Why Now Is the Time to Mail into Japan

Jul 18, 2005 9:31 PM  By

Anyone dealing with Japanese direct marketing lists, either as a user or as a list manager/broker, has surely heard about the “strict privacy law” enacted this past April and how it threatens to lock out the Japan market. Don’t believe the doom and gloom. What I see from the fallout of the April 1 legislation is a huge competitive advantage for non-Japanese firms marketing directly to Japanese consumers and businesses.

First, understand that those legal clamps that many direct marketing firms fear pertain primarily to databases of customers, clients, patients, etc. of individual Japanese firms. For both compiled and response lists, the law actually does nothing to limit the foreign firm. Furthermore, the legislation pertains only to lists of 5,000 records and larger, and is, from my point of view, a stop-gap measure, really, only something to reduce (rather than eliminate) the rampant problem of companies’ client contact details getting into the wrong hands.

This law makes it more difficult for firms that lose substantial volumes of client records to absolve themselves of guilt in the usual Japanese way, as we have come to seeing on the news nearly every night: A press conference is called, and behind a long table, several top executives stand as the president/chairman offers a solemn and wordy apology, after which all the suits bow deeply. Segue to next news item; all is forgiven. Not any more, or, at least less so.

Firms with at least 5,000 client records must have a “security officer” responsible for data security (which must exist); in addition, training protocols for employees are required, a notification procedure – for cases of suspected data “leakage” – must be established, and firms must make their privacy policies easily accessible to the public. And companies will be fined for negligence resulting in the compromising of the security of data that they have collected and stored on their clients. Real sanctions, finally.

See anything in there about the use of the Japanese data that you buy? Neither do I.

You’ve heard the saying “make hay while the sun shines.” Well, if you have a product or service to sell to the populace of the country with the highest percentage of disposable income in the world, and yours is not a Japanese firm, the sun shines on you. The June issue of the Japan Direct Mail Association’s (JDMA) monthly magazine shows that last year, before the new law came into effect, the volume of domestically mailed catalogs and large brochures fells a hefty 19.4%. While final data are not in yet, the JDMA tells me that further reductions in the direct mail sent to Japanese consumers are unavoidable for this year, and the shrinkage in the amount of direct marketing that reaches consumers is certain to be “profound for the period beginning April 1, 2005.”

Companies throughout Japan are zealously safeguarding their data, with fewer data reaching database marketing firms, and this manifests in less direct marketing reaching Japanese consumers. Companies here may be held up to scrutiny not only for leakages but for acquiring data illegitimately as well. “At the moment, Japanese don’t generally go to court. Now lawyers are lining up and even offering application forms to join suits on their Websites. For companies, the damages arising could prove very expensive, and it could be a busy time for lawyers,” says Kazuhito Masui, an attorney at Tokyo-based Shiba International Law Offices.

That there has not been one case of a Japanese consumer chasing down a foreign marketer as a violator makes perfect sense, since the law pertains only to the original list owner and the initial sale of the data. In other words, buy your Japanese consumer and corporate lists from a list company, and any and all liability for the use of personal data rests with the company that initially purchased a company’s client data or the company collecting the responses for a response list. If you are running a mail order wine-of-the-month club in Australia or are a list manager in New York, then you are at least one or more degrees of separation away from the “actionable” party.

Further, a dramatic decrease in the domestically available supply of lists as well as a fear of the Japanese consumer’s newfound awareness of his privacy rights means that Japanese consumers are being marketed to at a significantly reduced rate – from within Japan. And then, perhaps due to misconceptions about the state of the economy of Japan, on top of erroneous fears of culpability subsequent to the enactment of the April privacy law, slightly less direct marketing is reaching the Japanese from abroad as well.

Saul Fleischman is international marketing director for Free Business Co., an Osaka-based direct marketing list company with offices in Tokyo and Dailin, China.