Winning the Japanese Domain Name Game

Back to Contents of Issue: August 2000

by Daniel Scuka

For US portal Altavista and PDA manufacturer Palm Computing, it's already too late. Too late, that is, to register the .co.jp versions of their .com domain names. A quick WHOIS lookup reveals www.altavista .co.jp is owned by Hyper Internet Planning Corp., headquartered somewhere in Saitama prefecture, and that www.palm .co.jp has been registered by one Koji Kondo, president of a locally named Palm Inc., based in Nagoya city. (And it really is too late -- in Japan it's illegal to transfer existing .co.jp domain names. See the Filter item)

But even if the .co.jp version of a company's name hasn't been nabbed yet, more problems await thanks to some cryptic rules set up by JPNIC, the local registration authority in charge of registering country-specific domains in Japan. All firms aspiring to .co.jp status must be legally registered corporate entities in Japan (your super-low-cost Delaware or Washington State incorporation just won't cut it). And registering a company in Japan is a complicated process that involves lawyers or a judicial scrivener and about 11 million.

The main idea behind a startup called Darshaun Inc. is to help companies wanting a .co.jp address get around this mess by acting as their local branch office.

The idea came to founder Darshaun Nadeau after he read the fine print of Japan's commercial code, where he discovered a little-known clause that allows a basic company registration to be done without the participation of a lawyer or scrivener. "You always could do a corporate registration this way," he says, "but even most Japanese shihoshoshi (scriveners) don't know how to do it."

According to Nadeau, his company's JapanRegistry.com service can handle all aspects of company and .co.jp registration for a foreign client for about one-tenth the cost of doing a traditional Japanese incorporation. The paperwork/bureaucracy aspect makes the idea sound prosaic, but there are yen symbols swimming in Nadeau's eyes: "The number of foreign companies coming to Japan is way up," he says. "Between 1992 and October 1999, total Japan domain registrations rose to 100,000. Since then, they've increased 50 percent, to over 150,000." And JapanRegistry.com is one of the few JPNIC-licensed companies offering .co.jp registration services in English, says Nadeau.

The biggest challenge the startup has to face is gaining customer trust: once the corporate and domain registrations are complete, JapanRegistry.com acts as the overseas company's resident representative and Darshaun Inc.'s offices serve as the local branch office -- with legally binding authority. "The Ministry of Justice's Legal Affairs Bureau requires that the foreign corporation appoint a representative in Japan who is a resident here and who has the authority to bind the company," says Robert F. Grondine, a registered foreign attorney at the Tokyo office of White & Case. Obviously, granting legally binding authority to a Net startup will be an issue for some clients. But Nadeau says once the client is registered, it can move to Japan anytime. And the president of the company has the ability and authority to change representatives at any time, he adds.

One critique of the service is that it's an overly simplistic approach to a very complicated process that requires mountains of paperwork. Setting up shop in Japan has never been easy, after all. "I am very suspicious of the effectiveness of a service like this," says a Gartner Group Japan analyst. "A company needs experienced accounting or consulting help when getting a business license here.

"In any event," the analyst continues, "companies need to know about the Japanese market when doing business in Japan. A business license and domain name without any practical experience in Japan will not be any help for companies outside Japan."

Nonetheless, Nadeau claims his company is off to a strong start. "Since our mid-March launch, we've been signing up two clients per month, and that's with virtually no marketing budget," says Nadeau. He expects the service to take off when US reseller Internet Domain Registrars (Registrars.com) announces a strategic tie-up with JapanRegistry.com this month. Under the agreement, JapanRegistry.com will serve as the .co.jp domain registration provider for IDR's global clients.

JapanRegistry.com isn't the next Yahoo, but it's found a niche and is well positioned to exploit it. "Considering the number of companies coming here, we see a tremendous opportunity for this business," says Nadeau.

If he's right, it'll be fine reward for reading the fine print.

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