Terrie's Take 398 -- Outsourcing and JTP, ebiz news from Japan

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

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+++ WHAT'S NEW

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On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

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The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

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- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

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You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

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=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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+++ UPCOMING EVENTS/ANNOUNCEMENTS

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NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

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Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

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+++ ABOUT US

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STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


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Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

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+++ WHAT'S NEW

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On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

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The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

<>

<>

<>

<>

+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

<>

<>

<>

<>

+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


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Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

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+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

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+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

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<>

<>

+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

<>

<>

<>

<>

+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

---

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+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
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Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

ADAPT Expat Insurance How Much of Your Money has Your Health Insurance Company Given Back to You During the Past 4 Years? ADAPT customers have received total Cash Back averaging $3,241 each, while enjoying the benefits of full coverage, tailored to their individual needs. You can too. http://www.expathealthassurance.com email: support@expathealthassurance.com, Tel. 0120-63-4419

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<>

<>

+++ WHAT'S NEW

back

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

General Edition Sunday, November 5, 2006 Issue No. 398

+++ INDEX
- What's new
- News
- Candidate roundup
- Upcoming events
- News credits

---

On June 22nd a rather unique if small outsourcing company, called Japan Third Party (JTP), listed on the JASDAQ.
Although at first glance the business looks like a pretty standard operation, the company is special in that a full 95% of its business comes from foreign technology firms (not end users). The remaining 5% is with Japanese firms needing some form of assistance leveraged by JTP's international operations. In a country where most SI firms are challenged to simply communicate with foreigners, JTP really shines.

According to MIC Research Institute Limited, the overall IT outsourcing market in Japan for 2005 was worth about JPY2.45trn (US$2bn), being split up roughly into the following categories: Data Centers at 40%, contracted data processing at 30%, and the remainder being in-house manpower and general IT services and support. The market has been stagnant since the implosion of the dotcom sector in 2001, an event that had repercussions on data centers in particular, and grew only 1.5% year-on-year to 2005.
However, thanks to the recent economic improvement, things are looking up again, and MIC reckons that this year, 2006, the overall market will be worth JPY2.61trn (US$2.21bn), up 6.5%. As one could expect, the biggest area of growth is expected to be data centers, which are likely to expand by about 8.7% annually through 2010.

The largest player in the conventional third party outsourcing sector is IBM Japan. The company blew past its competition, both local and foreign, back in 1999, when it announced that it had signed a 10-year deal with auto maker Mazda Motor Corp., for a reported JPY55bn (US$480m) for the full period. The deal involved IBM Japan taking over the development, operation and maintenance of Mazda's host computers, supercomputers, 10,000 personal computers, and most of its network links. While outsourcing deals had been hitting the news on a regular basis before this one, the Mazda contract was sufficiently massive and independent that it served as a wake-up call to IBM's domestic SI competitors, and touched off what has since become an outsourcing war.

In the intervening 7 years since the Mazda deal, IBM's competitors have been retaliating and putting together their own deals. Among these was a landmark JPY250bn
(US$2.12bn) 10-year deal between Hitachi and UFJ Bank in 2002. The two companies in typical Japanese style formed a joint venture - an indication of how closely Japanese firms want to keep their outsourcing partners -- and which is called UFJ-Hitachi systems.

Ironically, with the merger of UFJ into the Bank of Tokyo Mitsubishi at the beginning of this year, the final outsourcing victor over the next two years will actually be IBM Japan, who in 2003 formed an outsourcing joint venture with Bank of Tokyo-Mitsubishi. IBM is doing really well in the sector and is now rumored to be tying up with Resona to supply a core banking system to Japan Post, the world's largest savings bank.

[Continued below.]

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

+++ NEWS

back

- New Indian software centre for Japan
- Oricon overwhelmed by iTunes
- Softbank subject of Fair Trade Complaint
- Income gap increasing, now 12th among OECD
- Condo developer ramping up property purchases

-> New Indian software centre for Japan

Although a slightly dated news item, we thought this fits well with today's editorial about outsourcing. Tata Consultancy Services (TCS) announced in October that it has opened a new software development centre in Kolkata that will supply services to about 35 Japanese Systems Integrator and end-user customers. The new center will have 100 staff to begin with, expanding to several thousand over the next 2 years. ***Ed: Considering all the other software centers being formed in India by Japanese and Japan-related companies, clearly there is something of a boom going on right now. We have heard that one catalyst for the latest burst of activity is the upsurge of Indian engineers learning Japanese in their own country, especially now that it is harder to get a work visa and jobs in the USA.**
(Source: TT commentary from reuters.com, Oct 18, 2006)

http://tinyurl.com/u5mh6

->Oricon overwhelmed by iTunes

Oricon, Japan's largest publisher of music hit charts (kind of like Billboard in the USA) has announced that it will pull out of the online music business after sparse customer traffic to its website, caused, it says, by the overwhelming popularity of Apple's iTunes music store.
Significantly, an Oricon spokesman said, "The iPod has outrun us all." Oricon will refocus its energies on mobile phone music downloads, which is still a viable market.
(Source: TT commentary from silicon.com, Nov 1, 2006)

http://networks.silicon.com/webwatch/0,39024667,39163745,00.htm

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061101D3ZJKN07.htm

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

+++ CANDIDATE ROUND UP/VACANCIES

back

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

Corporate Translation Does your translator have 15 years' experience? Professional translator Michael House does. Michael House can take your Japanese documents and translate them into clear, concise and accurate English. With special expertise in the IT, business and insurance sectors, Michael's 15 years' translating means you get top quality. Why go through an agent when you can go direct? Email Michael now for competitive rates and dates. Email: macross@gol.com

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.

Tokyo Monthly 21 Furnished apartments in Tokyo Are you planning to visit Tokyo and looking for an apartment for a short trip or an extended stay? We, Tokyo Monthly 21, provide comfortable living at our fully-furnished apartments. Book through us with confidence and rent an apartment for a week, month, or year for your next business or vacation visit. http://www.furnished-apartment-tokyo.com/

[Article continues]

Back to JTP, the company was started in 1987 by CEO Kazuaki Mori. He got into the outsourcing business, so the story goes, after attending a Rotarian conference in Austin, Texas in 1982. Mori worked in the Field Service division of Omron, and was trying to learn more about how to support Omron's ATM business in the USA. As one of the few non-Americans in the room, he quickly struck up a conversation with the gentleman sitting next to him and mentioned how he was struggling with how to support his ATM business. The man asked him why Omron, an ATM maker, was trying to be a field service company. "Surely," he said, "You would want someone with an already established third party service network to do the work?"

Mori was astonished. The solution seemed too easy, especially when compared to the millions of dollars being proposed internally for a purpose-built service network.
The concept and the term "Third Party" stuck with Mori, and he decided to go check out several such vendors. He was impressed with their professional capabilities and yet their ability to control costs. Heading back to Japan, he floated the idea that Omron, too, should go into the third party maintenance business in Japan. The idea met with favor and a team was formed.

However, neither Mori nor Omron had counted on the revaluation of the Japanese yen in the mid-1980's and the resulting loss of manufacturing competitiveness here in Japan. Omron decided to get out of the outsourcing business in 1987 and Mori, having decided that he had found his calling, resigned to start up Japan Third Party.

Fast forward 19 years, and today Mori's company is doing about JPY5.08bn (US$43.05m) in sales, with an operating profit of JPY230m (US$1.949m). Modest numbers to be sure, but given that the company is growing in an environment where most of the world's majors have failed, shows that its basic business proposition has legs. Right now most of JTP's revenue comes from business-to-business (not end-user customers yet unfortunately) dealings with foreign firms already in Japan. It has a blue chip client list, which includes such companies as Sun Microsystems Japan, SAP, Symantec, Nokia, Acer, and Hewlett Packard Japan.

Analysts say that while the company may be doing well, its exposure with 40% of its business coming from just two customers, Sun Micro and HP Japan, means that it needs to expand and diversify. Indeed, that is exactly what Mori's team is doing. JTP has been aggressively investing in a regional presence in such countries as China, Korea, and the USA -- taking advantage of its bilingual and sometimes trilingual staff. In the USA in particular, Mori reckons that about 500 venture capital deals are done in Silicon Valley every year, and that about 10% of these companies are interested in setting up in Japan. His Santa Clara office is intended to tap in to this flow.

On the day of the IPO, JTP's stock closed at a pretty good price of JPY360,000 per share, almost double the IPO price of JPY200,000. But once the day traders had taken their toll, the stock has settled down to around JPY190,000, and now looks relatively cheap. One reason we think the stock has come down is that the market doesn't really understand the value of JTP's foreign client base. His clients are multi-billion dollar companies with a commitment to Japan, and Mori keeps finding ways for them to do business with him. The latest is engineer training. JTP educated a surprisingly large 12,000 engineers last year, and in August 2006 inked deals with EMC, the storage maker, and Caplan, the Itochu-related temporary staffing company, to conduct training on the behalf of both companies.

There will be a full article on JTP in the December issue of Japan Inc. magazine. We'll let readers know when it is due out.

Wrapping up today's newsletter, and on a completely different note, we'd like to point out the two CEO positions featured in the Job Section below. These positions are with companies that Japan Inc.'s advisory consulting business is working with. The key point about these vacancies is that both companies are looking for Japanese-speaking foreigners to run their Japan operations. It is refreshing to see foreign firms who value local foreign top staff. Interested parties should contact editors@terrie.com for more information.

...The information janitors/

---

The Ingenium Group is Recruiting The Ingenium Group, a leading executive search firm in Japan,is expanding and currently accepting applications for Executive Search Consultants who want to play key roles in the following areas: Accounting, Human Resources, Technology, Semiconductors, Financial Services, and Consumer Products. You are encouraged to consider joining our growing team if you're ambitious, organized, self-confident and have strong client presentation and client service skills. For more information: Web:  http://www.ingeniumgroup.com/inside/ing-careers.html    Email: career@ingeniumgoup.com

Century 21 SKY Realty Century 21 SKY Realty has been the leader in Tokyo's real estate market for more than 20 years. We offer a wide selection of rental and sales properties for residential living and commercial use. Our bilingual agents are skilled at helping people find the ideal location to accommodate their lifestyle. We also help businesses find room to work, with our vast computerized inventory of commercial and office space, not only in central Tokyo but also throughout most of Japan. Visit our website for up-to-date listings and more features: http://www.c21sky.com/c2/

-> New Indian software centre for Japan

->Oricon overwhelmed by iTunes

->Softbank subject of Fair Trade Complaint

KDDI has filed a complaint with the Fair Trade Commission (FTC), claiming that Softbank Mobile has been running misleading ads in local newspapers. At the center of the controversy is a series of ads which claim zero fees for calls and e-mails between Softbank Mobile users. But on reading the small print there are a large number of conditions that make it unlikely the average consumer will be able to take advantage of the offer. The ads also offer a "reduced" price to newly signed subscribers, over the "regular" price of JPY9,600. KDDI claims that there has never been a regular price at this rate, and that this is just an effort by Softbank marketers to hype the apparently low cost of the service. (Source: TT commentary from nikkei.co.jp, Nov 3, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFF02.htm

->Income gap increasing, now 12th among OECD

Whether you buy into the opposition parties' claims that Koizumi's market deregulatory policies are the cause of growing income disparity, the fact is that a government survey done by the Ministry of Internal Affairs shows that indeed the disparity gap not only exists, it is increasing.
Apparently, Japan's income disparity is now 12th among OECD countries, about the same as France but greater than that of Germany and Sweden, and lower than that for the UK and USA. ***Ed: A separate July OECD report showed that Japan's relativepoverty rate, that is the number of people earning less than half the national median income, is the second worst in the OECD, after that of the USA.**  (Source: TT commentary from nikkei.co.jp, Nov 2, 2006)

http://www.nni.nikkei.co.jp/AC/TNKS/Nni20061102D02JFN02.htm

->  Condo developer ramping up property purchases

In anticipation of a strong increase in property values in urban areas of Japan, Japan's largest property developer, Mitsui Fudosan, has said that it is increasing investments into special-purpose companies (SPCs) as well as purchasing property for condominium development. The new strategy was announced as a follow-up to the company's half-yearly results last week, when it disclosed that group operating profit soared 42% to JPY64.2bn (US$525m) for the first half of FY2006. The surge in profits came from property investment and the sales of condos. (Source: TT commentary from nikkei.co.jp, Nov 1, 2006)

->Income gap increasing, now 12th among OECD

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

---

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

You're Vending What? Japan is home to the highest density of vending machines in the world, with about 5.6m machines, or one for every 23 people. You can buy almost anything, and the Japanese do, with about JPY6.67trn (US$56bn) being spent every year. Yet, apart from the obvious players such as major soft drinks companies, there have been no foreign owners of this massive direct sales medium - until now. Market Pioneer Japan is proud to announce that as of October, 2006, it has built a network of 1,000 vending machines placed nationwide, selling stickers and print logos. We invite owners of licenceable characters to contact us with a view to distributing your IP assets into the Japanese market. Web: www.japaninc.com/mpj,  email: mpj@japaninc.com

=> Two Japan Inc. Communications advisory consulting clients are actively searching for CEOs for Japan. These positions are both open to non-Japanese with relevant prior experience and language skills.

Position One:
- CEO for established Japan operation, electronics industry
- Local office of European multinational
- Managing 70+ employees
- Must have strong electronics/sales background
- Must have strong bilingual language skills
- At least 5 years recent work experience in Japan
- References will be required
- Position to be filled by year-end

Position Two:
- CEO for new operation to be established in 2007
- Green-field manufacturing facility, to grow to 40 people
   in two years
- Parent company is one of fastest growing
   technology/manufacturing companies in USA
- Radical new manufacturing process that in trial research
   indicated company will revolutionize the market segment
- Strong leadership and bilingual communication skills
- Initial work is planning and executing the start-up
- Then moving to sales and market leadership
- At least 5 years in product manufacturing in Japan
- References will be required
- Position to be filled by March 2007

* Interested parties may make initial contact in confidence
   to editors@terrie.com.

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

+++ UPCOMING EVENTS/ANNOUNCEMENTS

back

NZ Ball The NZ Ball is a charity event, raising money for Cure Kids (www.curekids.org.nz). Enjoy a great evening of entertainment, food and wine, and help future generations of NZers. Date: Friday 17th November, 2006 Where: Grand Hyatt Tokyo, Roppongi Hills - 3rd Floor Ballroom Time: 7pm until very......late Attire: Black tie event (Men - jackets with ties are fine also). Tickets: Purchase through tickets@nzball.com, or go online to www.nzball.com

Tokyo PC Users Group The oldest English-speaking PC club joins users of all stripes. Discuss new technology, software & hardware at monthly evening meetings on the first Thursday, held at the Tokyo Union Church. Over 30 open mailing lists and newsgroups -- ask questions or read along. Free hands-on PC help desk at meetings. All welcome! See www.tokyopc.org for details.

IT events announcements are priced at JPY50,000 per week. For more information, contact sales@japaninc.com

+++ 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.

-> TT 397. We highlighted the changes in the attitudes by
the courts as companies seek to adjust employee's salaries according to performance rather than seniority. A recent law allowed a Kanagawa company to signficantly reduce the salaries of some seniors after they could not perform to the specifications of their job description.

*** Reader response
This could trigger a wholesale gutting of the wage system and make a lot of older workers vulnerable. Is that such a good thing in a country whose income gap is already getting growing?

*** We respond
What would you rather have? A flexible work force in a competitive world, or drivers and gardeners on JPY12m or more annually because they have been with the company for 40 years? We really do know of drivers who make this amount and more. The reality is that Japan can't afford to build its social welfare net into the companies themselves.
Instead, if people need help, it should be broken out into a government-supplied line item. We believe skilled young people should earn more, based on merit, and older people getting left behind should try reskilling themselves, or better still, go into business for themselves and hire a bunch more talented young people...

...The information janitors/
>>>>--------------------------------------------------<

DENPHONE Full-featured Office PBX Business Telephony Solutions and PBXs Denphone is a leading corporate provider of business telephony solutions including PBXs, telephones, call centers, CTI/IVR automated voice menu systems, call recording and voicemail. See how our office telephony systems and hosted solutions are lower cost while offering more features. Call us to find out more. http://www.denphone.com   Tel: 03-5545-4638

Logistics: The So-Fast Corporation Seeing is believing: see our company in action So Fast Corporation, an innovative logistics company, is offering tours of its Heiwajima warehouse. See why 8 of 10 foreign company presidents choose So Fast after a visit. Read in the autumn issue of J@pan Inc Magazine why SNOVA Corporation selected So Fast and are glad they did. For details or appointment, contact Katsuhiko Kakuchiyama. Phone: 03-5753-3101 Email: k.kakuchi@so-fast.co.jp Logistics warehouse Dates: Sep 1 - Oct 31 Time: 8:45a.m. - noon http://www.so-fast.co.jp/en/index.html

END

SUBSCRIBERS: 24960 as of November 5, 2006
(We purge our list regularly.)

---

+++ ABOUT US

back

STAFF
Written by: Terrie Lloydterrie.lloyd@japaninc.com.


HELP: E-mail Terrie-request@mailman.lincmedia.co.jp
with the word 'help' in the subject or body (dont include the quotes), and you will get back a message with instructions.


FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to editors@terrie.com.


ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.


SUSCRIBE
Get Terrie's Take by giving your name and email address athttp://www.terrie.com/subscribe.html.
BACK ISSUES
http://mailman.lincmedia.co.jp/pipermail/terrie/.

Copyright 2006 Japan Inc. Communications Inc.

_______________Japan Inc is worth every penny!_______________

Don't forget you can get deeper analysis on Japan's hottest new businesses and technology from the quarterly edition of J@pan Inc. 1-year subscription for JPY3,600(Japan). It's so cost effective you can even get your company to pay for it!
Go to: www.japaninc.net/mag/subs.html for details.