From...

May 4, 1999
Web posted at: 10:41 a.m. EDT (1441 GMT)

by Maryann Jones Thompson and Michiyo Yamada

(IDG) -- While the world's second-largest economy has yet to fully recover from a bruising economic downturn, Japan's Internet Economy is bracing for

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strong growth. Out of Japan's total population of 125 million, the latest forecasts from International Data Corp. show 8 million people are online. That number is expected to quadruple by 2003, reaching nearly 32 million. And online buying will also boom: from $2 billion in 1998 to $45 billion in 2003. Although that figure is just a small slice of IDC's U.S. e-commerce forecast of $707 billion, Japan's 87 percent annual growth rate will beat the expected 80 percent U.S. growth rate.

"Japan is technologically a year behind the U.S. both in terms of content and next-generation backbone routers," says Rachel S. Howe, managing partner of DSA Analytics, a Virginia-based research institute that specializes in East Asian economies. "And people are spending less due to the recession." But they're nonetheless flocking to U.S sites to save money on the cost of imported goods. The growth in the number of women online is also driving online shopping's popularity. The most recent Nikkei study shows 39 percent of new Japanese Net users are female. DSA Analytics says women accounted for 20 percent of Japan's surfers in 1998, up from 15 percent the year before.

Although Japanese buy many of the same products online that Americans do, Howe says that Japan's e-commerce industry hasn't grown as quickly as that of the U.S. because of Japan's high phone rates, one of the major reasons that the majority of Japanese surfing is done at the office.