Japan's B2B Universe

For now, it's anyone's guess which of these companies will emerge triumphant. Will Tokushu Kou Cyber Market become the dominant exchange for Japanese companies looking for customized steel products? Maybe. Parent company Mitsubishi Shouji sure hopes so, but there's already competition in the space, and more is on the way.

One thing is certain: the stakes are huge. eMarketer values Japan's B2B ecommerce market at $45 billion by 2003, so chances are some of the companies listed here will be rolling in money five years from now. It's equally certain, however, that many will be out of business. So how do you choose?

One US firm that's done pretty well making these choices Stateside is B2B investor Internet Capital Group, and recently it stepped up its efforts in Japan. "Japan is one of the great industrial economies of the world, and in certain industries it's a clear leader," says managing director Ken Fox. "We want to invest in Japan-based companies that we think will become global leaders."

Internet Capital Group is hardly alone, of course, in its enthusiasm for B2B investments in Japan. One venture capitalist we talked to admitted that every single company his firm had invested in was a B2B play.

Of course, this is Japan, so differences in business culture need to be considered. Take wireless, for instance. Many businessmen here are starting to adopt cellphones as their primary means of communicating, organizing, and Net surfing. Sound far-fetched for using online exchanges? Don't be so sure: technology integrator Gluegent is already creating a package whereby cellphones will be the single system a company needs. No PCs, no laptops.

There's also the conservative business culture to take into account. Not everyone in the Japanese business world -- especially industries slow to modernize -- is like the risk-friendly entrepreneurs that this magazine covers. "Japan has a very structured business culture," says Patrick Toolis, a young CEO hoping for success with his new J-Surplus.com exchange. He complains that the "hanko stampers" -- the senior managers who must approve any new B2B initiative -- are for the most part older and not tech savvy.

No matter. These are just hurdles that will be cleared by the ultimate winners. Who will they be? Stay tuned.

Note: listings show company name/URL/parent company.