1. Japan Assessment for IT Capability

2. Japan’s Political Makeup – Unitary Constitutional Monarchy Legislature - Parliament House of Representatives (480) House of Councillors (242) Executive Prime Minister – elected by Legislature Cabinet – appointed by Prime Minister – usually members of Parliament Judiciary – 5 Levels of Courts Appointed by the Cabinet

3. Political Parties Political Parties present in Parliament Liberal Democratic Party Democratic Party of Japan New Clean Government Party Japan Communist Party Socialist Democratic Party Conservative New Party

4. Government Promotion of IT METI – Ministry of Economy, Trade, and Industry Creates policies related to: Electronic Commerce Promotion Personal Information Protection Electronic Government R&D Human Resource Development Information Security Incentives offered for companies investing in IT research Low Interest Rates Tax breaks Expert advice

5. Barriers to IT Diffusion Low Foreign Investment State Owned Services Delivery Insurance Financial

6. Barrier to IT Diffusion – Foreign Investment Lowest foreign direct investment out of G8 members Low investment amount attributed to Japan’s historical view that foreign investment is a threat Government is looking for ways to actively promote investment, realizing its importance Foreign investment has risen sharply recently, although still low comparatively

7. Barrier to IT Diffusion – State Owned Services Privatization is relatively extensive, except for the Japan Post which is state owned Postal Delivery Insurance Services Banking (Savings) Privatization of Japan Post to begin in 2007 Heavily debated

8. Restriction of IT Ownership Restrictions are minimal NTT – National Telephone Company 33% foreign ownership cap Largest Cable TV Company (Juniper) is majority-owned by a US Firm

9. Japan’s Copyright Laws Robust and strict, similar to the U.S. Exceptions: Teachers can reproduce copyrighted works in the interest of teaching (TV and Audio only) Free reproduction of news is permitted S/W can be reproduced for personal use Copy protected CD’s and Digital Private Recording fees (DVD-RW recorders, etc) exist

10. Educational System 99% of population is literate IT literacy is also widespread 2002 – 57.2 million Internet Users 12 million Internet Hosts

11. Language Knowledge of English 30% of elementary students All Junior and High school students 20% of population read English newspapers, magazines, or watch English TV Written symbols More than 256 Made up of characters and Syllabaries

12. Japanese Culture Hofstede MAS – 91 High degree of gender differentiation Hofstede UAI – 89 Low tolerance for uncertainty and ambiguity Hofstede PDI – 50 Doesn’t stress extreme equality or inequality Hofstede IND – 42 Mid to low individualism – group still more important than the individual

13. IT Diffusion Phones 71.15 million land lines (2002) 86.6 million cell phones (2003) 119 per 100 people (2002) 29 th in the world Computers 38.2 per 100 people (2005) 21 st in the world TV 10.5 million cable subscribers Growing 20% a year 3 million satellite subscribers Internet 57.2 million subscribers 12 million hosts (2002) 44.9 per 100 people 17 th in the world (2002)

14. Electronic Commerce / EDI Considered an important and relevant topic Issued joint statements on EC with: United States United Kingdom Australia METI considers EC a critical initiative

15. Digital / Fiber Network Infrastructure High speed networks are readily and cheaply available IT Strategy Council formed in 2000 by PM Goal was to make Japan the “World’s Leading IT Nation by 2005” Cornerstone of plan was broadband connections Today fiber (ultra-broadband) is available to most (16 times faster than connections in US) Broadband (DSL / Cable) is available to all May 2003 the percentage of Japan households containing broadband surpassed the U.S.

16. Native Software Industry Second largest market in the world for IT products and services Still imports 40% of all software Lack of industry standard and great number of characters cause software problems – multi-bits needed for one character Factory assembly methods have been successfully implemented in software development Multilingual programmers in great demand

17. Native Hardware Industry Robust with mature hardware firms including: Sony Fuji Electronics NEC Fujitsu

18. Joint Ventures Keiretsu System – close and stable partnering relationship designed to benefit both companies involved, but considered temporary Prefer joint ventures as opposed to wholly owned subsidiaries, particularly when barriers to entry are high.

19. Economy Third largest economy in purchasing power parity, second on a nominal basis Stock Market Tokyo Stock Exchange Second largest exchange in monetary value to the NYSE Currently lists 2,383 companies GNP Per Capita $42,000 USD

20. Future Outlook 18 th in Information Society Index (2005) 16 th in Global Information Technology Report ranking IT readiness (2005) Currently in a position to leverage IT with ubiquitous broadband access and a technology-savvy population Can benefit from a greater amount of foreign investment and privatization of remaining state sponsored industries