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Vodafone faces tough struggle in Japan, says report

International mobile giant fights to rebuild its reputation in the Far East

Mobile network giant Vodafone is facing an uphill struggle to rebuild its reputation in Japan after a number of disastrous business decisions saw the company losing around 200,000 subscribers there in the first five months of 2004.

That's according to a report in the New York Times this week, which reveals some of the problems that led to the Japanese subsidiary of the London-based company reporting a 15.4 per cent annual profit last year, and saw its share price tumbling on the Nikkei.

Among the most prominent issues fingered by the report are poor reliability on the service which led to users of the company's 2G service missing calls and messages, while its 3G service experienced major outages in the months following its launch this spring.

In Japan, where mobile phones are used heavily to access email and internet services as well as for voice calls, these problems were catastrophic for the company's reputation - while a poor selection of handsets also discouraged users from staying with Vodafone.

That latter problem was apparently a result of Vodafone's decision to roll out a selection of handsets uniformly across its entire global customer base, ignoring the fact that rival Japanese providers KDDI and NTT DoCoMo were using much more technically advanced devices tailored to the Japanese market.

Although these problems are now being worked on - with Vodafone KK (the Japanese unit) taking steps including the re-hiring of former president William Morrow and new product development boss Hiroshi Ohta, the original creator of the cameraphone - the loss of so many customers remains an embarrassing blot on Vodafone's record.

Vodafone KK was held up as a shining example of the company's overseas businesses in the years after it was acquired and renamed from J-Phone, and at one point was one of Vodafone's most profitable business units.

These difficulties will come as a blow to the company's vision of a standardised approach across all of its global markets, with critics pointing out that the main reason for the decline of the division was a failure to take local quirks into account in its global planning.

"Japan has been a peculiar place where things haven't worked Vodafone's way," UBS Securities analyst Makio Inui told the New York Times. "The company was slow to realise that, gee whiz, Japan is really different from Europe."

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