent development course, or is it simply a transient phenomenon? It would be interesting to compare what is going on, and explore why the differences exit, if they really do exit.

When our company tried to get the right to use credit cards online it took over six months to get registered by Sumitomo Visa (uhhh, we need to study...) The big shift you are seeing in difference of settlement process may be attributed to the hefty charge of 7% to be a Visa merchant for small businesses here in Japan. I wonder if the Sumitomo Visa monopoly on Visa cards in Japan might need a look into also?? 7% is a painful amount of money.

Especially,
1 Rules of EC,from who? what can we doing?
2 How we can get a Big potential EC user,it is mean Women.
3 What can we do something for veuture company who is focus on EC.

Now I'm involved in projects to establish online brokerage and 401(k) services in Japan. I'm also managing a mailing list called "cyber-economy" whose 400 participants discuss about development of information technology and its influence to the world society and economy.

My ideas on what we will discuss here are;
1. financial conditions with which the market of electronic commerce can expand
The advanced equity market is the key to encourage the new electronic commerce companies. U.S participants might think that's obvious. But in Japan, 60% of 10 trillion US dollar individual financial assets are in bank deposits, though it's only 15% in U.S.

The new companies must lend money from bank in most case, and most venture capitalist in Japan are affiliate company of the major banks and major brokers, and those funds are borrowed mostly from banks also. i.e. They can't take risks. That's not only a Japanese problem. U.S. has the most advanced IT related companies and the most advanced equity market. I think that's not a coincidence.

2. relation between electronic commerce and online brokerage
In U.S., they say around 30% of the individual stock trades are made through online broker now, and the rate is still growing. Obviously, online brokerage customers are also the users of internet, and should have interest to have equity of electronic commerce related companies.

To "own" those companies should be one of the strongest incentive for people to be interested in electronic commerce, and that's one of the reason the stock prices of online businesses are so high. In Japan, the commission of stock trade is not yet liberalized, and people should pay same commission even if s/he trades on line. The situation will change when the commission table will be completely deregulated in October this year.

3. the most important condition to expand Japanese electronic commerce market
Financial problems are not the only reason Japanese electronic commerce are not attractive yet, but I think that's the largest one. Generally, who have interests in electronic commerce don't have interest in finance in Japan. But I think those are the two faces of a same coin. I think we can't avoid to discuss about finance when we talk about the future growth of Japanese electronic commerce.

(5)Bradley L. Bartz

When our company tried to get the right to use credit cards online it took over six months to get registered by Sumitomo Visa (uhhh, we need to study...) The big shift you are seeing in difference of settlement process may be attributed to the hefty charge of 7% to be a Visa merchant for small businesses here in Japan. I wonder if the Sumitomo Visa monopoly on Visa cards in Japan might need a look into also?? 7% is a painful amount of money.

I heard this everywhere. I can feel Mr. Bartz's difficulty dealing with credit card companies in Japan. Even Nikkei had to pay a charge rate of just below 7%. That means, most of the small shops and merchants who are selling online have to pay 7% to use the credit card system. They chose to use the post office, bank transfers and convenience store systems.

I know it is more convenient for consumers to use credit cards, but I feel the post office or the convenience store system aren't totally bad. I guess the only problem is that the merchant have to send the goods to the consumers first and take the risk. But in Japan, this system works and the merchants are happy with it.

When the so-called big merchants get into the market, they will probably get a better rate from the credit card company because of the volume. I think they won't use the other methods like the small shops. We'll see.

(5)Bradley L. Bartz
The big shift you are seeing in difference of settlement process may be attributed to the hefty charge of 7% to be a Visa merchant for small businesses here in Japan. I wonder if the Sumitomo Visa monopoly on Visa cards in Japan might need a look into also?? 7% is a painful amount of money.

7% that is painful. Here in the UK "on-line" merchants start at 5% then based onactivity can expect to drop to around 2%. In the US minimum rates are a little less about 1.75%. Because there are such large discrepancies in rates a new tier of businesses are springing up that of Bank Acquirer intermediaries.

These guys do the processing on your behalf (charging anything from 3%) in a whole host of base currencies. All that happens is the customer buys the goods from your "on-line" site, then when it comes to payment, link directly to the Bank Acquirer intermediary's site where settlement is made. Payment is then sent to your bank within 3 days.

I have been the General Manager of GET UP (Global Electronic Trade UN Partnership), which gathered a few thousands participants in Lyon (France) last November. I also happen to be the World Coordinator of the UN 'Trade Point programme', which helps enterprises (especially small- and medium-sized enterprises) to benefit from e-commerce.

There are acurrently some 140 Trade Points in 108 countries. The most recent one was inaugurated last wednesday (10 February 1999) by the Prime Minister of Jamaica (H.E. P.J. Patterson) at the occasion of the G-15 Summit in Montego Bay.

For more biographical info: http://www.lanvin-global.com
For more info on the Global Trade Point Network: http://www.unicc.org/untpdc
For more information on GET UP:
http://www-partners.unctad.ch/english/R2/som_home.htm
For more information on UNCTAD: http://www.unctad.org