Pulling Down the Barriers

As the players in e-commerce come to realize the need to break down language and cultural barriers in order to succeed globally in otherwise borderless communications, the impact on the language industry is becoming tangible. The language industry analyst Rose Lockwood puts it exactly: “It is not an exaggeration to say… that language, more than geography, will determine the extent and scope of the potential market for online commerce [2]. ‘Location’ will become a language issue…”.

E-commerce and the language business are intrinsically intertwined in this manner. As the global economy matures alongside the Internet’s growth, it will become increasingly evident that localization is an essential support industry for worldwide e-commerce that has got to be multilingual-ready. This environment presents an unprecedented opportunity for the language industry in general and the localization industry in particular.

Figure 1. Source: Global Reach http://www.glreach.com/globstats/

Japan’s Internet Market and E-commerce

Although English has long been considered the lingua franca of the Internet, the fastest growing group of people online today are those who use LOTE (i.e., a “Language Other Than English”), and Japanese users make up some 20% of them—the single largest LOTE group (see Figure 1). This makes it well worthwhile for the world’s Internet commerce providers as well as localizers to seriously examine the emerging Japanese Internet market.

The MPT’s 1999 Communications White Paper provides a comprehensive picture of Japan’s Internet market as of the 1998 fiscal year (the year to March 1999). Users of the Internet in Japan were estimated to number about 17 million, with household and corporate penetration ratios at 11.0% and 80.0% respectively. In particular, household use is linked to the rapid increase in the female online population, as is also pointed out by a number of other sources3. As of early 2000, female users are estimated to make up nearly 30% of the total Japanese online population—a jump from 17.8% in the first half of 1998.

Some market observers consider this demographic feature to be a significant factor in targeting e-commerce in Japan. Keeping in line with the “speed” which signifies all things Internet, the White Paper points out that, while the telephone took 76 years to reach the 10% household mark in Japan, the Internet achieved the same a mere 5 years after its commercial launch. This will mean a very short lead-time for a support industry such as localization to learn the new communications environment. This has been amply demonstrated by the sharp learning curve still faced by localizers dealing with Web localization.

As of February 1999 Web servers located in Japan totaled 75,000 units with some 29.5 million Web pages, containing over 1,024 GB of accessible information. Unfortunately, these statistics do not indicate a breakdown of the content into Japanese and other languages. However, according to a February 1999 WWW Content Survey by MTP3 95.4% of link sites for Japanese HTML files were domestic (linked to .jp domain), with only 4.6% linked to overseas sites [3]. The language barrier must surely be the prime reason for the lack of overseas links. This is yet further proof that language is becoming a barrier to rather than a medium for communication.

Japan’s Internet commerce products and services market (which includes B2C and B2B) doubled in 1998 to reach ¥ 166.5 billion (USD 1.66 billion), but is still in its infancy. A 1998 survey [4] conducted by the Japanese Ministry of International Trade and Industry (MITI) and Andersen Consulting compared the Japanese and American B2C markets for 1998 with the result that the Japanese market, worth ¥ 65 billion, is about one thirty- fifth of the American market and is four to five years behind in its developmental stage. However, the survey estimates the Japanese market will grow fifty fold to ¥ 3 trillion by 2003 with peak growth occurring between 2001 and 2002, provided that the infrastructure requirements and content business developments can satisfy the market demand.

In terms of technical factors negatively affecting the growth of e-commerce, the White Paper identifies slow Internet access to be the primary concern among those surveyed (30.2%), followed by lack of a secure payment mechanism (29.0%). In relation to the first issue, MPT found that 46.8% of the total files accessible via the Web in Japan were image files, which may explain the slowness and justify the need for a bigger pipe. Whether or not Japanese Web sites tend to be particularly graphicsrich (suggesting a Japanese propensity towards images in their Web-based communications) requires further investigation. The second issue, concern for security, in part reflects a national characteristic of the Japanese: their strong preference for cash transactions—the direct opposite to the plastic money societies of the West.

A recent follow-up study by MITI and Andersen Consulting points out some unique needs arising out of Japanese e-commerce, including the ability to accommodate a wide range of communications terminals likely to be used such as mobile-based access to the Internet, a system linked to global navigation systems widely adopted in Japanese cars and kiosk-type computer terminals set up, for example, in convenience stores [5].

In sum, Japan’s Internet market may be characterized by the following trends:

• It is a fast-growing market with growth expected to peak during the next two years;
• Female users are rapidly increasing, implying a significant contributing factor for future online retailing;
• Settlement methods need to take into account the consumer preference for cash transactions by secure means; and
• E-commerce providers will be required to allow customer access via a wide range of terminal devices.

Keeping in mind these broad underlying trends, let us now look into the real world and see who is succeeding with e-commerce in Japan and what strategy is apparent in terms of catering to the specific requirements of the Japanese online market.

Who is Leading Japanese E-commerce?

Japan’s acceptance of e-commerce is only just beginning and so far no local equivalent of Amazon.com or eBay has emerged. However, there is every sign that the tide may be turning, with the Internet population reaching a critical mass. One company responding to the opportunity is Rakuten cybermall (www.rakuten.co.jp), which accommodates over 2,000 shops with 600,000 registered shoppers [6]. With a monthly hit rate of 70 million, it is the winner of the 1999 Yahoo!Japan’s Web Site of the Year and is now associated with Microsoft through the MSN Shopping Channel. But what is special about Rakuten (which means “being optimistic” in Japanese)? Its mastermind Mr. Mikitani provides his insight into the Japanese online market as quoted in an interview by Japanese DIME magazine [7]. Rakuten’s foremost philosophy is viewing online shopping as “entertainment”. Rakuten’s commitment to making the shopping experience fun is reflected in various features it offers, such as a one-yen (one cent equivalent) auction and specials to match various seasonal events in Japanese culture. Rakuten is currently offering items related to cherry blossom viewing and also for the forthcoming May “golden week”—a week that has a cluster of national holidays.

Mikitani sees two symbiotic factors that draw Japanese customers to online shopping. One is that the cyber mode of shopping readily facilitates satisfactory customer-seller relationships for that particular group of customers who tend to be communication “otaku”. These are customers who shun face-to-face communication, preferring the anonymity of online transactions. Combined with this is the advantage in terms of cost-reduction, achievable relatively easily in online retailing in Japan in comparison with the US, for example. From its Web design to its settlement methods it is clear that Rakuten studies Japanese online customer psychology in minute detail. Most shops operating in their mall seem to offer a choice of arrangements in addition to credit card payments, including cash postal transfers or cash-on-delivery, whereby customers pay and receive the goods at a nearby convenience store. This is becoming a popular way for e-commerce settlements in Japan (these stores are omnipresent and there are some 7,800 Seven-Eleven stores, for example, throughout the country).

Not surprisingly, Mikitani is considering taking the currently local Rakuten overseas, in particular to other Asian markets such as South Korea, Singapore and Taiwan, and offering the site in local language versions [6]. This will be an interesting development to observe: a Japanese e-business operator localizing into foreign markets. Although Japan has been successful in globally marketing such hit products as Walkman, PlayStation, Tamagotchi or Pokémon in the bricks-and-mortar world, the new world order being set by the clicks-and-delivery mode seems to provide a different kind of playing field and a challenge.

Another interesting development in the Japanese e-commerce scene of late is the launch of eBay Japan. Towards the end of 1999 in reference to its ambitions to go international, eBay’s CEO Whitman was quoted as saying: “The battle grounds are France, Italy and Japan—the biggest prize, the second largest Internet market in the world” [8]. True to this statement, within a relatively short time frame eBay transited from its interim Japanese site, which was partially localized, into its fully localized eBay Japan site (www.ebayjapan.co.jp). Furthermore, in March 2000 NEC announced its participation in the venture as a 30% stakeholder with the balance held by eBay. With its ISP business, NEC has a customer base of some 2.8 million in Japan for whom an incentive package is being considered if they use eBay. A quick test drive of eBay’s Japanese site impresses and shows the seriousness of the firm to tackle the Japanese market. For example, the site allows transactions in the local currency as well as other special features such as sorting by the items being sold within Japan or items being offered in JPY together with special auction items selected for Japanese customers. eBay has done the full monty with its localization; the Japanese site is clearly more than a simple replication of its English language eBay.com site and is adapted to the local market interests and requirements.

Challenges for Localizing Japan into the Net Age

So, on the basis of the emerging picture of Japanese e-commerce what implications can be drawn for the localization industry? First of all, there will be a flurry of activities for non-Japanese e-commerce providers coming to the now Net-ready Japanese market, while at the same time Japanese players as in the case of Rakuten will be emerging and also going international. This will mean that in terms of language combinations, requirements will be not only from English into LOTE but also from LOTE to LOTE.

The pattern of bringing e-commerce into a foreign language/culture region so far seems to be to enter into an alliance with a local firm, as in the case of eBay Japan going with NEC. This strategy obviously not only has benefits for the design of local content but also the control of customer liaison at all levels in the local language and cultural context. For example, in the case of both Rakuten and eBay Japan, the importance placed on aftersales care is apparent to make up for otherwise “faceless” transactions.

According to the Japan Consumer Institute, which is gearing up to respond to consumer problems with e-commerce, while so far there are few complaints lodged for e-commerce transactions with local companies, there are such cases with non-Japanese providers, and these are obviously complicated by the language barriers [9].

This also points to a widening scope for language assistance required for e-commerce at every step beyond the localization of Web sites. What about interlingual dispute resolutions in e-mail, international free-phone lines or even online chat? Solutions to language mediation in such a wide range of media, often in real-time and in huge numbers, will certainly pose a challenge to those e-commerce providers faced with designing the local language assistance component.

Given that the language issue is being treated seriously by e-commerce players targeting markets beyond their own linguistic and cultural territory, vertical integration undertaken by e-commerce providers may eventually involve localizers, thus formalizing multilingual and multicultural components. This in turn may set the bottomline requirement that:

• Localizers understand the nature of the Web as a medium for doing business in a given language and cultural context
• Localizers themselves operate in a global e-commerce mode in providing services via local alliances to ensure quality.

The aggressive deployment of the Internet into the world of commerce covering a wide range of industries will have an incredible spin-off effect on the localization business. Web localization is already the fastest growing area within the translation sector and this is likely to continue with more businesses adapting to the Internet/Web environments.

As businesses become increasingly aware that localization is one of the essential ingredients for going global, the competition to achieve elegant localization solutions will become fierce. The localization style will differ depending on the nature of the business, whether selling books, hosting auctions, or niche marketing for a film. There is no doubt that strategic alliances will be formed to tackle Japan’s potentially huge virtual market and vice versa for Japanese companies going global.

The big question is: How prepared is the localization industry to respond to the surging needs? In the Net Age, the art of localization seems to be ever more a matter of finely-tuned orchestration between technology on the one hand, and language and culture on the other. This will mean learning, learning and learning—no rest for the wicked.

References

[1] 1999 MPT Communications White Paper: http://www.mpt.go.jp/policyreports/english/papers/WhitePaper99.html

[2] Lockwood, R. (1998). Multilingual E-commerce. Language International 10.3, 16–17.

[3] Nakada, G. (August 1999). Girl Power: A third of Internet Users in Japan are Women, but they’re still Ignored by Marketers. Asian Business. Fujitsu Research Institute Survey: http://www.nikkeibp.asiabiztech.com/Database/98_Sep/24/Mor.05.gwif.html

[4] 1998 MITI Andersen Survey: http://www.jipdec.or.jp/chosa/andersen/Sld004.htm
Note: this survey uses ¥ 120 = USD 1 conversion rate.

[5] 1999 MITI Andersen Survey: http://www.ecom.or.jp/seika/press/000119/sld003.htm

[6] Kunii, I. (February 7, 2000). Is This Man Building the Amazon.com of Asia? Business Week.

[7] http://www.rakuten.co.jp/news/1999/news/199912_003_m.html

[8] Cohen, A. (December 27, 1999). The Attic of e. Time.

[9] The Approach by Japan Consumers Institute for E-commerce: http://www.ecom.or.jp/ecom_today/no.5/6-4jca.html
Note: currency conversion in this article is based on ¥ 100 = USD 1.

---

Dr. Minako O’Hagan
Communications Consultant,
Wellington,
New Zealand
Fax: (+64) 4 472 8734
E-mail: minako.ohagan@xtra.co.nz