BUSINESSWEEK ONLINE : MARCH 6, 2000 ISSUE
INTERNATIONAL -- ASIAN COVER STORY "The Revolution Is Starting" Japanese Net advocate Jiro Kokuryo talks about the country's come-from-behind strategy Jiro Kokuryo, an associate professor at the Keio University Business School in Tokyo, is one of Japan's leading Internet proponents. In 1998, he triggered controversy when he called for the introduction of flat-rate phone fees to encourage Internet usage in Japan. He accused NTT, the telecom giant that controls the local phone market, of delaying Japan's transition to the Information Age. Last year, NTT finally relented and began testing a flat-rate, high-speed Net-access service that it will introduce in Tokyo in May. Combined with the new boom in mobile Net phones, Kokuryo now believes that Japan is about to join the Net revolution. Kokuryo recently spoke to Business Week Tokyo Correspondent Irene M. Kunii. Here are edited excerpts: Q: Are you concerned that Japan may face another economic downturn that could wipe out the emerging Internet sector? A: I don't really want to worry, but on a macroeconomic level, it is a race against time. The Japanese economy has started to move forward a bit as a result of the fiscal-policy engine. It may last for another 12 months, but not 24 months. So we all know we can't rely on the fiscal-deficit engine. But we can depend on information technology -- the emergence of IT-based new businesses and the IT-based rejuvenation of existing industries. The power of IT is strong enough to create a vigorous economy and a dynamic society. Still, we can conceive of a scenario where there is a collapse. So that is why we are rushing things. Q: Is Japan headed in the right direction, and what can we expect in the way of new business? A: If we draw a road map, we can see that in the last eight years, we lacked strategy and a sense of direction. But there has been a big change, and many people are now convinced we have to do it all and change completely. There's been a lot of progress in terms of deregulation. Firms can now move to holding-company structures, and the big thing is the liberalization of stock trading fees, making it much easier for individuals to invest. So we now have a sense of direction, and we have confidence that we could do it better than others in such areas as mobile communications. When music downloading and video-streaming become popular, areas where Japan excels, the country will then figure more prominently. I have always claimed that networking and the Japanese society are well matched. See how big the mobile Internet has become here. Q: Is the Internet about to take off in Japan? A: The revolution is starting. We knew all along that it was just a matter of time. It was probably around last summer that I started to feel something was happening. But there is a second pessimistic scenario: That right now, there is too much cash [being invested in too few Internet companies on the stock markets]. I'm concerned about a backlash that could happen when investors get hurt and then turn against us. There are other problems, such as the lack of a supply of experienced Net managers or entrepreneurs. There are no venture capitalists who can judge whether a startup is viable or not. Q: NTT is lowering its fees, and competitors are stepping up with alternative Net-access services. Will that help hasten change? A: I've been campaigning hard on this point. A year-and-a-half ago, I was a joke, and [it was] thought I had started something unrealistic. Everyone agreed it was necessary, but all conceded that it was impossible. But last August, suddenly everything changed when Tokyo Metallic announced it would launch a flat-rate Internet service for everyone. I've never advocated one type of technology. It can be ASDL, fiber-optic, or even the good old telephone. Whatever it is, it has to offer speeds of 64K or more. Q: Softbank and others are setting up the Japanese operations of U.S. Internet companies and introducing the same business models. Is this a good strategy? A: I don't like to use the cultural argument, but at the same time, there is reason to believe that successful U.S. models have to be altered to be successful. We need to combine local insight with U.S. experience to be successful. But that kind of talent here is limited. The biggest issue we face is that growth is outpacing our ability to provide the right people. What we need to do is capture those people who are finally leaving jobs in big Japanese banks and other companies. It's unrealistic to think that they can go directly to a Net venture, so this is where Keio Business School and other institutions play a role in educating future entrepreneurs. Q: Will big conglomerates dominate the Internet? A: The game has just started. I tend to see it polarizing into huge players who have huge infrastructure, such as networks and physical distribution. As we've seen in the States, Christmas presents delivered on Dec. 26 mean very little. So a reliable infrastructure is important, and every player who wants to belong in this area has to be big. Q: Do you see Japan as a key player in the global Internet economy? A: There are certain things we can do better than the others, and other things that we're not good at. I think we can expect Japan to contribute in the way of Net games, such as delivering Pokemon games on the Net. I think we have a chance of excelling. We have a high level of education and literacy. Once an idea sinks in, acceptance then spreads quickly. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Japan's Net Builders (int'l edition) ASIA COVER IMAGE: Japan's Net Builders TABLE: Japan's Busy Net Builders...And Two New Net ``Incubators'' ONLINE ORIGINAL: "The Revolution Is Starting" ONLINE ORIGINAL: "On the Internet, Size Doesn't Matter" INTERACT E-Mail to Business Week Online

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