Terrie Lloyd is a well-known foreign entrepreneur in Japan, arriving in 1984 and having established four companies in the past 14 years. He publishes Computing Japan, and runs LINC Media, one of Japan's fastest-growing Internet marketing and software development companies. He can be reached at terrie@lincmedia.co.jp.

Japanese Internet ? A New Frontier of Non-Tariff Trade Barriers

by Terrie Lloyd
 Foreign companies will have a whole host of trade issues to deal with in the next year or so, thanks to moves here in Japan relating to the Internet. Because the Internet is such a new environment, the details are still sketchy, but a picture is starting to emerge. And basically it's that through bureaucracy, government-sponsored projects, turf protection, and financial restrictions, doing business on the Internet in Japan is going to get harder to do.

1. Bureaucracy

       As a website production house, we have to deal a lot with JPNIC, the Japanese equivalent of InterNIC. These guys are a perfect example of a trade barrier created by obfuscation and bureaucracy. I have some stories to tell in a minute, but the most worrying thing is that while JPNIC is currently an independent body, there are moves afoot to make them a non-profit shadan hojin. It's common knowledge that shadan hojin only get their status by cutting a deal with the related government ministry so that ministry executives can sit on the board after retirement (amakudari). That means JPNIC will become a bunch of tenured old fogies who will be even harder to deal with.

       For those who don't know, in order to get your own Japanese domain name, such as www.computingjapan.com, you have to register with JPNIC and they give you a name and internationally recognized Internet address. Problem is that JPNIC only allows one domain name per company, so that production companies like us can't assign independent domain names to each project. This is a major business impediment and will become more so when major multinationals having different divisions want to start websites for each division. Currently the ways around this problem are simple. Either register with the States using a "dot.com" address, or register a fictitious company name. We found out by accident that JPNIC is not sophisticated enough to know if they are dealing with a real company or not. Thank heavens for small mercies.

       Regardless of the difficulties, one guy I know has got his act together and makes $100 Delaware companies in the USA, registers them as representative offices here, then registers the web domains. Smart! There's probably a business in doing that. What about off-the-shelf 10-cent Hong Kong companies?

       A sensible person might also ask, "Well, what about registering as a foreign company?" Unfortunately JPNIC is not well imbued with a sense of internationalism. The requirements are not clearly stated, but a quick phone call confirms that companies not registered in Japan can't have a Japanese domain name. Of course, this is not written down anywhere, but for the time being they're still telling the truth over the telephone. Of course, even if they did take foreign applications, the forms are in Japanese only and they're confusing even if you're a Japanese. If you make a mistake JPNIC will decline the application and you have to pay again! Then, there is the little issue of JPNIC charging ¥20,000 a year, versus InterNIC 's $100 for 2 years. Oh, and how about having to wait three to four weeks for JPNIC to hand-process the applications? Who'd have thought they were in the computer business?

       As anecdotal evidence of JPNIC's boneheaded attitude, several months ago my company created a website for the Semiconductor Industry Association in Japan. The SIAJ is composed of the top 20 US semiconductor firms in Japan. These companies have revenues of billions of dollars, have major research and development facilities in Japan, and pay truckloads of tax. In applying we did expect the usual run-around and requests for more information on just what this "SIAJ organization" was. But despite several submissions of documents from the SIAJ to JPNIC, the old guys in JPNIC handed down a final decision that they were not convinced that the SIAJ was a bona fide organization! Duh... anybody at home?!

       In the end, we registered the domain as www.siaj.org. It took only a few minutes to do, thanks to InterNIC's easy-to-use online registration and credit card payment system.

       Luckily having a ".com" versus a ".co.jp" address does not have a strong stigma attached to it. In fact a lot of major Japanese companies register in the States in preference to Japan because of the cheaper hosting fees and better bandwidth access to overseas markets. Even Yahoo Japan, which is heavily influenced by Softbank here, will list ".com" sites on their popular What's New page so long as they have Japanese in them.