* Autumn 1993 In this issue: Feature Article: Taking Control Profiles: Ssuga Japanese Bookstore Insights:The Art of Persuasion, Japanese Style Business Tips:Business Tips Culture: AMERICAN SOFTWARE FIRMS REAP THE BENEFITS OF LOCALIZING AT HOME The good prospects for sales of American software in Japan are getting even better. But to truly penetrate the Japanese market an American firm must "localize" its software - i.e., modify the code to run on Japanese platforms, and translate user interfaces as well as documentation. Fortunately, it is becoming both easier and less expensive for American software companies to carry out these steps themselves, in the United States. Firms that do so benefit from greater leverage in the Japanese market. Localizing in the U.S. increases the developer's share of the program's list price in Japan. "The American firm gains an additional ten to fifteen percent in royalties by manufacturing a Japanese version here," says Jack Plimpton, President of the consulting firm Japan Entry. "This is not only true for a $500 PC package but also for a $5000 vertical application." Legally as well, it is advantageous to localize at home. Attorney Jim Simon of Nutter, McClennen & Fish points out, "Localizing in Japan has the potential of confusing ownership rights in the software." Conflicting claims to the Japanese product can handcuff a firm that seeks to set up additional distribution channels. Finally, many software makers choose to localize in-house or close by so that their engineers can have maximum input into the process. "We want a high quality, uniform user interface for each international market, now and in future releases as well," says Louis Reynolds, President of Electronic Book Technologies of Providence, Rhode Island. Despite the numerous advantages of localizing in the U.S., many firms prove unable to resist an offer by a Japanese trading company to take care of everything, including the cost, in exchange for exclusive rights in Japan. One reason is that the cost and effort of localizing by oneself have seemed forbidding. This situation is rapidly changing, however. The success of Microsoft Windows and of the Mac in the Japanese PC market, and the trend towards open environments on larger computers, are giving American firms more familiar targets in Japan than they had in the 1980s, when various Japanese makers' proprietary systems dominated. Another plus: the structure of these newly popular operating environments allows easier localization. "It costs considerably less to localize for the Japanese Windows environment than for Japanese DOS, never mind for proprietary NEC or Fujitsu systems," says Carl Hoffman, President of Basis Technology, a Boston-based Japanese localization firm. Developers of Windows applications "can place their language-specific text strings in resource files separate from the main body of the program. Furthermore, by compiling these resource files into a separate dynamic link library (DLL), it is possible to distribute a single executable version to all your customers, who can select their preferred language." According to Hoffman, these capabilities simplify the job and enable developers to work with their Japanese partners without releasing the proprietary parts of their codes. Motif applications are also relatively easy to localize, and help is available from system vendors such as Microsoft, Apple, DEC and Sun, who run programs to support Japanization of third party applications for their systems. A key step in localizing for Japan is adapting a program to handle Japanese text by supporting the Japan Industrial Standard (JIS) character set of about 8,000 characters. "Although JIS and its variants are more complex than ASCII, the procedure for supporting JIS can be readily understood by an American software engineer, independent of his or her knowledge of Japanese," states Hoffman. However, David Pollack, Tokyo-based Director of Japan Market Development for the American Electronics Association (AEA), urges that beta testing be done by "native-speaker end users" to ensure the level of perfection demanded by Japanese customers. Industry insiders suggest that an American software firm strive for at least ten to twenty percent of its worldwide sales in Japan. The AEA estimates the Japanese packaged software market at $6.6 billion in 1992, about seventy percent of which was created by non-Japanese firms. The market is estimated by IDC Japan to be growing at about twenty percent annually. While success is not guaranteed - the Japanese market demands an innovative, bug-free product adapted for local users, and assiduous customer service - the winds of change have never been more favorable for American software companies setting sail in Japan. Sasuga Japanese Bookstore For all those desiring to keep up with the U.S.-Japan business world - indeed, for all those with an interest in any aspect of Japan - Sasuga Japanese Bookstore is an indispensable resource. Sasuga stocks a full line of books in English about Japanese business, history, culture and society, as well as dictionaries, language textbooks and travel guides. Readers of Japanese can choose from a large collection of Japanese books, magazines and comic books for all interests and ages. In addition to books and magazines, Sasuga offers Japanese-style New Year's cards, or nengajo (see Japanese Business Calendar) for those who wish to take part in this important business and social ritual. The exchange of nengajo provides an easy and effective means of building business relationships in Japan. (Large orders must be placed by the end of October.)Owners Karen and Minoru Yahara give prompt attention to phone (617-497-5460) and fax (617-497-5362) orders. Free catalog is sent on request. Japan Insider readers receive free UPS ground shipping for first-time orders ($25 minimum). The Art of Persuasion, Japanese-style There are few people better qualified to give advice about Japanese and American business than Consultant Shigemichi Takata, who combines first-hand knowledge of the traditional world of Japanese business with a long career as an internationalist. As a young man, Takata followed a typical path for a member of the Japanese elite, joining the large trading firm Mitsui & Co. after graduating from the prestigious Keio University in 1961. Later, he pursued graduate study at Cornell University's School of Labor Relations, traveled extensively exporting papermaking machinery to English-speaking countries, and married an American. Eventually, he left the security of the large firm to start his own trading company. In 1977, he sold his company and moved to the United States, where he consults for both American and Japanese firms. We Japanese feel we make decisions from our gut, our "hara," and not just with our minds. Western-style presentations generally rely on linear logic and well-articulated arguments. The ideas might interest us, but they don't move us to action. Like sumo wrestlers, we are not easily swayed. In fact, people who are especially verbal are often slightly mistrusted in Japan. I recommend that Americans doing business with Japanese change the form, not the content, of their presentations if they wish to be more persuasive. First, make small talk before jumping right into business. It is important to me, as a Japanese, to get to know you a little before I consider your proposal. Second, don't tell me your "bottom line" until the end of your presentation. Rather, give me all of the relevant data and let me anticipate your conclusion. After you've presented all of your main points, delay the conclusion still more. Introduce a related but less central idea. Take a break. Or take me to lunch. I call this the "buffer" stage of a presentation. I need time to consider inside my gut what you are likely to propose and how I wish to react. This stage presents a sort of mental challenge to the parties in the negotiation. It allows each side to size up the other's character, and makes business more satisfying in the end. Finally, make your proposal. At this point, you can show a little more feeling than you might in American business circles. If you really want my business, or need it, let me see that. It might influence my decision. Even if I don't say yes this time, I can sense your sincerity and will feel an obligation to return it. This is ideal ground from which a strong business relationship can grow. The style of interaction that Shigemichi Takata describes here manifests itself in all aspects of Japanese life. In business, you can effectively apply this sequence of steps to a single presentation, a several day visit, or to the whole sales cycle. Patent Problems? U.S. firms should do a better job of overseeing translation of their Japanese patents, concludes the report Intellectual Property Rights in Japan compiled by the U.S. General Accounting Office (GAO). Only 28 percent of firms surveyed check translations done by their Japanese patent agent. The study covers key differences in the two country's patent systems, areas where the U.S. is pressing Japan to change, and steps firms can take to get better results in Japan. One copy of report #GAO/ GGD-93-126 is free from the GAO at tel. 202-512-6000 or fax 301-258-4066. Two New Magazines Japan Related is a new business and culture magazine aimed at Americans working for Japanese companies, though much of the advice is useful in any business with Japan. A 6 times per year subscription is only $25, and companies ordering 10 or more copies receive a discount. Mention Japan Insider for a free sample. Tel. 404-607-1166. Japan Technical Affairs is a new quarterly journal covering Japanese technology and related public policy. Both American and Japanese authors contribute to the journal, which includes detailed reviews of relevant books and U.S. government reports. Sample issues are $10. Insider readers receive 20 percent off the $60 sub-scription fee. Tel. 609-466-2281. Autumn The custom of koromogae clearly marks the change of seasons in Japan. On October 1, regardless of the weather, all uniform-wearing workers (including the majority of female employees) put away their summer uniforms for heavier winter ones. Also on October 1, Japan enters the second half of the fiscal year, shimohanki. Keeping tabs on physical as well as fiscal fitness, many companies hold an outdoor sports day, or undokai, in October. On the chosen day, company sections compete with one another in events designed to boost company morale and group spirit. Outside of two national holidays, November is a relatively uneventful month. December, by contrast, is quite busy. Mid-December brings the winter bonus, which is traditionally based on seniority rather than merit. Equal to anywhere from one to four months' salary, the bonasu, issued twice yearly, forms a crucial part of any Japanese employee's income. The winter bonus also thankfully coincides with o-seibo, the year-end period of gift-giving in Japan. As with o-chugen, the summer gift-giving period, o-seibo gifts are purchased for anyone to whom the giver feels indebted. End-of-year parties, or bonenkai (literally, "party to forget the year") keep the social calendars of company workers filled in December. An employee might attend a bonenkai given by his section, another given by his floor, a third for all new employees, and so on. The writing of nengajo, or New Year's cards, also keeps people busy in December. Nengajo, which Japanese send to friends as well as business contacts (one person typically sends from fifty to several hundred cards) must arrive at their destinations on January 1st. The post office takes care of logistics as long as the cards are marked "nenga" and mailed early enough. If January 1 brings any cards from people to whom you failed to send one, custom dictates that a card be sent immediately. Shigoto osame marks the last day of work for the public sector before the New Year's holiday, which is a sacred time of completion and renewal in Japanese culture. Most private companies begin their holiday on the 27th or 28th and stay closed through the early part of the first week of January. _________________________________________________________________ National Holidays October 10 Physical Education Day November 3 Culture Day November 23 Labor Day December 23 Emperor's Birthday _________________________________________________________________ Upcoming Trade Shows October 28-30 Japan Nuclear Medicine November 10-12 '93 Patent/Information Fair November 22-26 Multimedia December 1-3 Semicon Japan December 8-10 Unix Fair '93 December 16-17 Alliance '93 _________________________________________________________________ JAPAN INSIDER Copyright 1993 Japanese Language Services, Inc. All rights reserved. PUBLISHER: Carl Kay EDITOR: Laura Silverman Japan Insider Japanese Language Services, Inc. 186 Lincoln Street, Boston, MA 02111-2403 Phone: 617-338-2211 Toll-free: 800-USA-JAPAN Fax: 617-338-4611E-mail: insider@japanese.com World Wide Web: http://www.japanese.com