◎Survey Results

1. Trend of E-Commerce Market Scale

(1) Market Scale of B to B EC (Business to Business E-commerce)
~B to B EC market scale in Japan is about 131 trillion yen -
EC ratio continues to grow ~
(100 billion yen)

Broad Definition EC Market Narrow Definition EC Market Broad Definition EC Narrow Definition EC
Scale Scale Ratio Market Scale

The scale of B to B EC market (narrow definition) is about 131 trillion yen.

Though its market scale was reduced with a decrease of 17.5% from the
previous year, the EC ratio (*2), which is an index showing how EC has
penetrated, marked 13.7% (narrow definition), with an increase of 0.2 from
the previous year.

*1 Broad definition and narrow definition

Definition of broad definition e-commerce

“Business transactions via a computer network system for which the restricted amount is known.”
Business transactions here means “exchange of goods, services, information and money between the
order placing party and the order receiving party in relation to commercial transfer of properties
between economic agents”.

In addition to narrow definition e-commerce, this includes transactions via conventional EDI that does
not use TCP/IP protocol such as VAN leased line (Example: Those using Japanese Bankers
Association Protocol, EIAJ protocol etc.).

Definition of narrow definition e-commerce

“Business transactions via a computer network system using the Internet technology, for which the
restricted amount is known.”
Business transactions here means “exchange of goods, services, information and money between the

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 order placing party and the order receiving party in relation to commercial transfer of properties
between economic agents”.

“The Internet technology” means the technology using TCＰ/IP protocol. It includes, in addition to the
Internet on the public circuit, extranet, Internet VPN (Virtual Private Network) and IP-VPN.

*2 EC ratio: The ratio of e-commerce (EC) transactions in all business

transactions

As the scale of the broad and narrow definition B to B EC market becomes

smaller, the market scale for many types of business is declining compared
with the previous year. On the other hand, the EC market scale is growing
both in broad and narrow definitions for the food, information communications,
financial and other service industries.
Further, the EC ratio is rising for all types of trade.

(2) Scale of B to C EC (E-commerce for consumers)

~EC market scale for consumers in Japan is about 6.7 trillion yen -
Expanding B to C EC market~

（千億円
(100 billion ）yen)

80 3.00%

67
70
61 2.50%

60
53
2.00%
50 2.08%
44

40 1.79% 1.50%

1.52%
30
1.25% 1.00%

20

0.50%
10

0 0.00%
2006年 2007年 2008年 2009年
EC市場規模（左目盛）
EC market scale (left scale) EC ratio (right scale)
EC化率（右目盛）

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 Though the B to C EC market scale is smaller than the B to B EC market
scale, it amounts to about 6.7 trillion yen, with an increase of 10.0% from the
previous year. In addition, the EC ratio(*), an index showing penetration of
EC, marked about 2.1% with a 0.3 point increase from the previous year.

* EC ratio: The ratio of e-commerce (EC) transactions in all business

transactions. This refers to the value in the retailing and service
providing businesses.

As the B to C EC market scale is steadily growing, the market scale has

increased from the previous year in many businesses having a large market
scale such as the information and communications industry, general
merchandizing stores, automobile industry, parts, furniture, home appliances
and electric product retailers, accommodation and travel industries. The EC
ratio has risen in all types of trade.

2. Actual State of Trans-boundary E-commerce Use

(1) International Comparison of Use of Trans-boundary E-commerce

While the utilization ratio of trans-boundary e-commerce (e-commerce where
goods are purchased from foreign e-commerce websites; hereinafter referred
to as trans-boundary EC) among Japanese consumers is moderate (17.8%),
Chinese consumers use trans-boundary EC at a higher rate (48.1%) (Fig.
2-1).

However, when compared with the survey results from “FY 2007
E-Commerce Market Survey”, an increase of the trans-boundary EC
utilization ratio from 8.9% to 17.8% in the past year among Japanese
consumers shows a steady spreading of trans-boundary EC users in Japan.

While about 20% of consumers intend to use trans-boundary EC in the future

(total of “I will use it positively” and “I will use it if I have an opportunity”) in
Japan and in the U.S., 80% of Chinese consumers and 50% of Korean
consumers intend to use it in the future. Their positive attitude toward
trans-boundary EC is understood.

For EC users in China, barriers against use of trans-boundary EC may be

language of website, means of settlement, anxiety about after-sales service
and so on. If these problems are solved in the future, more Chinese
consumers will further use trans-boundary EC.

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 Fig. 2-1 Trans-boundary EC Utilization Ratio by Consumers in the Past Year
(Japan, the U.S., China and Korea)

0% 10% 20% 30% 40% 50% 60% 70 % 80 % 90% 100%

Parameter (N)
Japan shows the
17.8% 82.2%
number of EC
users in the
country

U.S. Japan: N=981

25.4% 74.6%
U.S.: N=849

China: N=899
China
48.1% 51.9%
Korea: N=990

Korea
29.4% 70.6%

User Non-user

(2) Trans-boundary E-commerce Trends in the Surveyed Countries

A) Trend in Japan
About 20% of Internet shopping users have used overseas EC websites in
the past year (See Fig. 2-1 above). When calculated country by country, the
utilization ratio of U.S. websites is as high as 13.7%.

Among the EC users who use overseas websites, the ratio of amount spent
through overseas websites is below 5% of the total spent through EC
websites. Out of this, 3% is through websites in the U.S. and below 1% is
spent through Chinese and Korean websites respectively.

B) Trend in the U.S.

About one fourth of Internet shopping users have used overseas EC websites
(Fig. 2-1 above). When calculated country by country, the ratio of Chinese
website use is as high as 12.7%.

The ratio of amount spent through overseas websites represents 8.1% of the
total amount related to use of EC websites. Out of this, 2.2% is for Chinese
websites. The amount spent through Japanese and Korean websites
represents 2.1% and 1.1% respectively.

C) Trend in China
About 50% of Internet shopping users have used overseas EC websites (Fig.
2-1 above). When calculated country by country, the ratio of use of U.S.
websites is as high as 36.2%.

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 The amount spent through overseas websites represents about 20% of the
total amount related to use of EC websites, out of which 7.4% is for U.S.
websites, 5.3% for Japanese and 4.0% for Korean websites respectively.

D) Trend in Korea
About 30% of Internet shopping users have used overseas EC websites (Fig.
2-1 above). Country by country, the use of U.S. websites is as high as
21.1%.

The amount spent through overseas websites represents about 8.7% of the
total amount related to use of EC websites, out of which 3.5% is for U.S.
websites, 2.7% for Japanese and 1.3% for Chinese websites.

3. Awareness Survey Regarding Use of Internet in Various Countries

A questionnaire mainly about awareness of consumers using Internet
business was distributed in various countries. The results obtained are as
follows:

(1) Self–responsibility awareness regarding Internet services

Whether the respondent feels it natural to be personally responsible for any
benefits or losses generated through the use of Internet services was
surveyed. In Japan, the level of personal responsibility was about the same as
Germany and Korea, and many respondents considered it natural to take
personal responsibility. It can be said that the ratio of Japanese people who
feel a sense of natural personal responsibility is particularly high when
compared with other countries.

(2) Personal information transmission when using Internet services

Regarding the transmission of personal information when using Internet
services, awareness concerning the handling of personal information varies
among countries. In the U.S. and UK people avoid transmission of personal
information compared with other countries (Total of “I feel reluctant to send
personal information for some services. I do not use such services.” and “I
feel reluctant about sending personal information regardless of the type of
services. I do not use any service that requires personal information at all” is
45.9% for the U.S. and 43.8 % for the UK)

(3) Trouble in relation to Internet Use

While the trouble encounter rate related to EC use in the past one year is
higher than other countries in China and Korea (China: 68.7%; Korea: 78.8%),
it is the lowest in Japan (31.7%) (Fig. 3-1).

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Fig. 3-1 EC Trouble Encounter Rate by Country for the Past One Year

Japan
日本 31.7 Parameter (N)
shows the number
of EC users in the
U.S.
米国 44.1 country
Japan (N=981)
UK
英国 49.9 U.S. (N=849)
UK (N=933)
ドイツ
Germany 50.3 Germany (N=913)

France France (N=901)

フランス 47.5
China (N=899)

China
中国 68.7 Korea (N=990)

Korea
韓国 78.8

0 10 20 30 40 50 60 70 80 90 100 ％

ECトラブルあり
Those who experienced any
EC trouble

There seems to be a common trend in trouble related to use of EC Internet

services. Among these, “Delay in delivery of goods/untimely service " is
ranked high. It can be said that this kind of trouble is common to various
countries.

In addition, the trouble encounter rate is relatively higher in China than that in
other countries. It will be necessary to construct a safer and more secure
environment for Internet use.

The trouble encounter rate related to communication services, which are

represented by blogs and SNS (Social Network Services) in the past one
year is higher in China and Korea (56.0% for China and 50.1% for Korea).
The ratio is lowest in Japan (14.1%) (Fig. 3-2).

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Fig. 3-2 Trouble Encounter Rate in Communication Services by Country for the Past
Year

Japan
日本 14.1 Parameter (N)
shows the number
U.S.
米国 18.5 of communication
service users in the
UK
英国 19.8 country.
Japan (N=940)
Germany
ドイツ 21.6 U.S. (N=617)
UK (N=692)
France
フランス 20.4 Germany (N=431)

China France (N=683)

中国 56.0
China (N=807)
Korea
韓国 50.1 Korea (N=709 )

0 10 20 30 40 50 60 70 80 90 100
Those who experienced any ％
コミュニティトラブルあり
community trouble

Trouble occurring in communication services in Japan mainly include

“Slandering comments posted on the community I participate in” (44.0%) and
“Links and spam mails having no relation to us sent to the community I
participate in” (39.7%).

Trouble in other surveyed countries, “Links and spam mails having no relation
to us were sent to the community I participate in” represents the largest ratio in
the U.S., UK, China and Korea.

(4) Consultation and Resolution of Troubles Related to EC Use

There is a global trend of a rising ratio of Internet trouble advisers among
“Shop managers/sales companies” and “Shopping mall entrepreneurs”. Out
of these, the trouble resolution ratio in China is remarkably lower than that in
other countries (Shop manager/sales companies: 47.6%; Shopping mall
entrepreneurs: 37.7%). It is necessary for shops and other sellers to
construct a system for troubleshooting.

In Japan, the ratio of users who do not consult with anyone even when they
have some trouble in relation to EC websites is higher than that in other
countries (38.6%). While some users may independently solve the problem
without consulting with anyone, a substantial number of users may just
accept the problem.

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(5) Progress Comparison with the Survey in FY 2007
When compared with “FY 2007 E-Commerce Market Survey”, the ratio of non
consultation regarding EC-related troubles in Japan is about the same
(37.6% to 38.6%).

The trouble encounter rate in relation to EC website use has increased from
“FY 2007 E-Commerce Market Survey” (26.9% to 31.7%).

Considering the above results, it will be necessary to construct a system

where users can easily have consultation in the event of any trouble, or an
environment where users can safely and securely use the Internet.

4. Trend of the Internet-related Business Market in Various Countries

The actual state of the Internet-related business market in the subject
countries was surveyed by means of hearing from entrepreneurs. The survey
subjects were Japan, the U.S. and major European and Asian countries
(seven countries in total).

In e-commerce (sales of goods), there is a global tendency that C to C EC

(Internet auctions) and price comparison websites are supported. This is due
to a desire among consumers to purchase higher quality goods at lower
prices as well as economize. Among CGM and other services, SNS websites,
which have been strongly supported by consumers in the above countries,
are further expanding in existence. At the same time, Twitter service is
growing sharply.

The table below shows the overview of the overall trends (Table 4-1).

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Table 4-1 Trends of the Internet-related Business Market in the Subject Countries
Japan U.S. European countries Asian countries

 U.K.: B to C market scale:  China: Total scale of B

 B to C market scale: forecasted to be about 24.7 to C /C to C EC
 B to C market scale: 6.7 209.6 billion dollars billion euros, with an annual markets: 248.4 billion
trillion yen  Decrease of 4% from growth rate of 10% on average yuan, with an increase
EC  Increase of +10% from  Germany: B to C market scale:
previous year (first forecasted to be about 17.3 of +93.7% from previous
(market previous year negative growth in the billion euros, with an annual year
scale)  EC ratio: 2.08% history of EC in the growth rate of 9% on average  Korea: Total scale of B
(increase by +0.29 from U.S.)  France: B to C market scale: to C/C to C EC markets:
previous year)  However, EC sales forecasted to be about 9 billion expected to reach 20
euros, with an annual growth
started to grow from rate of 13% on average trillion won, with an
November. increase of +13% from
previous year

 As in 2008, consumers
support recycling,
purchase of used goods
and auction entry agency
via the Internet due to
EC
desire to save money.
(Sale of  Start of direct sales by
clothing manufacturers
goods)
etc. in the EC market has
contributed to increase of
channels in addition to
department stores.
 Amazon is the only
winner.
 Online supermarkets
fully started EC.
 Many female
consumers started to
purchase in the EC
market (Mothers who
cannot go out due to
child care, purchase of
baby goods by EC.)
 U.K.: Click-and-mortar type  China: Taobao still has
(to lead the consumers to the the advantage as C to C
real store; this type of
commerce is also superior in EC platform.
 Korea: C to C EC is
the real world) is supported
by EC. growing sharply.
 Germany: Price comparison
Growth of open markets
websites gives high influence
where individuals can
from the viewpoint of desire
to save money. enter is superior to that
 France: C to C EC websites of shopping mall style
as well as eBay are highly websites
supported from the viewpoint
of desire to save money..

 With introduction of the third generation (3G) mobile phones, motion pictures can be watched on mobile phone terminals.
 While sharing of free motion pictures (represented by YouTube) are spread, websites for distribution of high-definition motion pictures
tend to be supported by more and more people.
 Online games with an element like SNS on PC are supported.  Applications for iPod/iPhone from Apple are supported.
EC
(digital  Websites (VIDEX etc.)  E-books are introduced  VOD (IPTV) has
for charged distribution in full scale as Amazon penetrated from an
contents)
of high-definition Kindle increases its early stage.
pictures at least at the supporters.
HDTV level are
supported by certain
users.

Back-end system opening by Amazon fulfillment

Global progress of OpenID (System to realize authentication of several websites using one ID)

EC Back-end system
platform opening by major
players such as
Rakuten Business,
Yahoo! Wallet, Start
Today etc.

Free online games with Korea: Free online games

considerable SNS-like with considerable
SNS-like elements
elements played on played on mobile
mobile phones are phones are supported
CGM and supported (DeNA etc.) (ZIO Interactive etc.)
other
services China: Online game business
Twitter (mini-blog) support increases exponentially all over the world. by Tencent is growing

 Mixi has the advantage.  Leading SNS has  Because of language Korea: NAVER has the
advantage in browsing
Applications are changed from My Space problem, a unique SNS
increasing because API to Facebook. is supported by each
has been published. country.