iPark Tokyo The following article is part of a series on the activities of iPark in the region, assisting Korean companies in foreign business environments in the region. The writer is iPark's Tokyo CED (chief executive director) .... Ed. Exploring the IT market in Japan Reflecting the recovery of the Japanese economy, companies are advancing positive plant-and-equipment investment, which is leading the IT market as a whole. It is expected that IT investment in 2005 fiscal year should be 11,539,300 million yen and be the increase of 2.6% against the last year. The IT service market is entering a stable growth phase and a loose expansion continues, however, subjects such as smaller-scale deals, shorter development periods and a fall in service unit prices exist. The software package market shows firm growth with system infrastructure software such as security software, application life cycle management software, and storage software. The quantity sold in the hardware market has expanded; however, the hardware market reduces continuously by the trend of the demand shift to a low price product and a product price fall. Moreover, significant growth with information leak prevention solutions, including document management is shown by Private Information Protection Law which was enforced in April, 2005. It is predicted that a new IT investment associated with enforcement of the corporate reform law scheduled in 2008, takes place focusing on the field for the internal control of the company containing the financial audit. Although offering business consulting, IT consulting, and software investment relevant to the Japanese version SOX Law, will become much more significant in 2006 and reach a peak in 2007. It changed to IT investment for realizing the internal control of a company more comprehensively and it is predicted that the investment for building such an IT infrastructure continues expansion in 2008 and thereafter. As the number portability system starts in October 2006, NTT DoCoMo and SoftBank have enhanced investment for 3G service in order to oppose au (KDDI) which has advantage in 3G service. NTT DoCoMo invests 640 billion yen for 3G service infrastructure, and SoftBank invests 250 billion yen. Currently, there is a shortage of embedded software development engineers in digital appliances, mobile phones and the automobile industry, and most companies are very keen to recruit experienced engineers. Cooperation in IT industry field between Japan and Korea The OSS forum for OSS development and promoting diffusion is periodically held to promote cooperation among Japan, Korea and China. By the lead of iPark Tokyo, the Korea IT promotion Agency concluded MCA (Mutual Corporation Agreement) with IPA (IT Promotion Agency Japan) in November 2005 and established a cooperative framework in the software engineering field and the OSS field. Recently, ICT ministers of Japan, Korea and China agreed to study the standard technology in development of the 4G mobile phone together. 1) Image of "Korea IT" in Japanese market and product preference IPark Tokyo succeeded in "Broadband Korea" image establishment a couple of years ago. At present, the diffusion rates such as an optical fiber subscribers and 3G mobile phone subscribers in Japan is higher than in Korea, and an image that Japan is progressing in Broadband field is being established. "Korea IT" branding in DMB, robotics and ubiquitous field focused by "IT839 Strategy", has not succeeded. iPark Tokyo has carried out the activities for "Korea IT" brand building by introducing the latest IT information in Korea at Dynamic u-Korea Seminar and by the exhibit of "IT839 Strategy" and "u- IT839 Strategy" at trade show such as IPAX 2006, Interop Media Convergence Tokyo 2006, etc. However the recognition of "Korea IT" is still low. The status of "Korea IT" is relatively low compared with American and European brands, or Japanese brands, and it is equivalent to Taiwanese and Chinese brands. Since "Korea IT" brand is not yet established, it is involved in price wars in the market where competing products already exist, and market entry is severe for Korean IT companies. Of course, if the product has the originality, technical advantage, or competitive-edge, a possibility of succeeding in market entry will become higher. Practically, in PC online game and the IP-STB market, Korean products are overwhelming the Japanese market. 2) Influence of "Korea IT" booming According to Korea booming, the degree of attention to Korean digital contents including music and drama is very high in Japan, and the price of a drama is soaring 5 to 10 times. However, the benefit is not yet seen in the IT field. iPark Tokyo takes the activities to establish the image of "Advanced nation of communication & broadcast convergence" and "Advanced nation of integrated wires & wireless communication service", however the result is under the expectation. A cooperated activity with other Korean organization is absolutely necessary to build "Korea IT" brand more effectively and efficiently. 3) Improvement subject in IT business filed between Japan and Korea The big problem for Korean IT companies advancing into theJapanese market is not being able to rent an office because the Japanese landlord is very conservative regarding rental of an office to a foreign company. There is no way to resolve this issue. Another big problem is restrictions about working visa acquisition when Korean IT companies employ staffs for Japanese business and transfers them to a Japanese office. This problem is a subject solvable by government-level negotiations. However, there are other problems too. Last summer, iPark Tokyo conducted a survey of current status of 124 Korean IT companies which advanced to Japanese market. As the analysis result of success cases and failure cases, the basic principle and business strategy for success in Japanese market were drawn. iPark Tokyo carries out enlightenment activities for Korea IT companies which plan to advance into the Japanese market, such as Japanese market access forums and individual consultation meetings. iPark Tokyo activities iPark Tokyo has carried out four main activities: Promotional activities for establishing the "Korea IT" brand; Business launching support activities for Korean IT companies including tenants in the Japanese market, Enlightenment activities for Korean IT companies that plan to access the Japanese market; and investment attraction activities for Korean IT companies. Accordingly, iPark Tokyo has held 24 "Korean Tech Seminars" for disseminating the latest IT information in Korea. In 2005, the "Korea IT PR Center" was opened in iPark Tokyo web site, and "Korea IT" information such as solution, product, company, etc. is disseminated. In 2006, the exhibit of "IT839 Strategy" and "u-IT839 Strategy" is planned at IPAX 2006, Interop Media Convergence Tokyo 2006, etc. iPark Tokyo introduces the right business partners from the distribution channel database where more than 250 companies are registered, and provides the necessary support to conclude business alliances. For example, iPark Tokyo offers business booklets, such as the " Japanese IT market access guide" and "Business success conditions in Japanese market and subject according to growth stage for CEO at Korean IT S&M companies," and holds "Japanese market access forums" periodically for Korea IT companies planning to advance into the Japanese market. Also, iPark Tokyo holds "VC investment attraction forums" for offering matching opportunities with Japanese venture capital and investment funds to Korea IT companies.