Internet Market Defies Japan's Stumbling Economy

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Despite Japan's stumbling economy, e-commerce and the infrastructure it needs to thrive continue to forge ahead as more and more Japanese consumers rush online and U.S. companies come in to exploit the trend.


Thus priceline.com took the plunge recently when it announced a joint venture with Softbank's e-commerce subsidiary to be called priceline.com Japan Corp.


The business will start by bringing the "name your own price" concept to the selling of leisure airplane tickets and hotel reservations to Japanese travelers.


Priceline.com Japan Corp. will license the U.S. company's business method and will use its technology, marketing and operations. Softbank e-commerce Corp. will contribute management expertise to help launch the venture.


"Any Internet company looking to build a successful worldwide business and brand must have a significant presence and commitment to the Japanese market," Richard Braddock, priceline.com's chairman, said.


Softbank is a Japanese multinational with extensive holdings in the United States and stakes in some 400 Internet companies worldwide. Its other joint ventures include Yahoo Japan and E-trade Japan.


The deal calls for the new company to pay priceline.com an annual licensing fee "in respect" of priceline.com's intellectual property. Purchase of a convertible bond will give the U.S. firm the right to take an equity stake "under certain conditions."


Priceline.com has been moving across the globe this year, beginning with an alliance in January with Hutchison Whampoa Ltd. that would introduce services to China, India, Hong Kong, Taiwan, Indonesia and other Asian countries.


In February, priceline.com announced plans to launch a new company called MyPrice in Australia and New Zealand. And at the end of June, the company announced another alliance with General Atlantic Partners to bring the business to Europe.


Nor was this Softbank's only deal with a U.S. dot-com. Last month, it announced a pending deal with the U.S. online diamond dealer Odimo.com to set up a joint venture for selling jewelry, watches and accessories online.


Details reportedly will be wrapped up by September, with the business going online in November. Softbank will hold 60 percent in the joint venture, and Odimo.com will hold the rest.


Fair, Isaac last month announced a partnership with Fujitsu FIP, one of Japan's largest Internet companies, for the launch of Fair, Isaac's Web-based credit decisioning service launched in the United States in May under the LiquidCredit (SM) brand.


The target audience for the service is Japan's 800-plus banks and other credit grantors to help them extend their business into the consumer market. The service is due to start in the fourth quarter of this year.


It will provide four products and service components to Japanese financial institutions, a joint statement said, including analytic consulting, underwriting strategy and operations consulting, scoring services and an automated decision-support software system.


In the call center arena, an Ohio-based call center operation, TeleDevelopment Services, launched a joint venture with Telemarketing Japan, one of the country's largest telemarketing firms with eight locations in Japan and 3,500 employees.


The joint venture will be called TDS -- Asia Pacific, and will be headquartered in Tokyo. The idea is to provide both traditional contact management center services and consulting and training to Japanese companies and multinational firms with operations in Japan.


The TDS move, CEO Jon Kaplan said, came about because "the Japanese market is exploding with opportunity as telephone and Internet become widely accepted [media]" for conducting daily business.


"This market was lagging behind the United States, but the advent of the Internet is rapidly changing how this traditional market does business," he said. Kaplan also noted that he had developed a good relationship with TMJ over the past three years and that "nothing happens" there without one.


Nor is this a one-way street. Increasingly, Japanese DM firms are looking for a toehold in the United States to market various products, including cosmetics. DHC, one of the country's largest cosmetic DMers, is the latest one to try.


The company already has an operation in Taiwan and is moving abroad on the back of record sales and profits at home. In the fiscal year that ended in July, turnover hit 64.5 billion yen ($600 million), up 50 percent. Profits rose 42 percent to 16.5 billion yen ($154 million).
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