The information and communications technology industry will continue to create new businesses and products based on broader productivity and innovation. Japanese corporations are world leaders in many areas of electronics but what strengths do Japanese corporations have regarding the Internet? What are their weaknesses? What are possible success scenarios that exist for North American corporations seeking partners in Japan?

Experts point out that one of the strengths of Japanese corporations is to try and be all things to all customers, by adopting a "comprehensive-line" policy and avoiding outsourcing. However, in some ways this can also be a weakness. Whereas the mainstream is heading toward greater "specialization" centering on core competencies and modular assembly, Japanese corporations are comfortable developing products based on "original know-how" and then expressing this know-how in the software of the product. For example, rice cookers sold in Japan contain what is called in Japanese "micon" - software built into its chip. The "micon" delicately controls heat and power and cooks rice perfectly every time. Each and every manufacturer has independently created products having experimented with literally tons of rice. This approach can also be seen in many aspects of Japanese business, from LSI chips to automobile assembly.

On the other hand foreign firms tend to adopt "specialization" strategies. They concentrate on their "core competencies" and leave integration to others. In the personal computer (PC) industry, for example, it is critical that as technology advances, manufacturers not be left behind. As a result, business strategy and new product development is based on "platform" technologies such as Intel's CPU and Microsoft's OS. As the PC manufacturers develop new products they are faced with a smorgasbord of specialized products that "plug" in. Beyond specialization, some of the advantages of this modular approach reduced development cost and sharing risk rather than trying to "reinvent the wheel".

However, we have to think about compatibility when we assemble modules. Matching among best technologies does not always bring us an optimum result. Advanced technologies possessed by North American companies may achieve considerable synergy by combining with the Japanese comprehensive, know-how-based approach used by Japanese corporations. It is well accepted in Japan that Japanese corporations must adapt to new realities in global trade and make important structural changes to survive. The last few years have been the first serious crisis for Japanese corporations, and they are struggling with reducing bad debts, slimming down the number of employees, and facing with more competition due to deregulation. There is general recognition that they do not have surplus energy left to continue the "comprehensive-line" policy. In the future, even among Japanese corporations, the trend will be to quickly adapt advanced technology, outsourcing and embarking on joint ventures.

According to a survey conducted by the Nippon Economic Journal that asked what business people forecast will be the new technology-related markets in the 21^st century, many believe Japan will maintain international competitiveness in the manufacturing "hard" products. A good example of this strength is in "miniaturization of the products" to reduce weight, thickness or size and in mass production. However, they also expressed doubt that Japanese corporations will be competitive in such fields as networked businesses (on-line advertisement, electric money transfer, and internet-order selling). Recently, in the Japanese market we see many cases where Japanese corporations are seeking alliances with foreign companies, rather than obtaining know-how based on their own experience and expense. Late last year Japan Unisys and MCI Worldcom announced an agreement to create a consulting business focusing on "Computer Telephony Integration (CTI)." This joint venture is intended to capture some of the 165 million-dollar business expected within the next three years. CTI is a customer support system integrating computer and telephone-related technology. The demand for CTI is increasing rapidly especially among financial institutions and in the distribution industry. Customer information based on transactions can be accumulated and maintained in one record however, the consumer accesses the company. Deregulation in the financial and securities industry has allowed firms to provide more comprehensive service to customers. New services, such as telephone banking and call centers are growing quickly as an effective means to attract new customers. In the U.S., the number of call centers has reached more than sixty thousand, and business related to the establishment of CTI systems is growing at an annual rate of 30%. But Japan has less than one thousand call centers but is expected to pickup rapidly. CTI will play a leading role in the integration of information products and Japanese financial institutions are carefully looking for where investments can be made.

The fields where Japanese companies show weakness will generate new business opportunities for North American firms not only through new technologies but also from a shift in attitudes to collaboration with foreign companies. Through GVF, we anticipate many more joint ventures will be created to exploit synergies.