TT-632 -- BPO in Dalian, e-biz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, October 02, 2011, Issue No. 632

+++ INDEX

- What's New -- BPO in Dalian
- News -- Karoshi case ruling sustained by Supreme Court
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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+++ WHAT'S NEW

If there's one thing we can predict about Japanese
companies, it's that once a trend gains momentum, everyone
wants to jump on the bandwagon and thus the trend becomes
a rush. High domestic costs and a dwindling market are the
drivers for Japanese companies to move abroad, and right
now there is no bigger rush than the one into China. Some
are going for outsourced price cutting, thanks to factory
wages of JPY10,000/month or less, and others are going
because they see China as an undemanding first overseas
market where they can make mistakes and morph their
business as opportunities come and go.

Either way, China is becoming a beachhead for newbies, who
want to take a stab at the world at large but who need to
get their feet wet first. This isn't to say that the China
market is an easy one. On the contrary, the lack of law and
the willingness of local partners to take advantage of
their naive new Japanese partners, means that there is
plenty of scope to lose your shirt. And certainly we are
hearing many stories of Japanese firms getting robbed blind
as they learn the ropes.

But they are learning, and so far there have been two major
lessons. Firstly, if you want to operate in an emerging
market, China just being one of the largest and closest,
you need to own end-to-end control of your business -- or
be using someone who does. That means your own
infrastructure, raw materials, trusted management,
warehousing, and shipping. Thus everything that happens is
supervised and quality can be reasonably assured. Luckily
this is exactly the way Japanese major firms have
developed back home, so layering in lots of vertical
capability comes as second nature.

[Continued below...]

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[...Article continues]

Secondly, you need to be big. Big enough that you can take
the initial hits of learning who to trust and how the
political system works. For those companies which are not
big enough, there is outsourcing, a business that is
expanding by leaps and bounds.

The Nikkei had a good article last week about Japanese
outsourcing firms in the Northern Chinese city of Dalian, a
location they originally picked because of the relatively
high concentration of Japanese speakers there. When one
thinks of outsourcing the most logical activity to try
first in a place with Japanese speakers is call centers,
and sure enough, many major western and Japanese firms set
up in Dalian in the early 2000's. But what they found is
that there is a dire shortage of Japanese speakers willing
to work at rates much below those available in Japan, and
thus the call center efforts floundered.

While spoken Japanese language outsourcing has been
a bust, written language such as processing business
documentation has been a huge success. Sure, the Chinese
and Japanese character sets have some differences, but
at most an educated Chinese white collar worker needs just
6 months to master those differences and become proficient
within a given vocabulary set. Thus the Business Process
Outsourcing (BPO) sector has become a leading source of
employment growth for Dalian and for the Japanese firms
operating there.

The growth numbers are pretty impressive. Including some
US and European firms, but most of which are servicing the
Japan market, over 900 foreign companies have set up
operations in Dalian, employing 100,000+ people. About half
of these appear to be in the BPO sector. The City of Dalian
knows a good thing when it sees it, and is planning to
expand not just BPO but also software outsourcing in
general, and has set a target of 200,000 employees.

There are two types of foreign BPO companies operating in
Dalian: divisions of large multinationals who started off
doing company-internal processing and some of which are
now offering the same services to customers, and
third-party services firms who are doing outsourcing for
smaller companies back home.

IBM would qualify as one of the first type and the company
has about 2,000 BPO employees in Dalian. Now that it has
figured out the systems and processes, IBM has just opened
a new office that can house up to 10,000 employees. We
don't know how many of these employees are doing Japanese
BPO, but given that India and the Philippines can handle
English more competitively, our guess is that the
proportion is quite large.

Also in the first category would be Nomura Securities,
which is having to compete with the likes of Citigroup -- a
company already highly committed to off-shoring its BPO to
China. Nomura opened a data entry BPO office in Dalian in
April, employing just 40 people initially to key in
customer accounts and cost-tracking data. However, plans
are to grow this number to around 250 people by the end of
this fiscal year (2011) and 500 people in 2012.
Interestingly, Nomura is publicizing the BPO center as a
back-up center in case the firm's main operations in Japan
are crippled by a natural disaster. The reality is that it
is so much cheaper to get keyboarding done in China, but
if operational safety can be sold as an added advantage
even as people are losing jobs in its two Kanagawa centers,
then we guess that's the name of the PR game.

In the second category, as we reported in TT-580 last year,
are third-party BPO firms such as InfoDeliver, Transcosmos,
and PasonaTech. These companies are between them employing
more than 2,500 people in and around Dalian, and have plans
for significant growth. Now that China-based BPO for data
entry and accounting is mainstream, SMEs back here in Japan
are realizing that they can cut manpower costs and still
get a reasonable job done using such off-shoring vendors.
This point is really driven home when you can travel on the
Tokyo subway system and see ads for off-shoring accounting
services and business books about outsourcing to China.

Actually, Gartner said last year that the Japanese BPO
market in 2009 was worth around JPY1.28trn, and they were
predicting a rise to around JPY1.45trn by 2014. Our guess
is that with the herd mentality that comes with a
realization of huge cost savings, especially now that
income tax and social insurance premiums for employees
here in Japan are going to jump more than 10% in the next
two years, the real number for BPO will be more like
JPY2trn or more. This of course doesn't bode well for
Japanese white collar workers, who will correspondingly be
losing their jobs, but it is inevitable when the Japanese
government makes it so unattractive to hire staff and China
is so much cheaper.

****************

Special technology course.

If you a Unix or web engineer interested in search, you
won't want to miss a special one-off training opportunity
being conducted by Basis Technology about Apache Solr.
Basis Technology is a software and linguistics specialty
firm based in Boston, USA and are trying out this course
as a supplement to their mainstream Japanese-language
courses. You can find more about the course in the
Events/Announcements section below. As we mentioned,
this is only being run once in English, and probably won't
be repeated again for some time.

...The information janitors/

***------------------------****-------------------------***

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Data Center staff and managed services, Help Desk, desktop,
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hosting and solutions, general software development.

For more information on these and other SI and IT services,
in English or Japanese:

Phone: (03) 4588-2220, Email: solutions@biosjp.com
Web: www.biosjp.com
-----------------------------------------------------------

+++ NEWS

- Karoshi case ruling sustained by Supreme Court
- There's money in shoes
- Foreign tourists into Japan still well down
- Pregnancy simulation device for men
- Mrs Watanabes dump Brazilian Real

-> Karoshi case ruling sustained by Supreme Court

Camera-maker Nikon must have been plenty worried about
other employee law suits to have fought the case of Yuji
Uendan, who committed suicide due to overwork, for over
11 long years. Well, Nikon got the answer it obviously was
hoping to avoid when the Supreme Court upheld a 2009 Tokyo
High Court finding that Uendan killed himself due to
overwork. Nikon has been ordered, along with a haken
company based in Nagoya, to pay Uendan's mom JPY70m in
compensation. (Source: TT commentary from japantimes.co.jp,
Oct 2, 2011)

http://search.japantimes.co.jp/mail/nn20111002a5.html

-> There's money in shoes

We suppose it's logical. In times of hardship, people walk
more and so they use a lot more shoes. Certainly that
would be one explanation for the 13% sales jump enjoyed by
ABC-Mart, which is blowing past competitors in terms of
growth. The company says that its operating profit for the
first half (Mar-Aug) will increase 8% to JPY14bn. ABC-Mart
is also doing well abroad and has seen sales leap 40% from
overseas stores. Apparently most of the growth is coming
from high-end brand name sneakers and ABC-Mart's very
compelling product displays. (Source: TT commentary from
e.nikkei.com, Sep 30, 2011)

http://e.nikkei.com/e/ac/TNKS/Nni20110929D2909A24.htm?NS-query=accounting

-> Foreign tourists into Japan still well down

The high yen and the nuclear power problems at Fukushima
continue to dog the inbound tourism industry, with JNTO
figures showing tourism numbers down 31.9% over last year,
and tourists from South Korea and China down a massive 40%.
It seems that Taiwanese are a bit braver and their numbers
are down just 12%. Overall, the sector most fully recovered
is business travelers, who are almost back to normal
numbers. In terms of spending during the April-June period,
Chinese tourists spent around JPY29.9bn, South Koreans
JPY16.8bn, and Taiwanese JPY16.7bn. (Source: TT commentary
from e.nikkei.com, Sep 26, 2011)

http://e.nikkei.com/e/ac/20110926/TNW/Nni20110926FE9TOP01.htm

-> Pregnancy simulation device for for men

Well, we can't see them selling many of these, however,
researchers at the Kanagawa of Institute of Technology have
their hearts... err stomachs, in the right place. They have
invented a pregnancy simulator device that consists of a
diaphragm, water pumps, vibrator, and a bunch of valves and
tubes feeding into 48 balloons. The idea is that a male
subject -- supposedly the partner of an expectant women,
wears the device and feels over a period of hours the
weight, baby movements, and heartbeat of a growing fetus.
According to the lead scientist he made the device so that
men could experience what their partners might, especially
when traveling in the train... ***Ed: Make of this what you
will. We suppose it's a better use of state funding than
weapons research.** (Source: TT commentary from
abcnews.go.com, Sep 30, 2011)

http://abcn.ws/nDS9u6

-> Mrs Watanabes dump Brazilian Real

Just how big the Japanese FX market has grown becomes
obvious when one considers the Brazilian Real. Apparently
Japanese retail foreign exchange investors have fled the
Real since it took a big drop at the end of August after
the Brazilian Central Bank lowered interest rates to try to
fight inflation in that country. Retail investors have
pulled out about JPY52.7bn of currency from Real holdings
in just the last month, equivalent to about 20% of all the
nation's foreign reserves. On top of that, professional
investors from Japan pulled out about another JPY50bn.
(Source: TT commentary from businessweek.com, Sep
30, 2011)

http://buswk.co/rlJ7xp

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

***------------------------****-------------------------***

+++ CANDIDATE ROUND UP/VACANCIES

=> BiOS, a Division of the LINC Media group, is actively
marketing the following positions for customers setting up
or expanding in Japan, as well as other employers of
bilinguals.

** HIGHLIGHTED POSITION

BiOS is urgently looking for a Service Delivery Manager
with experience managing a company’s network and unified
communications system services to meet client expectations,
at our client’s office in the Minato-ku area. The candidate
will be responsible for acting as the single point of
contact for the client regarding services the company
provides to their multiple international clients in Japan,
as well as creating, proposing, and managing budget plans
to clients by working closely with internal staff from
sales and engineer teams.

You will also be responsible for analyzing business
requirements and inquiries regarding incidents received
from the clients, to improve quality of the services..

Due to the technical nature and demanding work environment,
this position is suitable for someone with solid experience
of more than five years as a project leader, team leader,
or supervisor of a network or unified communications
services team. In addition, since this role requires
frequent coordination with internal staff and clients,
business-level communication skills in English and
fluent-level communication skills in Japanese will be
required.

Remuneration is JPY8.5m – JPY10m depending on your
experience and skill level.

** POSITIONS VACANT

- Tech Support Engr, global medical equip, JPY4M – JPY5.5M
- MS Dynamics Specialist, BiOS, JPY6M – JPY8M
- Sales Staff, global IT co, JPY 8M – JPY10M
- Field Engineer, BiOS, JPY4M – JPY4.5M
- Data Center Engineer, global It co, JPY3M – JPY4M

Interested individuals may e-mail resumes to:
tomohiro.kimura@biosjp.com

** BiOS Job Mail

Every 2 weeks BiOS sends out a regular communication to its
job seeking candidates, called BiOS Job Mail. Every edition
carries a list of BiOS's current and most up-to-date
vacancies, with each entry featuring a short job
description and a direct link to the main entry on the BiOS
home page. Regardless of whether you are unemployed and
searching, thinking about a career change, or just curious
to know if there is something out there that might suit you
better, the BiOS Job Mail newsletter is an easy and
convenient way for you to stay informed. If you would like
to register for the BiOS Job Mail, or to find out more,
please email kenji.sakota@biosjp.com.

Interested individuals may e-mail resumes to:
tomohiro.kimura@biosjp.com

-----------------------------------------------------------

***------------------------****-------------------------***

+++ UPCOMING EVENTS/ANNOUNCEMENTS

--------- Official Apache Solr training in English --------

For engineers in Japan! (October 25-27, 2011)

Train in Tokyo to become an expert Apache Solr engineer
with a course developed by the engineers who helped write
the Apache Lucene/Solr code. This intensive, three-day,
hands-on, classroom course will be delivered in English by
certified instructors on Oct. 25-27, 2011 in Tokyo.

"Developing Search Applications With Solr" covers designing
Solr applications, indexing, findability, Japanese search
support, faceted navigation, admin configurations, etc.

Training Information:
http://www.lucidimagination.jp/training-en/
Registration:
http://fs11.formsite.com/basistech/solr-training-app-form/index.html?
-----------------------------------------------------------

--------- Japan's Most Popular Leadership Training --------

Japan's most popular leadership training is called Action
Learning, and was pioneered by Professor Reginald Revans
of the UK in the 1940's.

A published expert in the field of Action Learning is Dr.
Michael Marquardt, Prof at George Washington University,
DC. Dr. Marquardt will personally be in Japan, conducting a
series of seminars for major Japanese corporations, and has
agreed to do a single presentation for foreign managers as
well. Hear how Action Learning can transform your work
force.

Title: "Impact of Action Learning: What difference are we
making in the world?
Speaker: Dr. Marquardt, President of World Institute for
Action Learning

Date: October 27, 2011, 10:00-13:00(13:30)
Venue : Tokyo American Club (Tokyo, Japan)
Fee : JPY 15,000 @(including lunch)
Contact : info@ldcjp.com
03-6809-1144(English-Gledis Action Learning)
03-6680-2698(Japanese)

http://www.ldcjp.com/
http://www.ldcjp.com/seminar/20111027M.html
-----------------------------------------------------------

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to editors@terrie.com.

*** No comments this week.

***********************************************************
END

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+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

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