August 2002 |
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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
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August, 2002
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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 .
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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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