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What's New  August 2002

Market Snapshot - Japan
The rise and fall of NASDAQ Japan

Each month the Japanalyzer takes you inside one of Japan’s IT industries- showing you who’s who and where the market is heading. This month we focus on the stock market that was supposed to be the savior of Japan’s IT venture community: Nasdaq Japan. Launched in June 2000 as a joint venture between the US Nasdaq (43%) and Softbank Japan (43%), Nasdaq Japan was designed to serve as the basis for a 24-hour global stock market when aligned with Nasdaq in the US and Europe. For new Japanese ventures, Nasdaq Japan’s relatively liberal listing requirements meant increased access to capital and the public offering process. Expectations were so high for the fledgling market that the mere announcement of a Nasdaq in Japan, sparked a competitive response from the Tokyo Stock Exchange which launched a similarly liberal Mother’s (Market of the High Growth and Emerging Stocks) Exchange. But as with many projects and concepts spawned during the heady dotcom days, Nasdaq Japan is no more. Last week, Nasdaq Japan announced it will wind down its operations in the next few months and pull out of Japan completely by November of this year.

Nasdaq Japan made some bold forecasts in connection with its founding: 10 companies listing per month, 2000 companies listed by 2005, and eventual real-time trading of all 5000 US issues. Actual results have been disappointing but not entirely unexpected given the change in market conditions. Today Nasdaq Japan has 100 listings – half the number projected by now. While US issue trading has never taken place, Nasdaq Japan has been successful in listing several major Japanese subsidiaries of US companies such as Starbuck’s and E-trade. Nasdaq Japan has been quick to point out that while it has not met its numbers, it captured nearly 30% of the IPOs (initial public offerings) in Japan.

So what led to the fall of Nasdaq Japan?

According to John Hilley, Chairman of Nasdaq International the failure was due to poor market conditions, a weak Japanese economy, and regulatory hurdles. He added ”our timing was terrible. We launched in June 2000 when the market was still incredibly robust but then we (hit) a bear market. Try finding startups in a bear market- it’s terrible.” Others have suggested that there simply was too much competition for too few ventures. TSE’s new Mother’s exchange and the OTC (over the counter) market’s Jasdaq gave Nasdaq Japan a good reason to fold.

According to some, Nasdaq Japan’s relationship with OSE was both the rise and fall of Nasdaq Japan. Nasdaq Japan had teamed up with OSE to operate as an independent market within OSE in order to utilize OSE’s automated infrastructure. The original agreement between the two sides stipulated that the technology employed would move the exchange away from an auction system to a dealer market – a step known as Phase 2. Yet Phase 2 needed to be approved by the OSE's members, mainly smaller brokers with operations that focus on client meetings rather than high-tech dealing systems. These smaller brokers failed to see the need for the new system and would not pay for it even with Nasdaq agreeing to pay up $4.5 million, most of the system’ s cost.

So it's goodbye to Nasdaq Japan by order of a special board meeting held last week to approve the US Nasdaq’s recommendation to close its Japanese subsidiary. The good news for companies already listed with Nasdaq Japan is that they will continue to be traded through the Osaka Stock Exchange (OSE). The other beneficial outcome is that Japan now has a dedicated venture-enabled stock exchange linked to the Tokyo Stock Exchange, Mother’s, that owes its creation to pressure from Softbank and Nasdaq.

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This Month's Bridge Builder
Featuring the real voice of IT across the Pacific

August, 2002 

A tale of two Bridge Builders
Mr. Noritaka Nobukawa, Director of Business Development, Widcomm and Mr. Barry Eisler, Author and former Attorney

Those with an intense interest in another country or culture often face a dilemma. They must ask themselves: “How can I work in that country without sacrificing my career goals or failing to fulfill my obligations to both my family and myself”. For example, the Japanese manager who wants to work in the US must be prepared to leave the safety and comfort of the “salaryman” lifestyle to go it alone in the “employment at will” US market. Similarly, American business people interested in Japan must resolve themselves to spending time and money learning both written and spoken Japanese and adapting to the unique ways of Japan. It isn’t an easy decision- but for Noritaka “Nori” Nobukawa and Barry Eisler, it was simply a matter of following one’s passion. Mr. Nobukawa and Mr. Eisler are two Japan/US “bridge builders” who recently presented their stories at the Keizai Society ’s US Japan Business Forum entitled “Managing your career: a Japanese and American example.” This month’s Bridge Builder features key highlights from their discussions.

Mr. Nobukawa started his presentation with a brief introduction of his employer, Widcomm ("Wireless Internet and Data/Voice Communications")- a provider of Bluetooth and 802.11 short-range wireless connectivity solutions. At Widcomm, Mr. Nobukawa is responsible for business development, specific to the company’s presence in the Japanese market. A key contributor to Mr. Nobukawa’s success at Widcomm is his past employment with Sony as both an Engineer and Sales Manager. At Sony, Mr. Nobukawa had the opportunity to make numerous contacts both in Japan and the US, where he worked in San Jose as a Western Regional Sales Manager. Mr. Nobukawa liked working in Silicon Valley so much that he decided to leave Sony in 1995 in order to pursue his dream of working in the US High-Tech industry. However, like many IT industry managers looking to “make it” in Silicon Valley, Mr. Nobukawa had to deal with the dramatic industry fluctuations of the past few years. Mr. Nobukawa found work at Adobe only to be laid off with downsizing. He then joined a startup called Collabria that went out of business. Due to his career focus, he was still responsible and in charge of his career choices and is highly successful in San Diego at Widcomm, largely because of his strong Japanese connections, his international business development skills, his international network, and bi-cultural business knowledge.

Mr. Barry Eisler, author of the recently published thriller “Rain Fall”, presented his story by tracing the steps through his transition from government employee to lawyer to startup founder to writer. After graduating from Law School in 1989, then working for the U.S. State Department Foreign Service. Mr. Eisler quickly determined that while this secure job was good for his career as a lawyer, it did not help satisfy his desire to learn about Japan and get involved with Japanese culture. (He chose Japan since it overlapped with his other interest, judo). So in 1992, he applied to various law firms in Japan and was hired by the Japanese law firm of Hamada & Matsumoto. While in Japan, he was fortunate to be eventually assigned to be in-house counsel at the Osaka headquarters of Matsushita Electric. He then chose to come back to the US to another new culture, that of Silicon Valley. Here, he started as a lawyer then as a member of a startup’s founding team. His knowledge of Japan and Japanese helped at the start-up, but passion called. Becoming a writer, Mr. Eisler explained, was an outcome of his experiences in Japan, and eight years of work on his manuscript, during his free time, especially during the long flights to and from Japan. “Rain Fall” incorporates many of his passions such as judo (Mr. Eisler trained at the Kodokan in Tokyo). He painstakingly revisited Tokyo sites to ensure that he captured the sights and sounds correctly.

Perhaps the most interesting part of each presenter’s discussion was the use of quotations to emphasize the requirements for successful career building. For Mr. Nobukawa, inspiration came from Dr. William Smith Clark whose mission, on behalf of Japan’s new Meiji government, was to establish a modern, scientific, agricultural college on Japan’s northern frontier, the island of Hokkaido. Dr. Clark’s famous statement to his students - “ Boys, be ambitious!” Mr. Eisler’s quote stresses the importance of effort in achieving one’s goals. He quoted Thomas Edison who said “the harder I work the luckier I get.”

The Forum ended with an excellent summary from the Keizai Society’s Nadine Grant, who weaved together the commonalities from the panelist’s stories. She pointed out that both presenters:

- are bilingual: an ability which clearly drove their careers forward

- based career decisions on geographies because they realized the importance of “being there”

- followed their passions and made their careers fit their personal interests

- used their contacts and networks to move their careers along

- leveraged their current employment to research potential new career opportunities

For more information on the Keizai Society, please visit them on the web at www.keizai.org . For more information on Mr. Barry Eisler and his book “Rain Fall”, please visit www.barryeisler.com . Mr. Noritaka Nobukawa can be reached via e-mail at nnobukawa@widcomm.com .


Previous Interviews

Upcoming Events,

Auto-ID Expo
September 11-13, Tokyo Big Sight (Tokyo International Exhibition Center)
An exhibition and conference dedicated to automatic identification technologies, organized by Japan’s Automatic Identification Manufacturers Association

International New Technology Fair
September 25-27, Tokyo Big Sight (Tokyo International Exhibition Center)
An exhibition of new patents and technology under research and development, sponsored by the Nikkan Kogyo News.

CEATAC Japan 2002
October 1-5, 2002 Makuhari Messe (Nippon Convention Center)
An exhibition of consumer electronics, electronic parts, industrial electronics, telecommunication.

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