J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the week's business and technology news
Issue No. 161
Wednesday, December 12, 2001
++ Viewpoint: Plenty of Room to Bargain in High-Priced Japan
++ Noteworthy News
- C&W to Buy PSINET's Japan Unit
- Dentsu Wins World Cup 2006 Rights
- ADSL Subscribers Top 1 Million; Wireless Users Hit 50 Million
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++ VIEWPOINT: Plenty of Room to Bargain in High-Priced Japan
The Economist Intelligence Unit, the research arm of the
organization that publishes the Economist magazine, recently dubbed
Japan the most expensive country to do business in, well ahead of the
US, which came in second. Of course, the researchers are right if the
companies doing business here are completely inflexible and clueless.
But for those who are both flexible and good negotiators, there's
more room for bargaining these days thanks to a decade of dropping
land prices and a serious bout of deflation that is cutting prices on
everything from soap to shochu.
Consider office space: Since the 1997 financial crisis triggered in
Thailand, many companies renting office space turned to foreign
financial institutions and dot-coms to fill their offices. The
brokerages are now cutting back their retail operations here with a
vengeance, and we all know what happened to most of those dot-coms.
At the same time, office space is set to expand in Tokyo. Walk
through Roppongi and you'll see the 54-story Roppongi Hills office
and residential tower being built by Mori Building. It's set to open
in 2003. Around the corner, where the Defense Agency used to stand, a
consortium led by Mitsui Fudosan is planning another giant structure.
The Mitsubishi group is working on a giant office project in Otemachi,
and new top-class office buildings near Kamiyacho remain sparsely
An August issue of Asiaweek shows that the average net rent per
square meter in Tokyo for the quarter ending June 2001 was $96.29.
This pre-September 11 rate is already lower than the average
rate in 1997.
This week in Omote Sando at the end of Koto Avenue, a sign offering
apartments in trendy Azabu announced boldly and in English: "No Key
Money." Apartments with no key money have been around for awhile, but
Azabu is one of Tokyo's most sought-after addresses and is hardly
associated with bargains. Perhaps the extortionist practice of
demanding thank you payments, or key money, will be a welcomed
casualty of this recession.
Nowadays, McDonald's hamburgers are cheaper in Tokyo than in New York
(at least during the fast food chain's special offers), ADSL
subscription rates are among the lowest in the world, and some
prefectures (Tokyo included) will actually pay you when you have a
baby. That's not to say that Tokyo is cheap. It isn't -- not by a
long shot. But neither is San Francisco.
If you're a bargain hunter looking for office space or holiday
presents, now is the time to shop in Japan.
-- Bruce Rutledge
Economist Intelligence Unit Web site:
The KWR International Advisor highlights the real implications of
important economic, political and financial trends as they appear
on the global horizon. To access your copy and obtain a free
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++ NOTEWORTHY NEWS
(Long URLs may break across two lines.)
** C&W to Buy PSINET's Japan Unit
Extract: Cable & Wireless announced on Monday that it will buy
PSINet Japan for $10.2 million in cash to boost its presence in
Japan's Internet market. PSINet's Japan operations include 180
employees, a 4,000-sq-meter data center in Tokyo and 9,000
The deal will more than double C&W's sales in Japan from Internet
services, Bloomberg reported. PSINet Japan generated GBP28 million
in the first half of 2001, C&W said in a statement.
Commentary: C&W is quickly gaining a presence in Japan's Internet
market with this purchase and the purchase of most of Exodus
Communication's assets in November (Exodus owns Global
Online in Japan). Both Exodus and PSINet of Virginia have run into
trouble; PSINet filed for Chapter 11 protection from creditors in
June with debts of $4.3 billion.
But C&W is not without its own problems. Its holdings of shares in
cable company NTL and Hong Kong-based Pacific Century Cyberworks
have lost it billions of dollars in assets as the two stocks have
Two related articles from Financial Times:
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++ Wireless Watch (WW): Mondays -- A weekly digest of news
and commentary focusing on Japan's wireless industry. Stay up to date
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++ Gadget Watch (GW): Thursdays -- Looks at the latest gadgets
being rolled out in Japan and is the perfect newsletter for gadget
freaks. Note, however, that we're not responsible for any cases of
"Japan gadget envy" that develop -- in many cases the products you'll
read about are available only on these shores.
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** Dentsu Wins World Cup 2006 Rights
Extract: Just 10 days after its IPO, Japanese advertising giant
Dentsu won the exclusive rights to sell sponsorship contracts in Asia
for the 2006 soccer World Cup in Germany. FIFA announced on Monday
that the ad agency would sell sponsorships and partnerships for the
Cup in an area that includes Japan, East and Southeast Asia and
Oceania, according Reuters.
Commentary: Dentsu also has exclusive rights to the Japan half of the
2002 World Cup co-hosted by South Korea. But this latest deal at
least shows that Dentsu -- a domestic giant but globally not much of
a player -- can flex its muscles in overseas markets as well.
From Sporting News:
Related story from International Herald Tribune:
** ADSL Subscribers Top 1 Million; Wireless Users Near 50 Million
Extract: There were 1.2 million subscribers to ADSL services in Japan
at the end of November, according to the Nihon Keizai Shimbun,
Japan's leading business daily. The Nikkei, as the paper is called,
says ADSL subscribers will outnumber subscribers to cable TV services
by the end of this month. Nomura Research Institute expects Japan to
have 5.4 million ADSL subscribers by 2004, putting it on a par with
the US, which has 3 million subscribers, and South Korea, with 5
At the same time, wireless Internet users have almost hit the 50
million figure in Japan, according to numbers posted on the Wireless
World Forum Web site. As of the end of November, Japan had 49,589,000
wireless Internet users, and NTT DoCoMo's i-mode service was
leading the pack with more than 29 million subscribers.
Commentary: It's just getting interesting. Can Yahoo Japan hang on
and build Japan's ADSL market into something comparable to
world-leader Korea? Or will it collapse in a heap, as many analysts
have suggested? Internet access in Japan will be fun to watch in
2002 as wireless inevitably slows and ADSL picks up.
From Nikkei (ADSL figures):
From the Wireless World Forum:
3G Mobile World Summit / 15th-18th January 2002 / Makuhari Messe
Marcus Evans, the world's leading provider of business events, is
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Makuhari Messe in January 2002. Join us at the summit and benefit
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Or contact directly: Kyomi Azuma - Marketing Manager - at:
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