|
 |  | |
|
 |
about Asia Buzz | more Asia Buzz
Lost Chance
Japanese dotcoms are missing the e-boat
By PETER McKILLOP
March 17, 2000
Web posted at 1 p.m. Hong Kong time, 12 a.m. EST
Dotcom mania is sweeping the world. In Hong Kong, police have not seen such investor mania since thousands of residents clogged the streets trying to cash in free cake receipts. In America, aging boomers are selling their father's favorite blue chips for dotcoms started by their sons or daughters' college roommates. Today's Internet craze has more froth than a Starbucks cappuccino. Everywhere, that is, but Japan.
| |
ASIA BUZZ
|
Asia Buzz: Mission Doomed
Struggling communications company
set for spectacular crash
-
Thursday, March 16, 2000
Asia
Buzz: Country Drive
The car, some say, is the mirror of the
soul
-
Wednesday, March 15, 2000
Asia Buzz: Trading Blows
Japan giants say size really does
matter
-
Tuesday, March 14, 2000
Asia
Buzz: Taiwan Tactics
China votes with its (two left) feet
-
Monday, March 13, 2000
Letter
from Japan: Flashback
Doomsday cult still a powerful force in soul-searching
Japan
-
Friday, March 10, 2000
Asia
Buzz: Whiz Kid
The future of the Internet in Indonesia is in good hands
-
Thursday, March 9, 2000
|
|
|
ALSO IN TIME
|
Market Q&A
Each business evening with analysts around the region
|
|
ASIAWEEK
| |
|
Japan's lost decade of economic opportunity has stretched into the new millennium with Japan falling farther and farther behind in the race to own the Internet. The usual answer to the dearth of dotcoms is that Japan's risk averse culture discourages young entrepreneurs. Fair enough. It is risky to start a business in Japan. Banks still demand personal guarantees to business loans. You go bust, and there is a good chance some yakuza repo man will toss you and your used bento boxes onto the street.
| INTERACTIVE | |
Ticked off at Asia Buzz? Turned on? Talk back to TIME
| |
But a recent surge of foreign venture capital money should create a new source of capital, right? Think again. Bankers are desperately seeking any credible dotcom venture and yet the trickle to the market remains agonizingly slow. One reason is the extreme cost in Japan to build a brand. The pace of the Internet means building a brand instantly is the only way to survive. Building dotcom awareness drives traffic to a site and makes the financial community feel good about an upcoming public listing. "Coca-cola had the luxury of almost 100 years to build a brand," says Andreas Dannenberg, founder and president of Comm.com, a Japanese dotcom advertising agency. "Internet start-ups have a matter of months to do the same."
That is why the burn-out rate for advertising and marketing dotcom start-ups in the USA is so high. It takes more than 30% of pre-IPO financing to market a consumer oriented Internet portal. B2B, while less expensive, still eats up more than 10% of all financing. The cost will be even greater in Japan. Unlike the United States, Japanese dotcom start-ups will not have the luxury of being able to carefully target their message and precious adspend through the use of hundreds of television channels and thousands of magazines and Internet portals. Instead they will have to rely on a hopelessly antiquated media market.
Most of Japan's eyeballs are still watching television and reading newspapers the way your grandfather did. That means four national networks and a couple of humongous newspapers with eye-popping circulations reaching 10 million. That is fine if you are selling hamburgers or cars to a mass audience. But the average large Japanese consumer company will spend hundreds of millions of dollars on advertising. That is a luxury dotcoms cannot afford. They face the crushing dilemma of having to pay gargantuan fees to newspapers and television stations and having 95% of the audience ignore their message. And for most dotcoms that is simply a risk to big to take.
So what to do? Dannenberg is advising clients to spread the word through other ways--creative events, clever public relations, outdoor advertising, focused investor relations and the one medium that remains relatively cheap in Japan: the Internet.
Ticked
off at Asia Buzz? Turned on? Talk back to TIME
Write
to TIME at mail@web.timeasia.com
Search
for recent Asia
Buzz
TIME Asia home
| | LATEST HEADLINES: |
Click Here for the latest regional analysis from TIME Asia
|
|
|
