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Japan's electronics industry telecommunications

Post-Galapagos Japan? – globalizing Japan’s fantastic technologies…

Japan Galapagos effect: “Why do Japanese companies make so beautiful mobile phones with fantastic functions, and have almost no global market share?”

I asked this question back in 2003 to NTT-DoCoMo’s CEO Dr. Tachikawa (see my article “Leadership questions of the week” in Wallstreet Journal of June 12, 2006, page 31), and offered several proposals to Dr. Tachikawa, of which he accepted one.

A related question is: “why can Samsung, LG and Apple beat Japan’s initially far more advanced mobile phone makers, and why have Japan’s phone makers taken no effective action to build global business in order to avoid extinction?”

Now six years after my initial presentation to DoCoMo’s CEO, I have been invited as the only non-Japanese to work on Japan’s “Post-Galapagos Committee”. For most of this year our small group of industry CEOs, academics, government officials and other leaders have been working on understanding the reasons for Japan’s “Galapagos effect” and how to overcome it.

Read about this work here in the New York Times, about my (Japanese language) presentation to the committee on the IT-Media website here (in Japanese)

The “Galapagos effect” has not been created by a single factor. Instead a collection of choices by the management teams of Japan’s electrical conglomerates have prevented leverage of their domestic success stories into global success stories. These choices can be overcome. In our “Post-Galapagos committee” we have worked all-year on how to overcome these choices.

Unfortunately the “Galapagos effect” is only one symptom of the crisis of Japan’s electrical giants: most have shown little or no growth in sales over the last 10 years, while at the same time margins tend to be small or negative. Over the same period, General Electric has increased sales by a factor of about three, while at the same time earning healthy margins.

Overcoming this crisis will create many opportunities. If at least some of the conclusions of our “Post Galapagos Committee” can be realized, then our committee’s hard and totally voluntary work during most of this year and many late nights will not be wasted.

For an analysis of Japan’s electrical industry sector see our

Copyright (c) 2013 Eurotechnology Japan KK All Rights Reserved

Categories
Economics Japan's electronics industry

Investor Club: What crisis? Meet some booming Japanese companies

It’s not all doom and gloom here in Japan. Nintendo’s sales and operating profits are rising 8.8% year-on-year. KDDI saw its net profits increasing 59% year on year. Yahoo Japan increases dividends by 22%-25% for 2008. Who are today’s winners in Japan’s IT industry? Gerhard Fasol will show us how and why some great Japanese companies excel in today’s crisis.

The talk reviews today’s status of Japan’s electrical companies, the telecommunications sector and the internet sector, and introduces seven different companies, which show rapid growth of revenues, operating income and net income despite the crisis. These seven companies we introduce turn the crisis into an opportunity.

Mr Fasol is one of the best specialists of Japan’s IT industry. After 12 years in Japan working for the most prestigious Japanese institutions and companies (the University of Tokyo, NTT, Hitachi…), he founded the strategy and M&A firm Eurotechnology Japan KK in 1996. Mr Fasol has advised some of the greatest companies, including NTT, SIEMENS, Deutsche Telekom, Cubic, Unaxis and about 100 fund managers on strategy for Japan, as well as the President of Germany. He helped a French pharmaceutical company acquire a factory in Japan.
He comments regularly on CNBC on Japan’s tech sector.

Schedule: March 24th, 2009 (Tuesday) from 18:30
The conference will be followed by a light cocktail.
Place: French Chamber of Commerce and Industry in Japan, meeting room
Iida bldg 1F, 5-5 Rokubancho, Chiyoda-ku, Tokyo 102-0085
Tel.: 03-3288-9624
Access map: www.ccifj.or.jp
Language: English
Fees: 5.000 yens (to pay in cash at the door)
Payment will be required for cancellations or no-show after this deadline.
Announcement on the website of the French Chamber of Commerce
read a report on the talk here in the monthly newsletter of the French Chamber of Commerce in Japan (in French)

Background reading: our J-ELECTRIC report about Japan’s electric companies
and our Eurotechnology Japan Blog

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
electronics component makers Japan's electronics industry Japan's electronics multinationals media Mobile TV

Wild differences in operating margins for mobile, TV media groups and electricals

We analyze the effect of the crisis on operating margins in three different sectors in Japan:

(1) electronics,
(2) mobile communications
(3) TV media groups.

In sector (1), Nintendo‘s margins are above 30% and increasing despite the crisis, while traditional electronics companies’ margins are evaporating.

(2) for mobile operators DoCoMo, KDDI and SoftBank margins are 10%-20% and increasing despite the crisis! Could mobile phone usage be crisis resistant?

(3) TV media groups had healthy margins in the 10%-20% range back around 2001- however these margins have been slowly melting away, and TV group margins are heading to cross the zero line into the red zone by 2010-2011. Watch out for a TV media crisis. Read more below.

Consumer electronics sector operating margins:

Nintendo bucks the trend: while Japan’s electronics firms’ margins are dropping into the red, and have never been much higher than 5% during the last 10 years, Nintendo‘s operating margins are above 30% and rising despite the crisis.

Margins of top Japan's electronics multinationals and Nintendo
Margins of top Japan’s electronics multinationals and Nintendo

(Find full data, fully labeled graphics and analysis in our report on Japan’s electrical companies)

Mobile phone sector margins are 10% – 20% and rising despite the crisis.

Mobile phones seem to be resistant to the current crisis. DoCoMo‘s, KDDI‘s and Softbank‘s margins are healthy and improving despite the crisis.

Operating margins of Japan's top 3 mobile operators
Operating margins of Japan’s top 3 mobile operators

(Find full data, fully labeled graphics and analysis in our JCOMM Report)

Margins of TV media groups have been melting away since their peak in 2001.

Back in 2001 Japan’s TV media groups used to enjoy healthy margins of up to 20%. Over the last 8 years these healthy margins have molten away, and Japan’s large TV media groups are likely to all simultaneously go into the red from 2010 onwards, unless dramatic action is taken. Media groups will need to grow profitable new business, e.g. mobile-TV, and other cross-media growth areas.

Could it be that recent anti-takeover measures have made the large TV media groups complacent?

Operating margins of Japan's TV media groups
Operating margins of Japan’s TV media groups

(Find full data, fully labeled graphics and analysis in our J-MEDIA Report)

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Urban

Speech by Japan’s Chief-Cabinet Secretary Takeo Kawamura (河村建夫)

Japan’s Chief Cabinet Secretary Takeo Kawamura (河村建夫) gave a speech at the Foreign Correspondents Club on December 17th, 2008. Kawamura is born in Hagi (Kawaguchi-ken – a beautiful Castle Town in the west of Japan’s main island, which is also host to many famous potters). Kawaguchi was Education Minister in Prime Minister Aso’s cabinet.

In his speech Kawamura of course mainly talked about the current global financial crisis and stimulation programs to support the economic recovery, to support new industries and new technologies. Another emphasis is consumer protection support of the consumer agency in view of recent food scandals, and other consumer good problems.

Points which I found interesting in Kawamura’s presentation where:

– A comprehensive law for decentralization is on the way for next year

– The basic law on space development

There was quite a long Q&A with discussion. What I found interesting was Kawamura’s answer to the question about the disputed Takeshima islands, that a solution in an international arbitration court is desirable.- This is the first time I heard about this possibility from Japanese leaders.

Asked also about the disputed Sentaku Islands, Kawamura mentioned the possibility of joint ownership areas for maritime resources, and the development of gas resources beyond the 200 mile territorial limits.

Takeo Kawamura (LDP)
Takeo Kawamura (LDP)

Copyright·©2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
ecommerce Galapagos effect Mobile mobile payment QR codes Software

Amazon.co.jp captures mobile purchases directly inside competing brick-and-mortar stores with barcode i-appli

Amazon.co.jp introduced a barcode reader i-Appli (JAVA application for DoCoMo’s i-Mode phones), with which shoppers in brick-and-mortar stores can directly compare the prices with Amazon.co.jp’s mobile webstore prices. If the shopper prefers, he/she can order directly by i-Mode mobile phone from Amazon.co.jp online while still standing in front of the shelves of the brick-and-mortar store.

With this barcode reading mobile phone application (i-Appli), Amazon.co.jp is directly taking the competition into brick-and-mortar stores, battling on the same ground.

User interface of Amazon.co.jp’s barcode reading i-Appli – click to scan:

With Amazon.co.jp's barcode scan application customers shopping in a store can compare prices with Amazon.co.jp's ecommerce prices, and if cheaper, can order from Amazon.co.jp directly
With Amazon.co.jp’s barcode scan application customers shopping in a store can compare prices with Amazon.co.jp’s ecommerce prices, and if cheaper, can order from Amazon.co.jp directly from the mobile phone

The customer can directly scan the barcode with his/her Docomo i-Mode phone, and the Amazon.co.jp barcode i-Appli:

Customer scans the barcode in a store using the Amazon.co.jp bar code application on a DoCoMo i-mode phone
Customer scans the barcode in a store using the Amazon.co.jp bar code application on a DoCoMo i-mode phone

On the next screen Amazon.co.jp’s i-Appli shows the same product’s page in the Amazon.co.jp mobile store. The customer can directly order with one click if he/she prefers Amazon.co.jp’s offer instead of the brick-and-mortar store, where he/she is currently shopping. This i-Appli allows Amazon.co.jp to catch customers from within traditional stores.

After scanning the barcode, the Amazon.co.jp i-appli directly shows the price and order page of the same product on the Amazon.co.jp mobile site
After scanning the barcode, the Amazon.co.jp i-appli directly shows the price and order page of the same product on the Amazon.co.jp mobile site

Read our QR-code report for in-depth analysis and lots of applications of QR-codes and bar codes in Japan.

Categories
telecommunications

Japan’s Mobile Communications Industry

Presentation at the German Embassy, Tokyo

(12 June 2003, 18:30, Residence of HE The Ambassador of Germany, Tokyo)

Copyright·©1997-2013 ·Eurotechnology Japan KK·All Rights Reserved·

Categories
Economics electronics component makers Japan's electronics industry Japan's electronics multinationals

Briefing about Japan’s high-technology business world for Mme Nicole Fontaine

Briefing about Japan’s high-technology business sector for Mme Nicole Fontaine, Vice-Minister for Industry of France

Tokyo, Friday, September 20, 2002, at the French Chamber of Commerce and Industry in Japan.

Copyright·©1997-2013 ·Eurotechnology Japan KK·All Rights Reserved·