Report No.31
*****************************************************
Japan Entrepreneur Report No. 31 May 2005
*****************************************************
- $460 billion service market under way
- Fun facts about entrepreneurship in Japan
- Expat complaints hide million dollar ideas
- Wisdom words, bits and bytes
*****************************************************
$460 billion service market under way
A trillion yen here, a few hundred billion yen there--add it up and
pretty soon you're talking about real money.
Another "invisible" services market is quietly getting under way in Japan.
This one is worth 50 trillion yen, or some U.S. $460 billion, according
to a recent issue of Nikkei Venture.
Where's this colossal new market? In a sprawling, nationwide hodgepodge
of nearly 400,000 government-owned and operated tourist attractions,
museums, resorts, hot springs, public meeting halls, sports facilities,
parks, recreation centers, preschools, employment services, community
centers, libraries, senior centers, art galleries, prisons, youth hostels,
graveyards and other facilities.
Here's the problem, and the flipside opportunity: Civil servants still
run the overwhelming majority of these 400,000 government-owned
facilities, and many operate in the red. So a growing number of municipal
government offices are starting to hand over the management and marketing
of these money-losing ventures to private contractors who can operate
more efficiently, think more creatively or market more effectively.
Reorganizations of this sort became possible in 2003 with the revision of
laws limiting the operation and management of government-owned facilities
to corporations majority-owned by the government. Such quasi-governmental
organizations are usually staffed by civil servants and headed by
amakudari ex-bureaucrats. Lately, though, a small but growing number of
local government offices are starting to take advantage of the 2003
change by inviting private contractors to bid on assuming control of part
or all of a facility's operations.
The opportunities aren't restricted to companies with property management
or related expertise. Many of the facilities require services for
cafeterias, vending, laundry, cleaning, distribution and supply logistics.
Others need revamping by professionals with expertise in construction,
retail management, tourism consulting, accounting, marketing and related
areas.
During the go-go high-growth years, Japan built thousands of concert
halls, community centers and other bricks-and-mortar hardware in
locations where demand for such facilities was modest at best and non-
existent at worst. Management of these high-maintenance boondoggles was
entrusted to the quasi-governmental organizations, many of which accrued
massive operating losses through wasteful practices.
In some cases, otherwise-viable facilities were simply victims of slowing
regional economies. Local tourist attractions, museums and galleries, for
example, suffered because the disposable incomes of both visitors and
residents were dwindling.
Causes of the decline aside, the opportunities to revive the sites are
real and the bureaucrats are starting to act. The public-to-private
transfer is gathering momentum and will continue steadily in the coming
years, according to Nikkei Venture.
The reason, the magazine says, is simple. Without transferring service
operations to the private sector, Japan's municipal governments will go
bankrupt.
*****************************************************
Fun facts about entrepreneurship in Japan
Here are some fun facts to know and tell about entrepreneurship in Japan:
1. A Kodansha/Passmedia survey of 700 companies, each with annual
revenues exceeding one billion yen (about U.S. $9.3 million), found that
only 41 percent of the company presidents had college degrees. All
presidents surveyed were in their 20s or 30s, and twelve percent were
high school dropouts. Is academic accomplishment inversely correlated
with entrepreneurial success?
2. Nearly two thirds of those planning to start their own businesses
within the year will do so with three million yen (about U.S. $28,000) or
less in startup funding, according to a 2005 survey of 712 people
sponsored by the National Life Finance Corporation, a government lender
to small businesses. More than 95 percent of respondents said they intend
to start service businesses.
3. About 150,000 people in Japan started their own businesses in 2001,
the last year for which the Ministry of Economy, Trade and Industry (METI)
made estimates. That's only about one in 1,000 people, but industry
watchers say the number is growing steadily each year.
4. Some 20,000 people have started new businesses by taking advantage of
2003 legal changes that make it possible to start a legal corporation
with as little as one yen of paid-in capital.
*****************************************************
Expat complaints hide million-dollar ideas
Expatriates living in Japan tend to have mixed feelings about their
adopted home: they extol the nation's virtues one day and complain
bitterly the next. Beyond every foreigner's beef, though, lies a million
dollar idea, writes Bruce Rutledge. Read the story at
<http://199.239.235.234/reviews/JIC0505.htm>.
*****************************************************
Wisdom words, bits and bytes
"Boosting service sector productivity is one of the most critical
policies needed in an economy whose labor force is shrinking," Stanford
University Visiting Professor Noguchi Yukio wrote in a business weekly
earlier this year. "Today more than 20 million people work in services.
Halving this number through productivity improvements would basically
solve the problem of future labor shortages."
Speaking of Japan's service sector: In the coming months I will be giving
presentations about structural inefficiencies and the flipside
opportunities they offer entrepreneurs. Please join me where you can: in
Tokyo July 20; Honolulu July 26; Cincinnati September 10; Los Angeles and
San Diego the week of September 19-23; Chicago October 1. Details at
<http://www.SayingYesToJapan.com/events/>.
What's the world's oldest large-scale business enterprise? Here's a hint:
it's a Japanese company. Find the answer at <http://www.rolomail.com/cgi-
bin/sanadd.pl?54-1-136>.
Venture capitalist Suga Hitoshi and serial entrepreneur Mike Alfant will
teach attendees how to raise capital for their businesses in a panel
discussion moderated by Tokyo-born-and-raised venture capitalist and
entrepreneur Michael Korver. It all takes place the evening of Tuesday,
June 7. See <www.ea-tokyo.com> for details.
Tim Clark
Senior Fellow (non-resident)
SunBridge Corp.
Voice (U.S.) 503.235.4419
Fax (U.S.) 503.235.4429
clark at sunbridge.com
*****************************************************
Address change and unsubscribe instructions
To change your subscription address, visit:
<http://www.japanentrepreneur.com/change.html>
To unsubscribe from Japan Entrepreneur Report, visit:
<http://www.japanentrepreneur.com/unsubscribe.html>
*****************************************************
Copyright 2002-2005 Tim Clark
Reproduction in whole or in part without express written permission is
prohibited, but feel free to pass along or quote with URL
(<www.japanentrepreneur.com>).
*****************************************************
<< Archive | Page Top | Home
Copyright © 2002-2005 Tim Clark All rights reserved
