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Apr 30, 2002

Report from Gadgetland

Japanese companies joining the IR technology boom

It's the Mecca of tech in all its burnished, miniaturized glory. Cute little cars, cameras, watches, mobile phones and robotic pets. Yet only a handful of companies in Japan are applying their ingenuity in technology to investor relations

Out of 3,566 listed companies as of August 2001, the first Japanese IR web ranking by Nikkei Business found 3,291 with web sites but only 552 with investor relations information on them. Nomura IR, the country's largest IR service provider, did 741 webcasts for 370 companies between March 2000 and January 2002. But that's just a little more than one in ten Japanese listed companies, and IR events are rarely webcast live.

E-Associates, which has done 130 webcasts for clients over the last year, says it's the only Japanese service provider conducting live webcasts of conference calls. But e-Associates' president, Teruo Shiina, estimates that a mere 20 companies do earnings results calls, and about a dozen add live webcasts. That's 0.3 percent of Japanese listed companies compared to 83 percent of Niri members in the US. Companies generally stick to live results meetings with webcasts sometimes posted after the event.

Catching on

Internet IR is only now catching on in Japan for the simple reason that both the internet and IR are themselves only now catching on. Despite Japan's technology supremacy, the high cost of dial-up internet access has kept retail investors away from PCs. At the same time, the cultural importance of face-to-face meetings has deterred companies and investors from joining the virtual conferencing revolution.

Besides, Japanese companies never had to try very hard on the IR front - at least until recently. 'In the 1980s there was an excess of liquidity and companies didn't have to compete. In fact there was competition to invest,' says the Tokyo-based IR Corporation's director of new business development, Darrel Whitten, who was until recently chief strategist and managing director of Japan research for ABN Amro Securities. 'But after the last ten years and a dramatic decrease in cross-shareholding, companies must now actively seek investors.'

No wonder the Japan Investor Relations Association (Jira) reports 'dramatic growth' in membership, doubling to 560 companies since 1999. 'Still, investors need more information and top management commitment,' remarks Yoshiko Sato, Jira's program director and senior research fellow. 'Japanese investors still feel frustration.'

Two important IR targets are individual shareholders and foreign investors, and both groups are benefiting from increased use of technology by Japanese companies.

According to IR Corp, Japanese personal financial assets total $10.8 tn, but just 5.4 percent is invested in equities by around 10 mn people. And many inherited their stocks, so only around 7 mn are actually active investors. 'At the same time, it's the most rapidly ageing population in the OECD,' comments Whitten as he makes the case for growth in Japanese retail investment.

Buzz word

IR has entered the popular lexicon in the names of magazines and TV shows like TV Tokyo's IR Report and Nomura IR's IR Magazine, which promotes client companies to 50,000 readers who are active investors. Japan also has dozens of web sites promoting stocks, like Japanese Investor's Hello! IR World (

Nomura IR is expanding its business, in terms of both the number of companies and the quality of content, says Joichi Tanaka, general manager of Nomura IR's planning group. This is the third year of operation for Net-IR (, a portal site for Nomura client company information including over 200 presentations at any one time. An English version is planned.

But despite hundreds of results presentations online, almost none are streamed live. Instead they're usually reviewed for slip-ups, edited and almost always shorn of the Q&A session - sometimes setting off the Reg FD alarm bells at Nomura IR - before being archived online.

'Live meetings are the best means of communicating with investors,' Tanaka says, 'but Japanese management view live presentations as very risky, unlike US managers who are accustomed to presentations. In the last two to three years, though, senior management here have been paying more attention to presentation skills.' He adds that many companies, mostly in the technology sector, will introduce conference calls in 2002.

Tech pioneers

One by one, Japanese companies are becoming adept at using technology for investor relations. Takashimaya Company, for example, a department store chain, is the first Japanese company to take advantage of a revised commercial code and offer internet proxy voting. For others, wireless may be the way to go, especially considering Japan's love affair with mobile phones over PCs.

E-System Corp, a customer relationship management and wireless solutions company, gives its shareholders special mobile phone adapters to access IR information via NTT DoCoMo's hugely popular I-mode service, which has a web-like format including photos and videos.

Mizuho Holdings, the world's first bank with $1 tn in assets, is another Japanese IR pioneer. Senior IRO Tomohiro Matsumura says Mizuho's top management 'doesn't see any obstacle' to using conference calls and webcasts. The day semi-annual results are announced, the company e-mails a PDF presentation to a database of 400 domestic and 800 overseas investors and analysts. Then the company's chief IRO and CEO hold separate conference calls for domestic and overseas investors. Several days later Mizuho senior management meet with around 300 investors and analysts, and last fall e-Associates started webcasting the meeting live with an archive posted the next day.

Japan doesn't have any rule equivalent to Reg FD in the US. 'But at Mizuho we have the spirit of Reg FD,' Matsumura states. 'Why? Because we want to have credibility with our investors. We try to provide the same level of information to as many investors as possible.'

Indeed, the company's newly revamped IR web site (, launched at the beginning of April in conjunction with the fiscal year-end, includes a written disclosure policy outlining Mizuho's commitment to 'voluntary, proactive disclosure.' IRO Masato Mizuno admits the new site took a lot of hard work, but he's already thinking of new features to add in the future.

Wide & wired

When Ayako Endo joined Acom's IR department in early 2000 after enjoying always-on broadband internet access at a stateside university, she was amazed to find that many Japanese investors didn't use e-mail. Just a year later, virtually all of them did, and today she sends regular e-mail alerts to a wide, wired audience.

Acom had long had a web site - it's a consumer finance company, after all - although the IR component was very limited. For inspiration, Endo studied GE, Intel and Microsoft, but budgeting was a challenge. 'People have the wrong idea about the internet,' she says. 'They think it's cheap and quick, with information delivered in real-time. But it's not cheap to create a web site. We didn't have much of a budget the first year, but little by little I added content, and now we cover most things.'

Endo says web access in Japan is getting easier and cheaper. But like many professionals at Japanese companies and investment houses, she is blocked from surfing the web at work by a security firewall. So she has one computer connected to Acom's network and another which she uses to dial-up to the internet and check on her cutting-edge IR web site (

With 17 percent foreign ownership, Acom aims to increase this proportion in line with its competitors' 25 percent. That means an English-language annual report and web site. 'Anything we do, we do in English and Japanese. That's our standard,' Endo insists.

The company would also like to increase ownership by retail investors and it assiduously avoids selective disclosure. 'We're conscious of Reg FD. Very,' Endo says. So last year Acom turned to e-Associates to webcast its semi-annual results meetings. Video and PowerPoint go out live with an unedited, translated version posted the following day. Immediately after the live event, Acom's president and chief IRO hold an English conference call for foreign investors.

Endo is also enthusiastic about Bloomberg Voice, which is produced in conjunction with PR Newswire. The service delivers webcasts and company documents to investors and analysts via the Bloomberg terminal. Endo remarks on how simple it is for an investor to type Acom, Go to reach a page of Acom's videos and other information.

With Japan's record of technological innovation - and trend-setters like Mizuho and Acom - how long before US IR departments are playing catch-up instead of the other way around?