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Internet Companies in Japan after the Collapse of the Internet Bubble
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Internet Companies in Japan after the Collapse of the Internet Bubble －An Analysis of Internet Companies and their Cluster－ Economic Research Center Fujitsu Research Institute Senior Associate Kou Yukawa [email protected] 【Abstract】 1. In the late 1990s, media reports spotted Internet companies in Japan as the coming lead-players in the IT industry. But soon after the collapse of Internet bubble in 2000, this positive news was replaced by persistent negative images - both with little understanding of their actual status and development. Similarly, areas in Tokyo that attracted attention as Japan’s “Silicon Valley” for Internet companies are today considered as locations of little substance. 2. In contrast to such popular views, this study shows that the Internet companies that survived the collapse of the bubble still have high growth potential. The profitability of these companies has been improving, with many companies posting growth in both sales and profits for two years in a row in 2000-2002. Pure Internet players, such as intermediary and electronic commerce companies, have even begun to register positive profit numbers. 3. The largest degree of concentration of Internet companies is found to be in Minato ward, followed by Shibuya. In these two wards, more than 40% of all Internet companies in Tokyo are located. Specifically, nearly 30% are concentrated in the area covering Akasaka and Shibuya, forming the largest concentration in Tokyo. Another Internet company concentration is seen in the Kanda area, which includes the major electronics retail center Akihabara. The study could not identify, however, distinctive features of each region in terms of business categories, dates of foundation, or business performance. 4. It is highly probable that the negative image of Tokyo’s Internet companies after the collapse of the Internet bubble has been built up in large part by false impressions about them. Continued governmental support for the nascent Internet industry therefore seems to be promising beyond the general backing of Japan’s IT industry because the companies have already started to provide for improving information technology utilization, consumer convenience and corporate infrastructures.
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