Japan and Other Nations Try to Match US on Internet Business

Reiko Chiba led the glamorous life of a Japanese TV idol but by age 20, she gave it all up to do something more meaningful.

"What I was looking for was something to do for the rest of my life," Ms. Chiba says. What she found was the Internet.

Now she is one of Japan's youngest - and one of its few female - entrepreneurs online.

Her company, Cherry Babe, provides Internet and intranet consulting in Tokyo and also designs and hosts company Web sites. It is a small but significant sign of how nations other than the United States are poised to close the Internet gap between them and the country that created it.

Almost anywhere one looks, foreign entrepreneurs are getting online to do business.

Although the US dominates the world of electronic commerce, its lead will almost certainly shrink as Internet competition heats up. Nowhere is this more evident than in Asia.

Survey of executives

When International Data Corporation (IDC) surveyed 11,000 information-technology executives worldwide, it found 52 percent of the executives in the Asia-Pacific region (excluding Japan) thought an Internet strategy was important or very important. Japanese executives were on par with Americans at 30 percent, while Western Europeans trailed at 16 percent.

Less-developed nations are particularly interested in getting online. Compared with building a factory or a global network of distributors, developing an Internet presence is a cheap way to gain access to the world's consumers.

"We call it the leapfrog effect," says Michael Sullivan-Trainor, director of Internet research at IDC's headquarters in Framingham, Mass. "While the US is definitely in the lead in Internet and intranet development ... a lot of the countries in the Asia-Pacific region show much more aggressiveness in Internet deployment."

Executives at Japan's computer companies make no bones about where they're headed. "Internet business in Japan will definitely catch up with what's going on in America," says Tadayasu Sugita, head of personal systems business group at Fujitsu Ltd.

Rise in number of users

The change will come slowly. Between 1997 and 2001, according to the IDC, the number of users of the Internet's World Wide Web will increase sixfold in the US to 180 million, fourfold in Western Europe to 43 million, and nearly six times in the Asia-Pacific region (including Japan) to 49 million.

Japan has special challenges to overcome. For one thing, just as its personal-computer (PC) boom has faded this year, so has its Internet enthusiasm. "There was an Internet boom in the past, but it has been very difficult to maintain," says Kousuke Aoki, director of the Multimedia Research Institute in Tokyo.

Another challenge is telephone charges. The prices of calls are seven to eight times more than those typically found in the US.

Then there's the Japanese language. With so much of the Internet based on English, those who can't read it have access to far less information.

Still, a surprising number of Japanese brave these challenges to get online. One of the largest Internet providers in Japan, Big Globe, had 2.4 million users at the end of September and is adding 30,000 new users a month. Most users of the service, which is part of computer giant NEC, are buyers of NEC computers. Nearly 8 million Japanese are estimated to be using either an online service or receiving direct Internet access.

Profits not coming yet

Many of them are going into business. Some 2,000 companies in Japan alone provide access to the Internet. "There are millions of those Internet entrepreneurs," says Chiba of Cherry Babe. But "it's not very profitable. They have to have some kind of safety net."

Millions of digital pioneers on this side of the Pacific haven't made any profits either. Not wanting to limit herself to a single field, Chiba is developing game software and also does promotion and event planning for Japanese music and film personalities. And she's also interested in getting more women involved in the Internet.

"The PC ... is something that men do, and I want to break that stereotype," she says.

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