Japan

Assessment for IT Capability

Japan’s Political Makeup – Unitary Constitutional Monarchy

Legislature - Parliament House of Representatives

(480) House of Councillors (242)

Executive Prime Minister – elected by

Legislature Cabinet – appointed by Prime

Minister – usually members of Parliament

Judiciary – 5 Levels of Courts Appointed by the Cabinet

Political Parties

Political Parties present in Parliament Liberal Democratic Party Democratic Party of Japan New Clean Government Party Japan Communist Party Socialist Democratic Party Conservative New Party

Government Promotion of IT

METI – Ministry of Economy, Trade, and Industry Creates policies related to:

Electronic Commerce Promotion Personal Information Protection Electronic Government R&D Human Resource Development Information Security

Incentives offered for companies investing in IT research

Low Interest Rates Tax breaks Expert advice

Barriers to IT Diffusion

Low Foreign Investment State Owned Services

Delivery Insurance Financial

Barrier to IT Diffusion – Foreign Investment

Lowest foreign direct investment out of G8 members

Low investment amount attributed to Japan’s historical view that foreign investment is a threat

Government is looking for ways to actively promote investment, realizing its importance

Foreign investment has risen sharply recently, although still low comparatively

Barrier to IT Diffusion – State Owned Services

Privatization is relatively extensive, except for the Japan Post which is state owned Postal Delivery Insurance Services Banking (Savings)

Privatization of Japan Post to begin in 2007 Heavily debated

Restriction of IT Ownership

Restrictions are minimal NTT – National Telephone Company

33% foreign ownership cap Largest Cable TV Company (Juniper) is

majority-owned by a US Firm

Japan’s Copyright Laws

Robust and strict, similar to the U.S. Exceptions:

Teachers can reproduce copyrighted works in the interest of teaching (TV and Audio only)

Free reproduction of news is permitted S/W can be reproduced for personal use

Copy protected CD’s and Digital Private Recording fees (DVD-RW recorders, etc) exist

Educational System

99% of population is literate IT literacy is also widespread

2002 – 57.2 million Internet Users 12 million Internet Hosts

Language

Knowledge of English 30% of elementary students All Junior and High school students 20% of population read English newspapers,

magazines, or watch English TV Written symbols

More than 256 Made up of characters and Syllabaries

Japanese Culture

Hofstede MAS – 91 High degree of gender differentiation

Hofstede UAI – 89 Low tolerance for uncertainty and ambiguity

Hofstede PDI – 50 Doesn’t stress extreme equality or inequality

Hofstede IND – 42 Mid to low individualism – group still more

important than the individual

IT Diffusion Phones

71.15 million land lines (2002) 86.6 million cell phones (2003) 119 per 100 people (2002) 29th in the world

Computers 38.2 per 100 people (2005) 21st in the world

TV 10.5 million cable subscribers Growing 20% a year 3 million satellite subscribers

Internet 57.2 million subscribers 12 million hosts (2002) 44.9 per 100 people 17th in the world (2002)

Electronic Commerce / EDI

Considered an important and relevant topic Issued joint statements on EC with:

United States United Kingdom Australia

METI considers EC a critical initiative

Digital / Fiber Network Infrastructure

High speed networks are readily and cheaply available

IT Strategy Council formed in 2000 by PM Goal was to make Japan the “World’s Leading IT

Nation by 2005” Cornerstone of plan was broadband connections

Today fiber (ultra-broadband) is available to most (16 times faster than connections in US)

Broadband (DSL / Cable) is available to all May 2003 the percentage of Japan households

containing broadband surpassed the U.S.

Native Software Industry

Second largest market in the world for IT products and services

Still imports 40% of all software Lack of industry standard and great number

of characters cause software problems – multi-bits needed for one character

Factory assembly methods have been successfully implemented in software development

Multilingual programmers in great demand

Native Hardware Industry

Robust with mature hardware firms including: Sony Fuji Electronics NEC Fujitsu

Joint Ventures

Keiretsu System – close and stable partnering relationship designed to benefit both companies involved, but considered temporary

Prefer joint ventures as opposed to wholly owned subsidiaries, particularly when barriers to entry are high.

Economy

Third largest economy in purchasing power parity, second on a nominal basis

Stock Market Tokyo Stock Exchange Second largest exchange in monetary value to

the NYSE Currently lists 2,383 companies

GNP Per Capita $42,000 USD

Future Outlook

18th in Information Society Index (2005) 16th in Global Information Technology Report

ranking IT readiness (2005) Currently in a position to leverage IT with

ubiquitous broadband access and a technology-savvy population

Can benefit from a greater amount of foreign investment and privatization of remaining state sponsored industries