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

June 2005 - Volume VIII, Issue VI

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

Dan's Desk

From Triangle's CEO

Hello everybody!

Do you have CQ (cultural intelligence)?

As you faithful readers may remember, I am a social psychologist by training. Usually when clients hear that they wonder to themselves, "I must be nuts, hiring a social psychologist to help me make money in Japan." On the other hand, sometimes it really pays off - it turns out that a big obstacle to making money in Japan is the lack of social and cultural sensitivity of, well, you, yes YOU! If you are American, then it is even worse - most of you (us??) don’t even know that there are countries and cultures out there across the pond! (I wonder how many Americans have passports now - about 10-15 years ago it was about 4% according to one source. I googled it and found estimates that range from 7-25%, with ~20% probably being the most likely number. Note the dramatic 150% increase from 1991-2000, perhaps largely from dual nationals getting passports to visit home.

Does that mean that cultural intelligence may be on the rise in the US? I discovered this term (abbreviated CQ to be similar to “IQ”) a few weeks ago, and liked it immediately. CQ can be measured, and researchers Soon Ang, Chris Earley, and Linn Van Dyne have been doing just that the past few years. I think that CQ may be really critical in doing business successfully in other cultures, and thus social psychology may indeed help you make money.

What is CQ? CQ is made up of 4 parts:

COGNITIVE CQ – this is the specific knowledge of another culture, e.g. how well do you feel you know another culture’s religious practices, language, arts, legal systems, etc..

MOTIVATIONAL CQ – this is about how you feel interacting with people in different cultures – do you enjoy it? Are you confident you can do it?

BEHAVIORAL CQ – this has to do with your perceived ability to adjust your behavior in different cultures – facial expressions, speed, rhythm and intonation, other body language.

META-COGNITIVE CQ – this is the ability to think about one’s own cultural awareness (e.g., as you encounter people from different cultures, do you check and modify the accuracy of your knowledge of their culture?). Wanting to take the CQ test would probably be a sign of META-COGNITIVE CQ.

I am not sure these are the perfect components, but in my experience, there is definitely a set of attitudes and skills related to CQ. Some foreigners in Tokyo sit and complain on weekends about how strange it is in Japan (motivational CQ). Some insist on using Western customs or interpreting events in Western eyes - “we are great friends, I call him Hidemi and he calls me Dan” (behavioral CQ). Some feel it is no big deal – just be yourself, no need to consciously adapt – “Today Tokyo is just like New York… no problem.” (meta-cognitive CQ). Some don’t spend the time to learn the language, customs, history, economics etc (cognitive CQ).

Do you CQ?

All the best and good luck

Dan

***TRIANGLE TECHNOLOGIES NEWS***

+NIHON PALL WILL DISTRIBUTE ARKAL

Arkal Filtration Systems C.S from Kibuz Beir-Zera has signed a distribution agreement with Nihon Pall for industrial applications. The Israeli company has developed a line of water filters and filtration systems based on a patented technology developed in the company. The filters can handle many types of water in a superior manner to other filtration technologies. Some industries which require those solutions are cars, semiconductors, chemicals, food & beverage, pulp & papers. The Japanese company is a leader in fluid treatment and will use it to improve the water quality of its customers.

ISRAEL-JAPAN NEWS

No news.

***BUSINESS NEWS***

+CONSUMER SPENDING DOWN FURTHER

(nikkei.co.jp, Jun 24)According to the Japan Chain Store Association, supermarket sales fell in May by 3.4% year-on-year, to JPY1.2trn. This is the 15th straight month of decline and reflects the fact that overall private consumption is still dropping.

+RECORD 64 COMPANIES GO PUBLIC

(nikkei.co.jp, Jun 23)In the first 6 months of this year, a record 64 companies went public on the JASDAQ, Mothers, and Hercules – even more than the previous peak in 2000. The fund raised per IPO was JPY2.78bn, up 190% over the first half of 2004, and skewed due to the massive listing of Jupiter Telecommunications (JCOM), which brought in JPY87.3bn. Most of the listings were in JASDAQ, which had 36 IPOs. 16 IPOs, mostly of lower-end firms went public on Hercules.

+FOREIGN TOURISTS TO JAPAN EXCEEDS 6 MILLION FOR 1ST TIME

(Mainichi, June 20th) The number of foreign tourists who visited Japan last yea was 6.138 million, according to a government report. Up 17.8 percent from the year earlier. Those from South Korea, Taiwan, China and other Asian countries accounted for about 70 percent of the inbound tourists. The government estimates that 7 million foreigners will visit Japan this year as Chubu International Airport, popularly known as Centrair, in Aichi Prefecture opened earlier this year and Aichi Expo is under way. However, Japan is ranked 32nd in terms of the number of inbound tourists in the world and seventh in Asia following China, Malaysia and other countries in the region. The most popular destination in the world is France. Approximately 16.83 million Japanese people took overseas trips last year, an increase of 26.6 percent from the previous year, and the second largest number in history. On the contrary, fewer Japanese people took domestic trips last year.

+JAPAN'S PROPERTY MARKET CHANGING

(DPA , Jun 13) Japan's property market is currently undergoing extensive restructuring in a push for modernization that followed the stock exchange and real estate crashes of the early 1990s. As a dramatic deterioration in real estate prices that lasted for 14 years has now stopped, land prices in the country's six largest cities have started to rise once again. Greater Tokyo generates as much GDP as the whole of Germany, he said. Each square kilometer of Tokyo generates US$53 million dollars of annual GDP, 10 times what Germany generates per square kilometer. The three main business districts of Minato, Chiyoda and Chuo alone accommodate 40 million m2 of office floor space, which is more than in New York and about twice as much as London, he said. Annual rents collected in these three Tokyo districts amounted to US$47 billion dollars, which was more than in Manhattan and London combined. Traditionally , a true real estate market was practically non-existent in Japan. Land was principally privately owned by companies and served the firms as refinancing collateral. When dealing with loan applications, banking institutes traditionally only checked balance sheet figures, which were practically synonymous with the respective companies' real estate properties. There was no transparency and no price development in the modern sense of the word, which resulted in the so-called "bubble" that finally imploded in 1991. In September 2001, Japan introduced so-called REITs (real estate investment trusts), from which a new market emerged. The market capitalization of the current 17 listed Japanese REITs is already more than US$20 billion, and the figure is rising. In the meantime, Japan's real estate market has become as transparent as those in western countries.

***GENERAL TECHNOLOGY NEWS***

+CELL PHONE FIRMS DEVISE BOOSTER FOR UNDERGROUND SERVICES

(Kyodo , June 23)-Four mobile phone operators jointly developed a booster that makes their services possible underground. NTT DoCoMo, KDDI, Vodafone KK and Tu-Ka Cellular Tokyo Inc currently have separate boosters for underground cellphone communication. The joint booster, which is 380 by 250 by 300 millimeters and weighs 26 kilograms, sends radio waves from an underground antenna to an aboveground antenna and vice versa. It requires some 700,000 yen for installation in underground restaurants and other facilities.

+JAPAN TO GIVE UP NUCLEAR FUSION BID

(Kyodo News, June 23) - The Japanese government plans to give up its bid to have the world's first nuclear fusion reactor built in Aomori Prefecture, paving the way for the multibillion-dollar International Thermonuclear Experimental Reactor project to go to the European Union, government sources said.

+JCB TO LAUNCH QUICPAY MOBILE PAYMENT IN TAKAMATSU SYMBOL TOWER

(JCN Newswire, June 15) - JCB,announced teaming up with NTT DoCoMo Shikoku, Inc. and Symbol Tower Development Corporation to offer QUICPay(TM) Mobile contactless payment service at 23 stores and restaurants in Takamatsu City's Symbol Tower this month. The service is targeted to more than 1,500 office workers in the building, and is available to the general public as well. QUICPay is a contactless payment solution designed for locations where speed and convenience are important. Launched by JCB in 2003.

+NTT SUCCESS IN DISTRIBUTING SINGLE PHOTONS FOR QUANTUM CRYPTOGRAPHY

(JCN Newswire, June 14) Nippon Telegraph and Telephone Corp. has successfully demonstrated the quantum cryptography with a single photon, whose state is so fragile against the attacks from the eavesdroppers. This result was enabled by combining the original protocol of the quantum cryptography developed by the collaboration of NTT and Stanford University. Quantum cryptography is assumed as a next generation cryptographic system that may replace the public-key protocol. This technology utilizes the property that the quantum state is very delicate to the external environment and is destroyed by observing it. Namely, the transmitted secret key encoded in the quantum state, single photon, is destroyed when the eavesdropper observed it.

+HOZAN TOOL INDUSTRIAL TO BRING TO MARKET BIODEGRADABLE PLASTIC-TIPPED TWEEZERS IN JULY

***LIFE SCIENCES AND ENVIRONMENT NEWS***

VINEGAR DRINK SALES SOAR IN JAPAN

(The Japan Times, June 14th) - Drinks formulations take on a peculiar twist in Japan, with recent reports suggesting a recent boom in drinking vinegar shows no signs of tailing off. Vinegar brewer Uchibori Vinegar that has seen average monthly sales at each of its six shops rise ten-fold from two years ago. According to Japan's largest vinegar maker, Mizkan Group, the market for drinking vinegar nearly tripled to 21.46 billion yen between March and August 2004 from 7.57 billion yen in the same period in 2000. The upswing in consumption is due to links to supposed health benefits of vinegar, including that it promotes blood circulation, can stimulate appetite and assist in digestion.

+MOLTEN FLY ASH RECYCLE BUSINESS

(JCNN, June 20th) - Mitsui Kinzoku and Pacific Metals announced that they will launch molten fly recycle business in Hachinohe, Aomori Prefecture, in April 2006. MTR, a wholly owned subsidiary of Mitsui Kinzoku, will melt and remove chlorine content in molten fly ash and deliver desalted and dehydrated molten fly ash to Pacific Metals. Mitsui Kinzoku will build a 600 million yen ($5.5 mil) dehydration facility in its Hachinohe plant. Pacific Metals will drys, reduce and dissolve dehydrated molten fly ash at a new facility it will build at a cost of 1.8 billion yen ($16.5 mil).

+TEA CATECHIN HELPS BURN FAT AFTER MEAL

(JCNN, June 10) - Kao announced the results of its latest research on highly-concentrated tea catechin. The recent survey of healthy male subjects indicated that a regular intake of beverage containing highly-concentrated tea catechin can effectively burn body fat after a meal while elevating postprandial energy expenditure.

+CASTLEMAN'S DISEASE DRUG NOW AVAILABLE

(JCNN, June 14), Chugai Pharmaceutical announced the launch of ACTEMRA 200 for Intravenous Infusion, its proprietary drug used in the treatment of Castleman's disease. Co-developed by Chugai and Osaka University, ACTEMRA (tocilizumab), a humanized anti-human IL-6 receptor monoclonal antibody, is the world's first agent that has been indicated for Castleman's disease. First reported by Dr. Benjamin Castleman in 1956, Castleman's disease is a rare lymphoproliferative disorder. It is estimated that there are about 1,500 patients with the disease in Japan.

+FEMALE HORMONE DECREASE TRIGGERS HAIR THINNING

(JCNN, June 15th) - Japanese cosmetics and toiletries manufacturer Lion announced the results of its latest research on female hair thinning. The company has confirmed that the decrease in female hormone results in inhibiting the gene expression of bone morphogenetic protein (BMP), a type of hair growth inducer. Lion has also discovered that estrogen receptor-beta has a property to increase the gene expression of BMP. As such, the company concludes that BMP helps prevent hair thinning by suppressing the decrease of female hormone. Based on these findings, Lion will strive to develop female-specific hair growth stimulants.

+CAFFEINE'S STIMULANT EFFECTS AT MOLECULAR LEVEL

(JCNN, June 22nd) - The National Agriculture and Bio-oriented Research Organization (NARO) announced that a research group organized by the Osaka Bioscience Institute (OBI) has verified the mechanism of caffeine's stimulant effects at the molecular level. According to the group, the stimulant effects are regulated by the adenosine A2A receptor. This discovery will lead to innovative treatment for sleep disorder and the development of anti-drowsiness medicines.

+DNA DAMAGE ANALYSIS SYSTEM

(JCNN, June 15) - Youworks, a Tsukuba-based IT venture company, announced that it has developed Comet Analyzer Plus, a image analysis system that measures the degree of DNA damage. The new system, which combines the company's proprietary Comet Analyzer solution with a digital camera offered by Leica Microsystems, can automatically conduct Single-Cell Gel Electrophoresis (SCG) tests.

***SUNDRIES***

+GLOBAL LCD TV SHIPMENTS RISE 125% IN Q1 2005

(DisplaySearch Reports via NE Asia Online, June 14, 2005 -- Global 10-inch and larger LCD TV shipments grew 125% Y/Y while falling 13% Q/Q to 3.15M units in seasonally weak Q1 2005, according to reports from DisplaySearch.

Driving the growth was significant reductions in prices supported by cost reductions from new fabs optimized for larger LCD production. From Q1 2004 to Q1 2005, prices for the majority of LCD TVs with size of 20" and larger fell 20%-40%. Percentage of 30" and larger LCD TV shipments rose particularly rapidly with 254% Y/Y to achieve a 23% share, up from 15% in Q1 2004.

LCD TV demand surged worldwide, but was particularly robust in China where shipments grew 55% Q/Q and over 400% Y/Y to a record 200K units. The European LCD TV market rose the second fastest with an upsurge of 188%. North America raised 102% Y/Y, to 648K units and a 21% share, down from 26% in Q4 2004. Japan remained the number two region in decline with a 26% share, down from 27% in Q4'04, on 66% Y/Y growth. Japanese LCD TV market remained larger than North America's, and gained significant share versus other technologies in Japan in Q1 2005 due to their emphasis on form factor and smaller sizes.

In terms of growth by size, all size categories declined sequentially except for 35-39" and 40-44", which are becoming more widely available. In Q1 2005, Sharp remained number one worldwide with a 21.0% share, down from 21.9%, as shown in Table. Sharp remained the number one LCD TV brand in North America and Japan, was the second in rest of the world (ROW), third in Europe and fourth in China. Philips remained the second, although its unit share dropped from 14.7% to 10.9%. It remained first in European market, but fell to fifth in North America. Samsung overtook Sony and nearly caught Philips for the third position worldwide with a 10.8% share. Samsung led in ROW, rose to second place in North America and remained second in Europe. Sony dropped to the fourth with a 10.0% share, holding second place in Japan and the sixth in North America, while falling to the fifth in Europe. In China, Hisense held onto the top position followed by Skyworth and Xoceco.

By size category, Sharp continued to lead at 10-14", 20-21", 25-29", 35-39" and 45"+ and overtook Sony at 30-34". Samsung overtook Philips at 15-19", Philips overtook Sony at 22-24" and Sony continued to lead at 40-44".

Worldwide Branded LCD TV Market Share and Y/Y Growth
Source: DisplaySearch