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Japan 2006 IPO roundup December 27, 2006

Posted by fukumimi in Finance, IPO, Japan.
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We’re all done with IPOs on the Japanese exchanges for this year.

Some headline numbers:

  • Total number of IPOs: 188
  • 20 failed to post initial prices above the subscription price
  • 36 companies (or perhaps 37, depending on how eBASE does. The company listed on Dec 26th but has yet to trade in two days, buys outnumbering sells by approximately 30:1, and looks like the initial trades will occur at a level of PER>100) posted opening prices which translated to an initial price trailing PER >100
  • Highest initial price PER was Drecom (Feb 9th), at 953.94
  • 8 companies had initial price trailing PER<10, and a further 2 companies were loss-making for the most recent financial reporting period

More stats when I’ve had a chance to get the data into Excel.

The Independent should take some alpha taxonomy lessons December 26, 2006

Posted by fukumimi in Media.
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From the Independent: P Diddy rapped for selling coats made from dog pelts

It really pisses me off when the mainstream press gets its facts so wrong, or worse, manipulates facts to further its own arbitary, self-righteous agenda. The article has tabloid-esque sub-titles like “Price of fur: Dogs are skinned alive

The racoon dog (Nyctereutes procyonoides) is less of a dog than are wolves (wolves and dogs both are Canis lupus) or jackals (which are also of the genus Canis). If a racoon dog is a dog, so are foxes, which are also canines. The “racoon dog” is well known in Japan where the species is indigenous and is known as the tanuki. I don’t think any Japanese think the tanuki is a dog.

Both the tanuki and the dog (and wolves, jackals, foxes and other) are of the family Canidae. If we are look at humans, we belong to the family Hominidae. Fellow Hominidae include gorillas, chimps and orangutans. Does anyone seriously think we should refer to our fellow great apes as humans? I think not.

I’m against cruel treatment of animals as much as the next guy, but misrepresenting facts to whip up public outcry is intellectually corrupt.

And Macy’s fur policy is just stupid:

Our company has a standing policy against the selling of any dog or cat fur

So, it is OK to sell fur as long as it is not from a dog or cat? What makes these animals’ lives any more worthy of protection than those of other animals? How are the relative values of lives determined? Intelligence? Arbitary determination based on cultural values (and who determines which culture is used to dertermine which animals are or are not worthy of special protection? Shall we take a vote? I’m guessing there are more Chinese and Hindus than members of PETA, HSUS and the Kennel Club combined, so I guess cows are more likely to get onto the protected list than dogs, certainly racoon “dogs”)?

The article goes on to say:

 Macy’s yesterday pledged to use fake fur trims in the future manufacture of the coats

The pledge appears to be carefully worded so that the coats it sells (but doesn’t manufacture itself) with designer labels on them are not covered by that pledge.

The Independent has a “Fur Campaign” going:

Fur Campaign: What we are demanding

1. An end to the use of fur from animals which are cruelly treated, for example the two million cats and dogs raised in poor conditions for their fur in China or seals that are inhumanely slaughtered.

2. A halt to the practice of farming animals taken from the wild, such as foxes and mink, which are denied the basic freedoms they need and suffer distress when killed.

3. We want a universal system of labelling for fur, which clearly states its type and origin.

If we disect the first two demands, deductive logic leads us to this position:

1. Cats and dogs are OK, as long as they are raised in humane conditions. Seals are OK if they are slaughtered in a humane fashion.

2. Farming of wild animals is not OK, so farming must be contained to domesticated animals, such as cats and dogs.

I wonder what “basic freedoms” they refers to. Why should wild animals are treated preferentially to domesticated animals? Don’t domesticated animals also have basic freedoms which are denied to them by being bred for their fur? Also, I would guess that any animal would be distressed when killed, assuming that they have the ability to feel this emotion – so any animal that exhibits distress when being slaughtered should be protected then, but that would include all sorts of animals, chicken, domesticated livestock, insects. But then, plants also express distress when damaged or killed, so why draw the line at wild animals?

The newspaper has an article on fox hunting on the very same day: Half of Britons think ban on fox hunting will be overturned

Where is the Indie’s outrage on this issue? Foxes are as much dogs as racoon dogs are, after all. And fox hunting isn’t exactly without distress for the hunted foxes.

47News, the regional newspaper aggregation site December 25, 2006

Posted by fukumimi in Internet, Japan, Media.

47News, a new news portal which aggregates content from 52 local and regional newspapers from around Japan and national news from Kyodo News, launched on Christmas Eve. The company behind the site is Press Net Japan, which includes 47 of the newspapers as shareholders.

The site design is generally poor. There is a smattering of “Web 2.0″ish features like a bit of javascript and tag clouds and such. They also have a vaguely interesting map based feature (using the Zenrin map API) which shows the locations of the various news events. No RSS though (which is criminal. If these people want regional news to be seen and read, the best thing is to make it more accessible Stop worring about on-site CPM advertising so much…. So clueless….).

So typical of Japanese old school firms to take an opportunity to make a real change and just let it go begging.

Speaking of no RSS, the Japanese media seem to be slow in picking up on that, none of the big newspapers (Nikkei, Yomiuri, Asahi, Sankei, Mainichi) have RSS feeds on their sites. (Kyodo News does – though it isn’t a model of user friendly RSS implementation, and iza, the Sankei group’s social media portal does too, as does MSN-Mainichi albeit not separated out into news catagories apart from MDN which is the English language portion of the site which is given its own feed)

Who or When to visit Japan in the Spring? December 25, 2006

Posted by fukumimi in Uncategorized.
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Oh, it wasn’t a question….

Hu or Wen to visit Japan in the Spring (Asahi Shimbun in English)

But it could have been, given that the future is always uncertain. It would have made for a more entertaining headline….
The headline reminded me of Jim Sherman’s funny-but-you-could-so-image-such-a-scene-with-Dubya-involved “Hu’s on first”, which is of course derived from Abbott & Costello’s baseball themed “Who’s on First?”

No, this post does not contain any insightful commentary on Sino-Japanese relations.

The Australian’s revisionist history December 22, 2006

Posted by fukumimi in crime, Economy & Business, IT, Japan.

via JapanProbe

Original article here

Horie is a discredited figure and his attempts to blame his downfall entirely on the system are clearly self-serving. Yet he has a point. Well before he was accused of breaking the law, members of Japan’s business elite had already condemned him as a pariah. In their eyes, his biggest sin was daring to challenge vested interests and the status quo. Doing so was worse than impudent – it threatened the existing order.

Take the Keidanren, the influential business federation, whose head, Fujio Mitarai, has doggedly fought plans to allow foreign bidders to use their shares to finance takeovers, a step that could put many Japanese companies in play.

It is funny that the article mentions the Keidanren, as  Livedoor was actually admitted to this cozy old guard club. (And then chairman Okuda-san was terribly embarassed when the scandal hit, calling Livedoor’s acceptance into that club an embarassing mistake) If that club isn’t the epitome of the old guard business elite, I don’t know what is. (Well I do, it’s the regular meetings of the keiretsu CEOs that have names like the “Friday Club – Kinyokai – 金曜会”, “2nd Thursday Club – Nimokukai – 二木会”, “Whitewater Club – 白水会 – Hakusuikai” all of which get the big keiretsu CEOs together for regular meet-ups, ostensibly to hold study sessions over lunch or somesuch.)

Livedoor seemed cozy enough with the LDP top brass too, and those PR opportunities don’t happen without serious consideration and consultation.

Without doubt, the established old guard did initially resist, but in characteristic ovine behaviour, they seemed to embrace the new guard (as they did with Rakuten and Softbank before Livedoor) as a pretty coherent unit when some invisible signal (a dog whistle?) was sounded (albeit perhaps begrudgingly).

Clearly Son and Mikitani are more intelligent and/or more well connected than Horie and pals, as Son especially has done (and is doing, though I feel to a lesser extent these days – maybe he has learnt to play by the “rules”) a lot more to ruffle feathers of the old guard and disrupt the old order of things, at least on the surface.

The article continues:

 The key to raising the economy’s anaemic growth rate lies in the services sector. Its backwardness ought to be an opportunity for entrepreneurial innovators ready to have a go. But while Japan does not lack promising start-up companies, few have broken through to become big businesses.

That statement contradicts the facts. If you look at IPOs on MOTHERS and Hercules and JASDAQ, you’ll see a whole host of services companies who have become significant players. Everything from restaurant businesses to outsourced professional services to wedding planning companies to internet advertising firms (a whole bunch of them….), investment funds and debt recovery services have seen IPOs this year. (not all are equally valuable to society in my estimation)

I think the problem isn’t that there aren’t successful companies in the services sector. There are 2 problems.

1. The vast majority of companies in the service sector are (almost 100%) domestically focussed, and as such they are just redistributing the pie, taking share away from the backward businesses the author alludes to. Only by marketing its services overseas and repatriating the profits does the pie really grow. I know it that is simplistic and it is not a zero sum game, but I think that is the big difference between the Japanese service industry and national economies which have successful service industries who are competitive internationally. In the end, if Japan depends solely on the manufacturing sector to be competitive in international trade, the future is bleaker and bleaker as low cost (and increasingly high quality) competitors become more and more competitive. (Not to say that Japanese manufacturers aren’t trying (and suceeding) in being competitive by innovating and pushing the envelope – they are, but the lower value businesses are being decimated by competition from other nations and that means less of the pie for the Japanese)

2. Consumer spending remains weak, and with corporate-world’s recovery having been built in no small part on the backs of redundancies and switching from a predominantly full-time workforce to one that is increasingly dependent on contract, temporary, and part-time employees who are naturally paid a lot less for their time (in terms of both hourly wage and benefits), I’d say the odds of a resurgence in consumer spending (especially to the levels seen in the heady days of the bubble) are bleak. Of course, you wouldn’t think that is the case if you went shopping in Ginza or Omotesando, but that is just a factor of the increasing disparity in disposable income.

I do agree that Abe isn’t going to make things much better. He doesn’t even have the Koizumi talent of making bold but substance-less assertions and making the electorate feel warm and fuzzy inside whilst not actually changing anything material at all.

Japanese version of CoComment December 22, 2006

Posted by fukumimi in blogosphere, Internet, Japan, VC.

A:CEuro notes that CoComment has raised $1.5M from Netage Capital Partners, the Japanese VC which was one of the main investors in Mixi. $1.5M for a 40% stage seems very reasonable (heh, understatement) to me. I doubt you could drive such a bargain with a Japanese IT start-up these days.

(The value proposition here is that CoComment takes (at least a proportion of) pageviews away from the site that the comment was originally posted on, by scraping the content from the marked threads, and diverts eyeballs to the CoComment site which then can be monetized. Basically a blogosphere impression hijacking engine :-))

Netage launched a Japanese version of CoComment at the end of November (although much of the site is still unlocalised, which might hinder users).  It is part of Netage’s Saaf portal which gets nil points for originality, featuring Digg and del.icio.us feature ripoffs. (even in Japan there were companies like Hatena doing most of what Netage is doing here a long time ago)

The CoComment investment will probably be matched to the Trend Match advertising engine (or some other ad engine) to monetize pageviews I guess.

I’ve been using CoComment for a while and find it handy to track comments, especially if you are a Firefox user.

However, it will be interesting to see how the blogosphere dynamic evolves, NRI published a report on the state of the blogosphere in Japan (article here in Japanese) where they pointed out that of approx 10Million bloggers in Japan, only about 10% actively comment or trackback. I don’t think that there will be much change in the proportion of bloggers who actively link and comment, but I guess that such bloggers do spend much more time on their PCs, which may be a plus for advertisers. However, at the same time my gut feeling is that the more PC-centric a person’s lifestyle is, the less they actually click through CPC ad links. I certainly don’t click on many ads at all….

On Mobile RSS December 21, 2006

Posted by fukumimi in Internet, Mobile.

Aplix Corporation and Sweet Inc have announced a partnership to develop a mobile RSS solution. Aplix licenses its JBlend J2ME platform to handset manufacturers (amongst others) and JBlend powers many of the phones sold for all of the networks in Japan (and they have an increasing presence overseas as well). Sweet is the subsidiary of Japanese mobile internet development/production company, Yumemi.

Aplix is developing extensions to JBlend (corresponding APIs) to handle mobile RSS applications and, and Sweet will be developing applications for mobile handsets which will use RSS.

Sweet already has a couple of carriers supporting the RSS reader applications created by them (NTT DoCoMo and Willcom).

The new partnership seeks to explore ways to make mobile RSS usage easier, currently the specifications surrounding Java applets on some phones (defined by the carriers) apparently limit the usability of RSS readers.

Some random thoughts around this issue follows….

Thinking about how mobile RSS will be used, I can’t help but think that a dedicated mobile specific RSS solution isn’t the goal. Even with a good mobile RSS reader, RSS feed management is likely to be a nightmare if you have hundreds or thousands of feeds. I certainly don’t want to go through resubscribing to feeds on my phone. My ideal solution is for a mobile interface which is synchronised with my PC RSS reader. Whilst web-based RSS readers are useable, I personally currently prefer a desktop reader, but it would be nice to have a solution which syncs to a web-based reader which also provides similar connectivity from a mobile device. For mobile devices, it seems some form of smart feed aggregation and distribution is even more compelling than for desktop use. By supplying the aggregation component, the problem of only being able to access one server per Java application (as is the case for certain carrier specs at the moment) is neatly circumvented. Being able to specify (or perhaps even better, for the server-side logic to work out what I want to read – based on user behaviour feedback) which feeds I want access to from my phone would be nice.  By integrating the mobile app with the PC web-based and desktop apps, it would make feed management a lot easier especially for heavy users who are likely to use a desktop PC as well as their phones to access the internet.

Thinking further along those lines, it would be handy to have email access which is similarly device independent…..

Japan: A blind spot? December 21, 2006

Posted by fukumimi in Economy & Business, Education, Japan.

Title courtesy of Shantanu, who suggested I blog my tuppence worth on this issue. (he actually suggested I comment, and I elected to do so here as I suspected that my comment was going to be rather long and boring and didn’t want to waste real estate on his blog – sorry it took several days to respond)

Shantanu’s post was triggered by a WSJ piece (advertorial actually, sponsored by METI and JETRO) on page 6 of the December 14th edition, and on page 20 of the WSJ’s Asia edition which we get here in Tokyo. [Added 12/22: I have scanned the relevant advertorial, and was going to post it (or a link to some storage in the sky) here but seeing people from METI and/or related organisations seem to be reading this, I decided I would not give their advertorial any free publicity. For people who are really interested to see the original article, drop me an email and we’ll see what we can do]

The centerpiece is a map of Japan, showing the economic sizes of Japan’s regions and comparing them with countries of similar economic size (indicator used is GDP, Japanese regional figures for 2003, national figures for 2005)

Kanto $1650B (Italy’s national GDP=$1766B)

Kinki $681B (Australia’s GDP=$708B)

Chubu $656B (The Netherlands’ GDP= 625B)

Kyushu $406B (Belgium’s GDP=$372B

Tohoku $357B (Switzerland’s GDP=$368B)

Hokkaido $168B (Thailand’s GDP=$169B)

Shikoku $116B (Singapore’s GDP=118B)

No surprises that the Kanto region (Tokyo and its peripheral prefectures) is the biggest economic engine of Japan, accounting for $1.65Trillion, out of a total of somewhere north of $4Trillion. Second comes Kinki, which includes Osaka, Kyoto and Kobe. Third, Chubu, which includes Nagoya (and, crucially, home to Toyota). Kyushu, the south island, Tohoku, the “North East”, Hokkaido, the north island, and Shikoku (the smallest of the 4 main islands – home to Nichia the world leader in white and blue LEDs and, um, sanuki udon?) bring up the rear.

Not bad for a country with an area smaller than the state of California (Japan approx 375,000sq.km, California approx 424,000 sq.km).

[Off topic, for a piece paid for by Japanese governmental institutions, I note that both Okinawa (whose numbers I assume are included in Kyushu) and the disputed northern territories are missing from the simplified map. Typical of the lack of consistency exhibited by the Japanese government on these things….]

Shantanu says:

…it is surprising that not more people pay attention to what is happening there in terms of technology and innovation.

What drives this apathy?

Some possible answers follow:

  • Rather than apathy of outside observers, it may be that there is a significant structural problem with actually seeing what is happening here. Lingustic barriers still pose a significant problem, much of the technology reporting is confined to Japanese (and (but?) there is a LOT of it if you can access the language – but not really in the marketing oriented form accessible to people unfamiliar with the specific technology at hand), and there really doesn’t appear to be much effort made to disseminate (competently) information about or from Japan more proactively to the international market.
  • The language barrier is a two way issue of course, and whilst there are more and more Japanese capable foreigners out there, the information flow asymmetry is exacerbated by the lack of J-to-E resources outside Japan. Where once Japan was the focal point for Asia strategy for global (read US and European) firms, it has been displaced for mind-share by China, India and other emerging markets exhibiting strong growth and therefore opportunities at a bite of an increasing pie. This basically comes down to the fact that Asia seems to attract attention as a market first and foremost (and cheaper resources second), and not as a source of technology or innovation as far as most US and European companies are concerned. For all of the fuss about India and China, how much is about sourcing world beating technology and how much is about the market opportunity?
  • The fact that, in Japan, much of the innovation and technology occurs inside large corporations (and is kept there) is also an issue, you get a peek at the exciting technologies from time to time, but I suspect a lot of interesting work is fades into the noise in the huge portfolio of R&D activities going on at big firms. I suspect that the corporate culture and also the culture of Japanese technologists (and corporate workers in general) is a factor in the lack of liquidity in skilled resources in most industries. Also, the large corporations tend to be big enough to not have to sell technology, only the products thereof.
  • Exactly because Japan is such a big marketplace of technology, the vast majority of Japanese technologists do not need to look beyond Japan to find a market for their technology, even if they were keen to market the technology outside of their organisation (and I don’t think that is necessarily a given). Thus, they seem to be less aggressive in getting their message out globally. Even for VC-backed companies, virtually all of them which are successful can get to an IPO exit on domestic sales alone – so why bother with the international market for which one is ill-equipped?
  • It seems the bulk of successful companies with superior technology often do not have the aggressive corporate culture which elevates their visibility globally. I certainly can’t think of many young technology companies who have really made a global impact. Even the so called success stories of Japan’s Internet economy are basically domestic players, and I would suggest they aren’t really technology companies anyway [in the sense that technology is not their key competitive advantage].
  • Whilst foreign companies embrace new corporate strategies, Japanese companies are being left behind, and the SMEs are the worst offenders, especially in embracing the web. I cannot for the life of me understand why more SMEs do not use this infrastructure -wait, I can understand, IT literacy is surprisingly low especially in the older (but still working) generations. People doing research have leveraged the web to full effect, but the flip-side is that if you aren’t on the web, you might as well not exist. And if you aren’t on the English web, you might as well not exist to the international audience. That might be as much a reflection on the evolution of our research habits as much as anything, and an indication of how reliant we all are on the web for so much of our initial research.
  • Of course, often it makes sense for companies to target local markets first, it is often a matter of priorities and resources. The fact is, for many venture businesses and SMEs, selling overseas is a daunting prospect, especially with the real lack of language skills at many of these organisations. The number of linguistically competent Japanese has grown considerably, but the reality is that many people with these valuable skills are scooped up by larger Japanese and, for the really competent, foreign corporations. Despite the widely notion that Japanese have begun embracing a change in career aspirations and become less wedded to the idea of a job for life at a “prestigious” company, the large majority of jobseekers still seem to be looking for the same thing their predecessors were, 5, 10, 20, 30 years ago. Whilst the trend is towards an increase in alternative career paths, the absolute numbers are still insignificant. Further, I believe that not all sections of society are internationalising at the same speed and Japanese technologists residing in Japan may be somewhat more conservative (as well as perhaps having had less language education). The culture both in academia and corporate environments are less flexible than in, say, the US. I would guess that technologists who have been exposed to and prefer the alternative elect not to return to Japan. There are lots of Japanese academics and corporate professionals who have indeed chosen that route. Would it be unfair to point out that the Japanese system doesn’t really do much to enhance the ability of technologists as communicators?

As for the piece itself, it seems like a poor attempt at a marketing pitch, with dodgy copywriting to boot:

The result is that the map of Japan – some of whose eight regions exceed the size of some nations in terms of economic output – is starting to bristle with clusters of foreign-invested enterprises.

The highlighted part of that sentence is utterly vacuous. And the word “cluster”, you can see the METI influence right there.

We also have statements like:

Transport facilities such as airports and seaports need to be upgraded and soft infrastructure, such as financial services, enhanced.


Which smells just like the rural pork barrel projects that the LDP and its rural and construction backers love to see doled out.

FACT: However much TAXPAYERS’ money is wasted on building unnecessarily expensive infrastructure, foreign investment (ANY investment) is NEVER going to happen evenly throughout Japan.

Well, at least Honma has gone… December 21, 2006

Posted by fukumimi in Japan, Politics.
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But with his resignation “for personal reasons”, the LDP are probably going to pretend that the affair is behind them. It seems that many people knew of his living arrangements, an anonymous source saying that the mistress was well known in political circles because she was the mama-san of a hostess bar in Osaka where political types liked to hang out. Clearly the issue is about more than a personal indiscretion, but I suspect the media attack dogs have been called off and they won’t make much of an effort to deal with the heart of the issue, which is how someone with apparently known flaws was allowed to assume the position in the first place. The nomination was due directly to PM Abe’s and the Cabinet Office’s dislike of the previous chairman’s position, and Honma was the hand-picked replacement. Says something about the values and priorities of the government….


Posted by fukumimi in Energy, VC.
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A must read from Bob Metcalfe guest blogging on VCMike

via Paul Kedrosky’s blog (another one which should be on your reading list)

Lots and lots of good points.