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A monthly review of the latest developments in Japan’s IT, telecom, and life sciences sectors

January 2003 - Volume VI, Issue I

Triangle Technologies is the leading Japan Israel business development and investment advisory firm
www.triangletech.com

Dan's Desk

From Triangle's CEO

How to motivate your Japanese distributor

How many times have I heard it!!!!! "Our distributor is slow." "They don't have the right people on the job." "They are not aggressive enough." "We don't know what is going on with them!"

There is no doubt that motivating channel partners is one of the real fine arts of doing business in Japan. Let me share with you some of the results of our extensive experience here at Triangle.

Sorry to say it, but I have bad news. While you point a finger at your distributor, 3 fingers should be pointing back at yourself.

1. Put your own house in order. Is your product as perfect as can be expected? Have you responded to customers' criticisms, requests, complaints, promptly and completely? Is the pricing appropriate, is the value proposition clear, compelling? Have you met your delivery commitments, been on time? This is absolutely the most important thing. In Japan the cardinal principle for motivating your channel is to first have a perfect product with superb service. Always ask yourself, how would I act if my company were a Japanese company located in Japan? Customers are just as demanding of overseas suppliers as domestic ones, so being far away is no excuse.

2. Make sure that preparation has been thorough. Remember, Japanese customers (typically) read the operating manual before opening the box. Training is critical. Preference is for didactic training first, hands-on training, second, on the job training, last. Help your channel partner plan. Planning is an important phase in Japan, with more time spent on preparation than anywhere else in the world. That does not mean that they are slow, it means that they want to ramp up with relatively few embarrassing glitches. Japanese companies are great at operations! But remember that in getting from point A to point B, Japanese companies are better trainsmen than sailors (metaphorically). First they lay down the tracks, then they can move a lot of cargo very quickly. Spend time laying the tracks with them. Don't rely on the extemporaneous flexibility of the sailor.

3. Avoid willy nilly, frequent changes, and when you make them, make them very carefully and thoughtfully. Do you frequently vary your marketing collateral? Do you constantly modify your product or documentation? Do you change your pricing, your positioning? It is difficult to move those train track around whenever you feel like it. Are you crystal clear, or fuzzy and vague?

1-3 above will go a VERY long way to making your distributor aggressively, confidently (and proudly) approach customers and expand his sales pipeline. Pride is a powerful motivator in Japan, don't rely only on the financial incentives.

But having reasonably accomplished 1-3, my distributor still doesn't seem motivated, aggressive! Next Dan's Desk I will address how to motivate your distributor when everything else is perfect.

Good luck

Dan

***TRIANGLE TECHNOLOGIES NEWS***

+XMPIE SIGNS SAKATA INX AS DISTRIBUTOR, WITH FUJI XEROX AS 1ST CUSTOMER

Israeli start-up XMPie announced it had signed a distribution agreement with Sakata Inx, one of Japan’s largest providers of graphics and printing technologies and products. This is Sakata Inx’s first deal with an Israeli company. XMPie develops and markets software solutions for direct personalized marketing. Japanese giant printing and photocopy equipment maker Fuji Xerox has already place the first order for the software. Triangle Technologies helped form and negotiate the deal.

+INTUWAVE IN STRATEGIC ALLIANCE WITH ZION

Intuwave (Maidenhead, UK), a leading developer of middleware software and services that enables the rapid creation and deployment of applications for smartphones, has signed a strategic alliance agreement with Japanese system integrator and consultant, Zion Ltd. Triangle Technologies facilitated the signing of the deal. Recently listed on the Tokyo Stock Exchange (MOTHERS), Zion specializes in network intelligence, consulting and development related to large-scale Internet infrastructures. Zion's customers include leading wireless and wireline service providers. Intuwave and Zion will carry out joint marketing and sales activities vis-a-vis Japanese mobile operators and device manufacturers.

***ISRAEL-JAPAN NEWS***

+CAMTEK NAMES KANEMATSU DEVICES AS EXCLUSIVE DISTRIBUTOR IN JAPAN

Camtek (Nasdaq: CAMT) and Kanematsu Devices Corp. (KDC), a subsidiary of Kanematsu Corp., announced the appointment of KDC as the exclusive distributor in Japan of Camtek products for the microelectronics manufacturing industry. Camtek's network in Japan already consists of Pentax, which handles Camtek's products for the PCB manufacturing industry, and Camtek’s wholly owned subsidiary.

+TERAYON TECHNOLOGY SELECTED FOR VOIP TRIAL IN JAPAN

Jupiter Communications, Japan’s largest cable TV company, has selected one of its adapters for a trial of VoIP phone services. The embedded Multimedia Terminal Adapter (eMTA) would be used in a trial involving 100 households in the city of Urayasu near Tokyo.

***BUSINESS NEWS***

+NISSHO IWAI AND NICHIMEN TO MERGE

Trading houses Nissho Iwai and Nichimen agreed to integrate their businesses under a holding company to be set up in April 2003. Nissho Iwai is Japan's sixth biggest trading house, and Nichimen is the eighth biggest. The new integrated firm will try to boost its capital by $1.7 billion through investments from Lehman and UFJ Bank.

+KDDI 3G SUBSCRIBERS REACH 4.7 MILLION

DDI, Japan's No. 2 wireless operator, has reported that the number of users for its high-speed 3G mobile phone service had reached 4.7 million, keeping a wide lead over larger rival NTT DoCoMo. The figure represents an average increase of 557,000 subscribers per month since April 2002, and a 20% (776K) rise in subscriptions in December alone, indicating that the operator might beat its target of 7 million 3G subscribers by the end of the fiscal year in March.

+KDDI SEES JAPAN MOBILE USERS GROW BY 5M IN 2003

KDDI said it expects growth in the nation's mobile phone users to slow to about 5 million in 2003 as the market approaches saturation. KDDI forecasts the saturation point at 85 to 90 million subscribers, compared to today’s 73 million subscribers (a penetration rate of 60%). KDDI expects future growth opportunities in pet tracking, machine-to-machine communication, telematics, and installed modules.

+PHOTO-MAIL GIVES 30% BETTER ARPU

Even more from KDDI: Japan's 2nd-largest telecom carrier has announced that camera-equipped cell phones yield 30% higher ARPU than regular phones. This may represent a major breakthrough for phone companies trying to figure out how to extract more revenue from data services. A KDDI representative said that the ARPU for their users is around $63.6 per month and that photo-mail users spend around $17 to $25 more.

+DOCOMO CAMERA PHONE SALES ACCELERATE

NTT DoCoMo has sold 3 million handsets with integrated digital cameras since June 2002, and more than 1 million since mid-October 2002. About 7% of DoCoMo's 42 million customers are now equipped with camera phones, compared to over 50% at rival J-Phone.

+J-PHONE REACHES 1M VIDEO MESSAGING SUBSCRIBERS

J-Phone Co., Ltd. announced today that as of November 19, the number of subscribers to its video messaging service known as 'Movie Sha-mail'' passed the 1 million mark. J-Phone reached the milestone approximately 9 months after first introducing the service in March 2002.

+ONE IN THREE INTERNET USERS IN JAPAN LINK VIA BROADBAND

According to a survey by Nomura Research Institute, more than one in three Internet users in Japan use broadband transmission systems. ADSL was the most popular, partly because of its low price, accounting for 22.1% of survey respondents. It was followed cable access at 13% and fiber optics at 2.1%.

+AMD, FUJITSU TO RIVAL INTEL

Fujitsu and Advanced Micro Devices (AMD) plan to integrate their flash memory business into a new company that would rival world market leader Intel. An agreement between the Japanese electronics giant and the leading U.S. chip maker will likely be announced by the end of this year, according to the sources.

+HITACHI AND NEC IN JOINT CHIP VENTURE

Japanese electronics giants Hitachi and NEC said they planned to inject an additional $373 million into their chip venture, Elpida Memory, by the end of March. Mitsubishi Electric, which plans to shift its DRAM operations to Elpida, and Taiwan's PowerChip Semiconductor, which has signed a supply and technology deal with the company, both said they may consider taking an equity stake.

+RECORD M&AS IN 2002

Nomura Securities has said that there was a record number of mergers and acquisitions between Japanese firms in 2002. The firm says that in total there were 2,244 M&As, up 25% over 2001, compared with a world wide decline of roughly 20%.

***TECHNOLOGY NEWS***

+MAJOR ISP’S TO LAUNCH IP PHONE SERVICE TARGETING 1.3M USERS

NTT Communications, Sony Communication Network, and Nifty Corp. announced that they will jointly start a test VoIP communication service among the Internet connection services provided by the three companies. The total number of subscribers to the three companies was approximately 11 million as of the end of September. About 1.3 million of them subscribe to broadband services, and they are potential users of the VoIP service, according to the companies.

+TOSHIBA TO LAUNCH WORLD'S SMALLEST MASS PRODUCED CHIPS

Japanese giant Toshiba said it would start production of the world's smallest mass produced semiconductors this spring. The physical size of the 90-nanometer semiconductors will be roughly half that of 130-nanometer chips. Toshiba sources said the new chips would have 20% faster processing speeds and consume about 40% less energy than 130-nanometer chips. They would enable the size of products such as DVD players, game consoles and servers to be halved while doubling their operating speeds.

+HITACHI DEVELOPS WORLD'S SMALLEST FLASH MEMORY CARD

Hitachi said it has developed what it claims to be the world's smallest flash memory card. The reduced-size MultiMediaCard measures about half the size of the multimedia memory cards now used in a wide range of consumer products. Hitachi said the new memory device could be used for digital cameras, personal digital assistants, or PDAs, handheld computers and other portable electronics products.