[Too much domestic demand for imports or too much foreign demand for $$'s? I think the following, though anecdotal, is relevant:]
New Home for a Lost Generation of Innovators
By JOEL KOTKIN -- March 28, 1999
SAN JOSE, Calif. -- Like a growing number
of young Asian entrepreneurs, Nobuhiro
Michishita saw a future for himself in
cyberspace but felt that he had to go to the
United States to pursue it.
"We are trying to develop a business model for
the future, and it is much easier to do it here
than at home" said Michishita, 38, a computer
scientist from Japan. "Computer people in their
20s and 30s, they don't look to Japan but to
Silicon Valley for ways to work the Internet."
In America,
Michishita has
become something
he was unlikely to
be in Japan: a serial
entrepreneur.
Operating out of the
International
Business Incubator,
a joint venture of
San Jose State
University and the
San Jose city
government, he has given life to N&S
Consulting, an Internet consultancy that also
has offices in Tokyo; Cyberspace Navigation,
which sells Japanese-made toys on the Web
from a base in nearby Los Altos, and other
ventures.
The incubator, a modest downtown high-rise,
has become a magnet for a dozen or so
entrepreneurs from Asia who, like Michishita,
left home frustrated at the costs and obstacles
in the way of new ideas there.
Michishita tried starting a business in Japan but
lost patience with delays and governmental
paperwork. He hired an expediter to help him
navigate the bureaucracy, but his application
for a business license was rejected over
technicalities.
Not so in America. "When I went to Los Altos
City Hall to incorporate, right away they gave
me a paper and said, 'Congratulations and
good luck,"' he said.
Japan, too, has business incubators meant to
foster new technology enterprises, but
Michishita said the bureaucrats who run them
care more about edifices than entrepreneurs.
"An incubator in Japan is basically a big
building; they still are oriented around the
hardware," he said. "There is no knowledge,
no exchange of information."
Only a decade ago, Japan and its East Asian
neighbors were seen as a technological
juggernaut that would soon overtake the
United States, with powerful companies like
Matsushita, Sony and Samsung in the lead and
young scientists like Michishita expected to
follow.
But the Internet has changed all that.
Fleet-footed entrepreneurs in America are now
out in front while Asia's corporate giants and
the countries that bred them struggle to adapt.
Although use of the Internet is growing in
Asia, the gap with the United States remains
wide. Japan, Asia's dominant economy, has
about 9.6 computers connected to the Internet
for for every 1,000 people, half as many as in
the United States, according to Jupiter
Communications, a consulting company that
compiles Internet statistics.
In online commerce, Asia is even further
behind, according to the International Data
Corp. In 2001, Asia is expected to account for
17 percent of all Internet commerce, while the
United States will have more than 60 percent.
In the past, Asian countries closed
technological gaps by making huge
investments in research and development. But
the Internet poses a challenge not easily
overcome with engineering and money,
according to Sung Kim, who came to San Jose
from South Korea last year to found Nextream,
a software company.
"In the past, we saw a technology from a U.S.
company and followed it," said Kim, 38, of his
days at Samsung, his former employer. "Now
it's not a matter so much of getting the
technology; it's the ideas about how to use it
that matter. Take a company like Yahoo. It's
not really a technology, it's about an idea."
Nextream develops software to link mainframe
computers to the Internet and sells it mainly to
Korean banks and other financial institutions.
But like Michishita, Kim said he had to leave a
stifling environment -- in his case, the world of
South Korea's giant conglomerates -- to
embark on the venture.
The top-down management style and emphasis
on manufacturing at Samsung led executives
there to think of products as ideas conceived
by executives and then executed with precision
by engineers, Kim said.
He and his fellow founders of Nextream's
small Seoul-based parent company, Cheong Ji,
wanted instead to emulate the more flexible
and informal management style popular in
Silicon Valley.
Mike Morishita, formerly with Nippon
Telephone and Telegraph, points to another
problem: Many top Asian executives
personally know little about the Internet.
In a recent Andersen Consulting survey, only
13 percent of Japanese top executives said they
were "comfortable" or "familiar" with the
Internet, compared with 46 percent of their
American counterparts. Nearly 3 in 10
Japanese executives said they did not even
have access to cyberspace, compared with just
1 percent of the Americans.
As a result, Morishita said, Nippon Telephone
tends to treat the Internet not as an opportunity
but rather as a reason to increase rates. In the
United States, local calls to an Internet service
provider are typically free, but in Japan they
are usually toll calls, adding $100 a month to
the phone bill of someone using the Internet
for an hour a day. High-speed lines for
businesses also cost much more in Japan than
in America.
"It's too expensive to do this business in
Japan," said Morishita, who now, at 32, has a
successful computer consulting business, MM
Systems, in the Los Angeles suburb of
Torrance. MM Systems designs Web sites for a
mix of Japanese companies including Imperial
Hotel, Nissin Foods and even Nippon
Telephone, as well as American companies like
Earthlink Network, an Internet service
provider based in Pasadena, Calif.
But the biggest problem for Internet companies
in Asia may be the cultural adhesion that
helped propel the region's economic growth
for three decades, according to Akira
Tsurukame, a business consultant in Los
Angeles.
"Japan is a place where the ties between people
are very strong and people like to do business
with people they know personally," he said.
"The Internet is about networking strangers to
talk to each other," which is a threat to the
interlocking networks of suppliers and
distributors on which big Japanese companies
depend.
But it would be wrong to assume that Japan
will stay that way forever, he said. He and
Michishita have started an organization called
Business Cafe to attract Japanese Internet
entrepreneurs to the San Jose incubator this
year, with the goal of sending the new
cyberculture back to the home islands.
Applications have come in not just from young
entrepreneurs but also from well-placed
executives at Mitsubishi Electric, Toshiba and
Sony.
"A lot of people are feeling frustration with
Japan now and want to find a different way to
make things work," Michishita said. "People
see the value in coming to Silicon Valley."
Related Sites
These sites are not part of The New York Times on the
Web, and The Times has no control over their content or
availability.
International Business Incubator
Joel Kotkin is a senior fellow at the
Pepperdine Institute for Public Policy. His
column on the Main Street economy appears
the fourth Sunday of each month. E-mail:
grassrts@nytimes.com
Copyright 1999 The New York Times Company |
