A platitude often proffered regarding doing business in Japan is that pursuing a one-size-fits-all internationalization strategy mostly results in failure. History has shown that the relatively young Internet industry is no exception. A whole slew of globally successful Internet startups, especially from the U.S., tried to enter the Japanese market over the last few years—the vast majority packed up and left without ever looking back. In 2002, even online auction powerhouse eBay exited the world’s third largest Internet nation, following two years of trial-and-error.
So far, Japan’s web users have embraced just a handful of foreign Internet brands such as Yahoo, Google, and Twitter. Social networking services such as Facebook and MySpace, mega-popular in the U.S. and elsewhere, have largely been given the cold shoulder. Facebook, a mere online yearbook just four years ago, has emerged as the web’s social networking juggernaut, now connecting well over 400 million members worldwide. The site has become so big so quickly that it seems to be just a question of time as to when it will overtake Google as the leading destination on the web.
The number of Facebook users in Japan, however, hovers at just one million, a far cry from the 20 million people who have flocked to the country’s biggest social network, Mixi, so far. Facebook has also been outpaced by Mobage-town and GREE, two social networks optimized for use with mobile phones, which count 18 million members each. The America-born site is iconic in regions as diverse as Germany, Taiwan, and Indonesia. So what makes Japan different?
Industry experts sometimes argue that the reason for Facebook’s struggle in Japan is that social networking is a winner-takes-all business, and that the American startup was simply too late to market in Japan. In fact, Facebook started offering a translated version as late as 2008, giving the homegrown competitors a head start of four years (an eternity in Internet time). Adding to its late start, Facebook never adapted its design to Japanese interface tastes, refused to spend a single yen on marketing and never bothered finding a local partner. So, the reasoning goes, how could they truly expect to win in Japan with such an approach?
Nevertheless, this is exactly how Facebook has tackled almost every foreign market in the past. Its gradual, strictly hands-off expansion strategy isn’t unusual for a web startup with limited resources, and it did pay off in most parts of the world. The main reason for Facebook’s failure in Japan so far lies deep in the country’s unique web culture. It’s not primarily about Facebook’s timing, design, or functionality. The American startup needs to trigger nothing short of a paradigm shift in how Japanese users socialize on the web, especially regarding communication, safety and privacy.
Social networks, by their very nature, need to properly reflect real-life communication patterns, but these significantly differ from country to country. Facebook’s U.S.-focused positioning as a platform for self-expression and matchmaking is diametrically opposed to Mixi’s, its direct domestic competitor. Mixi encourages members to communicate at a distance, for example by writing diaries friends can comment on, which often leads to indirect conversations. A chat function, one of Facebook’s core elements, is absent on Mixi, as is the “poking” feature that enables Facebook users to contact and flirt with strangers.
Mixi, abiding by the preference of Japanese people to generally stay anonymous online, allows members to use nicknames and fake profile pictures. And, until recently, the site required an invitation from a current user and a Japanese mobile mail address for registration, making it harder for potential evil-doers to enter one’s network. These are just a few of the many Japan-specific communication tools and security features that Facebook doesn’t offer, but are embedded within the very fabric of the digital culture of Mixi. As a result, the site is seen as a safe, hermetically closed and high-trust destination by most Japanese users. But even as Mixi adds thousands of new members each month, Facebook is far from giving up on Japan. In fact, the American Internet concern has just established a development base in Tokyo, the first of its kind outside Silicon Valley.
Japan’s social network war isn’t over yet, and two specific factors should give Facebook cause for hope. Firstly, Mixi has so far managed to penetrate just 15.7 percent of the Japanese population, putting it far behind Facebook’s performance in the U.S. (Facebook’s 116 million-strong American user base translates to roughly 37.5 percent of the population). Secondly, Facebook has yet to break into Japan’s huge mobile web, a factor that was the catalyst for the explosive growth experienced by its domestic competitors over the last years. The American startup is already working on an optimized version for Japanese mobile phones. This first dent into Facebook’s Model T approach to internationalization is a significant step, but making it easier and safer for Japanese people to socialize on the site should be the next.
Dr. Serkan Toto is a Tokyo-based web industry consultant and writer for American online media network TechCrunch.