CONFIDENTIAL

FOR INTERNAL USE WITHIN CLIENT COMPANY ONLY

OPPORTUNITIES IN THE

JAPANESE ICT SECTOR

BUSINESS SWEDEN

Tokyo

January, 2016

ENORMOUS AND CRUCIAL NATIONAL INDUSTRY

MARKET OVERVIEW

ICT is Japan’s largest industry by contribution to GDP

(JETRO) and accounted for approximately 10.7 percent

of GDP in 2010. The ICT industry sector is growing

faster than the economy on average.

The Ministry for Internal Affairs and Communications is

seeking unconventional, innovative ideas that could

impact the global information and communications

industry.

Japanese companies’ competitive edges have been

eroded by low-cost competitors in other countries.

The Japanese government and Japanese companies

realize the importance of developing new innovative ICT

solutions.

CONTRIBUTION TO GDP BY INDUSTRY (IN 2010)

ICT industry 11%

Wholsesale 6%

Transport machinery

6%

Construction 5%

Transport 4%

Retail 4%

Electrical machinery

4% Steel 3%

Other industries

57%

26 JANUARY, 2016 BUSINESS SWEDEN 2

ICT IS JAPAN’S LARGEST INDUSTRY AS SHARE OF GDP

SOURCE: JETRO, METI, IDC, BMI RESEARCH

JAPAN IS AN IMPORTANT ICT MARKET FOR INTERNATIONAL SWEDISH COMPANIES WITHIN THE INDUSTRY

Source: JETRO White Paper on ICT – November 2013

BUT MANY COMPANIES ARE STRUGGLING IN THE INTERNATIONAL COMPETITION

COMPANY SIZE BY TURNOVER 2014-2015

020

4060

80100

120140160180200

Sam

su

ng

NT

T

Hitachi

Son

y

Pan

asonic

Soft

ba

nk

Toshib

a

KD

DI

Fujit

su

Docom

o

Cano

n

Ericsson

NE

C

Bil

lio

n U

SD

NET INCOME OF SELECTED COMPANIES

26 JANUARY, 2016 BUSINESS SWEDEN 3

JAPAN IS HOME TO LARGE MULTINATIONAL COMPANIES

SOURCE: ANNUAL REPORT OF EACH COMPANY

MANY LARGE JAPANESE COMPANIES STRUGGLE WITH PROFITABILITY AND ARE SEARCHING FOR OVERSEAS SOLUTIONS

-800

-600

-400

-200

0

200

4002011 2012 2013 2014 2015

Billi

on

JP

Y Sony

Panasonic

Fujitsu

NEC

Toshiba

JAPAN HAS LARGE MARKET WITH INCREASING NUMBER OF SUBSCRIBERS

FORECAST OF NO. OF SUBSCRIBERS [MILLION]

0

20

40

60

80

100

120

140

160

180

Mobile Phone

Broadbandinternet

Main telephonelines in service

AVERAGE REVENUE PER USER (ARPU) IN USD (2013)

26 JANUARY, 2016 BUSINESS SWEDEN 4

3RD

LARGEST MARKET WITH THE HIGHEST ARPU IN ASIA

SOURCE: BMI RESEARCH, BANK OF AMERICA MERRILL LYNCH GLOBAL WIRELESS MATRIX 1Q2014, DATED

21 APRIL 2014

JAPAN HAS HIGH ARPU OF WHICH A MAJORITY IS MADE UP FROM DATA SERVICES

0

10

20

30

40

50

60

ARPU

Data share ofARPU

CONSUMER PREFERENCES DIFFER IN ASIA COMPARED TO EUROPE

MOBILE PHONE SHIPMENTS [% OF WORLD TOTAL]

Region 2015e 2018e

Asia Pacific 51.7 52.2

Middle East &

Africa

15.2 16.0

North America 9.8 9.1

Latin America 9.1 9.3

Western Europe 8.8 8.1

Eastern Europe 4.4 4.4

Australasia 1.0 1.0

DIFFERENCES IN CONSUMER PREFERENCES FOR

MOBILE PHONES IN 2013

26 JANUARY, 2016 BUSINESS SWEDEN 5

ASIA IS THE LARGEST REGIONAL CELL PHONE MARKET

SOURCE: EUROMONITOR 2015

Samsung 26%

Nokia 11%

Lenovo 6%

Apple 5%

Huawei 5%

Micromax

LG

Yulong

ZTE

Others 34%

Apple 34%

Sharp 15% Sony

13%

Fujitsu 10%

Samsung 8%

Panasonic

Kyocera

NEC LG

Others 10%

ASIA PACIFIC

JAPAN*

* 40.3 MILLION MOBILE PHONES IN 2013

JAPANESE (ASIAN) CONSUMERS ARE MORE LIKELY TO BUY JAPANESE (ASIAN) MOBILE PHONES

TOP TELECOM COMPANIES BY TOTAL REVENUE 2013

[BILLION EUR]

OPERATOR MARKET SHARE IN 2015

(NO. OF SUBSCRIBERS)

26 JANUARY, 2016 BUSINESS SWEDEN 6

JAPAN IS HOME TO SOME OF THE LARGEST OPERATORS

THAT ARE DRIVING DEVELOPMENTS IN THE JP MARKET

SOURCE: HTTP://WWW.TOTALTELE.COM/RES/TOTAL%20TELECOM%20PLUS/TT_OCT14_G100.PDF ,

BMI RESEARCH TELECOMMUNICATION REPORT JAPAN DECEMBER 2015

31

35

38

41

44

46

47

57

60

75

77

88

94

KDDI (Japan)

China Unicom (China)

China Telecom (China)

Orange Mobile (France)

America Movil (Mexico)

Vodafone Mobile (UK)

Softbank (Japan)

Telefonica (Spain)

Deutsche Telekom (Germany)

China Mobile (China)

NTT Docomo (Japan)

Verizon Wireless (USA)

AT&T Wireless (USA)

JAPANESE TELECOMMUNICATION OPERATORS ARE AMONG THE WORLD’S LARGEST OPERATORS

NTT Docomo

44%

KDDI 28%

Softbank 28%

The Japanese content market was valued at

approximately 11.3 trillion yen in 2013. About 50 percent

was video content and about 40 percent text-based

content, and less than 10 percent audio-based content

The digital content market has been growing steadily in

recent years. The market grew by 2.3 trillion yen from

2012 to 2013.

Smartphones was the most used/viewed medium in

Japan with an average of 135 minutes of daily ”screen

minutes” compared to 125 minutes for TV, 28 minutes for

Laptop/PC and 15 minutes for tablets.

E-commerce has become increasingly popular and most

Japanese consumers are comfortable shopping online.

Japan is the 4th largest E-commerce market.

Almost half of all online purchases are made on a smart

phone or tablet, which makes Japan leading within

mobile E-commerce.

INCREASINGLY THROUGH MOBILE PHONES AND OTHER HANDHELD DEVICES

HOW MUCH IS DOWNLOADED - FROM WHERE?

Videos 3%

Terrestrial TV programs

26%

Satellite & cable TV broadcast programs

8%

Game software

7%

Original Internet videos

1%

Music 6%

Radio programs

2%

Newspaper articles

16%

Comics 5%

Magazines 11%

Books 7%

Database info 3%

Original Internet text-based

content 5%

BREAKDOWN OF JAPAN’S CONTENT MARKET IN 2012

26 JANUARY, 2016 BUSINESS SWEDEN 7

JAPAN HAS LARGE DOWNLOADABLE CONTENT MARKET

SOURCE: “SURVEY ON THE PRODUCTION AND DISTRIBUTION OF MEDIA CONTENT,” INSTITUTE FOR INFORMATION AND COMMUNICATIONS POLICY, MIC

MILWARD BROWN ADREACTION, 2014, EUROMONITOR INTERNET RETAILING IN JAPAN 2015

Market value

11 trillion JPY

JAPAN IS A SOPHISTICATED MARKET FOR DOWNLOADABLE CONTENT AND E-COMMERCE IN GENERAL

NATURE OF CYBER ATTACKS ON JAPAN (2013)

"Hacktivism" 45%

Cyber crime 44%

Cyber espionage

10%

Cyber warfare

1%

BUSINESS SWEDEN

JAPAN IS A HUGE ICT MARKET WITH VAST POTENTIAL

FOR SWEDISH CYBER SECURITY COMPANIES

SOURCE : YANO RESEARCH INSTITUTE, JAPAN SCIENCE AND TECHNOLOGY AGENCY (JST) / RESEARCH

INSTITUTE OF SCIENCE AND TECHNOLOGY FOR SOCIETY (RISTEX)

BUSINESS OPPORTUNITIES EXIST FOR SWEDISH COMPANIES THAT SPECIALIZES IN CYBER SECURITY

Japan is underdeveloped when it comes to cybersecurity

and recent international security breaches have

underlined the need to bolster cybersecurity defenses.

In 2014, Japan experienced close to 13 billion attempted

cyberattacks, of which 40% originated from China. The

fiscal year 2013, saw roughly 5 million cases of un-

authorized access to Japanese government agencies, an

increase of 400% from the previous year.

Several high profile hacker attacks have been carried out

in the past against Japanese targets.

A "Cyber Security Strategy" was released on June, 2013

by the National Information Security Center (NISC) with

a mid and long-term strategy on information security.

VAST POTENTIAL WITHIN CYBERSECURITY

Business Sweden

1-10-3-200 Roppongi, Minato-ku,

Tokyo, 106-0032, Japan

T +81 3 5562 5000

tokyo@business-sweden.se

http://www.business-sweden.se/japan/

CONTACT US

BUSINESS SWEDEN IN TOKYO

26 JANUARY 2016 9