Of Vietnamese Postage and Japanese Gigabits

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TOKYO - If direct marketers could change one thing about the Japanese market, it would probably be the high cost of postage. At about the equivalent of 67 cents to mail a domestic letter, Japan's postage rates are among the highest in the world.

To avoid such high costs, companies channel mail through low-postage countries such as Singapore and Hong Kong (until the Japan Post clamped down on the practice in recent years). But there may be a newcomer to the low-postage club: Vietnam.

Recently, Japanese prospects targeted by Honda Motors received a direct mail package posted in Vietnam. The package had a Vietnamese theme and an offer of free Vietnamese herbs for anyone taking the package to a Honda showroom.

Such so-called re-mail, posted in a country other than one's home country or the receiving country, has been discouraged by the Japan Post, and for the most part the practice has ceased.

It isn't clear whether the Vietnamese theme was created as a rational for mailing from Vietnam (and I don't know if the Japan Post would accept this as a defense). As long as Japanese mailing costs remain high, companies will try to get around them.

Speaking of the Japan Post, Seiko Noda, Japanese minister of posts and telecommunications, recently gave a talk at the Foreign Correspondents' Club of Japan here. Her theme was the future of Japan's communications infrastructure. According to Noda, Japan's e-commerce industry generates about 82 billion yen in annual sales (US$680 million), a 120-fold increase over three years ago. She added that there are 1.7 million host computers in Japan, 40 times more than five years ago.

While this is impressive growth in a relatively short period, Japan lags far behind the US, which has 31 million host computers and twice the population of the Japan. Noda pointed out, though, that the number of host computers worldwide grew by 19 times in the last five years, whereas growth in Japan was 40 times higher.

Japan plans to continue developing the technical infrastructure needed to support e-commerce growth and to provide efficient access to information. Specifically, according to Noda, Japan is focused on its five-year plan for the "next-generation" Internet.

The plan calls for a secure network able to provide high-speed and high-capacity communications. Japan will begin testing an experimental gigabit network in July.

According to Noda, it would take 13 hours to transmit one year's worth of daily newspapers using ordinary sound circuits, such as telephones. A gigabit circuit, by comparison, would take only three seconds.

If the results of a recently released survey on Japanese Internet usage are any indication of Japanese resistance to the medium, creating a secure environment will be a key factor in increasing e-commerce transactions.

Just under 15 percent of those surveyed have bought from the Internet, while 72 percent have not purchased but have seen a menu or catalog.

Those who had purchased were asked what types of products bought. Nearly 40 percent had bought books, followed by 31 percent for software and 20 percent for food.

Those who never purchased were asked why not. Security concerns was the top answer, cited by 58 percent. Fifty-two percent said nothing interested them, while 24 percent said prices were too high. Eighteen percent said there were too many steps required to buy.

Japanese tend to be extremely risk-averse, so concerns about security on the Internet are not surprising. Ironically, Japan recorded only some 4,200 cases of credit card fraud all of last year, so fear of credit card misuse is greater than the circumstances warrant.

Judging from response to my last column, accurate addressing of mail in Japan is a concern for many companies. To Patrick of Redmond, MN: I received your perfectly addressed test postcard six days after the postmark date.

I would like to invite readers of this column to let me know other areas of concern regarding direct marketing in Japan. I can't promise personalized answers, but I'd like to address those areas of interest to most readers.

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