Japanese Internet/E-Commerce Growth Blocked by Government, Cultural Traits

As more foreign companies tap into the Japanese
Internet/e-commerce marketplace, the state of Japan’s own growth in these
areas comes into question.

Robert Jamison, associate publisher/managing editor of Computing Japan
magazine (circulation 60,000), has found that cultural differences and the
overwhelming role of the Japanese government in everyday life is hindering
a great deal of online innovation for Japanese companies.

“The government is not the friend of the start-up or entrepreneur,” he said.
“Therefore, the Internet in Japan has a different character, a different
feel than it does in the States. There is experimentation here, but there
is also a papable feeling of insecurity about being different, about
standing out. Companies try things very slowly, very carefully, and then
look for a sign of disapproval from consumers or the government. Japan can
be very lonely for ‘nails that stick up.'”

This inability of “nails to stick up for fear of being hammered down,” said
Jamison, has led the government to move very slowly on the
Internet/e-commerce issue, noting that not until early this year were
online transactions allowed by the government ministries.

“They can really hamstring innovation here, which keeps Japan about 2-3
years behind the curve for non-manufacturing industries. The finance
industry is under enormous pressure right now from the economy and
long-overdue deregulation. Dealing with most banks is an unpleasant
experience, akin to visiting a free clinic. The service is dreadful and
inconvenient. The cash machines shut down at 5pm, and nobody takes checks.”

These types of practices leave the door wide open for foreign corporations
to move in and take
advantage of the market for their own purposes.

“Most of the innovative e-commerce happening in Japan is being led by
foreign companies,” Jamison explained. “One unique example of Japanese
e-commerce is the Loppi
system developed by IBM.

“This technology brings e-commerce into the
convenience stores which are everywhere in Japan. Shoppers can order
everything online from concert tickets to software, right there in the
store. Since Japan is pinched for space and the stores are already sardine
cans, this technology allows the stores to add thousands of items without
adding floor space.”

But for those Japanese companies and entrepreneurs wanting to play an
increasing role in the Internet/e-commerce field, that Confucian spirit of
carefully weighing, measuring, and analyzing anything lest the risk of
disharmony be introduced, must be overcome to affect change.

“Innovations in Japanese e-commerce will come from ‘nails that stick up,'”
offered Jamison.
“Once some success has been noted, others will follow. The government will
be dumbly blinking as one unexpected paradigm shift slips by after another.
That isn’t to say that they won’t pass resolutions and start expensive
studies and programs. But they are in no way going to lead anybody
anywhere, that’s for sure.”

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