Japan is enjoying a tourism boom. Tourists who were kept away due to Covid travel restrictions for years are now rushing to the country to get their Japanese fix. In September, foreign visitors to Japan hit 96% of pre-pandemic levels, and if the Chamber’s observations during our business mission to Kansai last month are anything to go by, that figure has already been far surpassed.
The surge is a double-edged sword. On the one hand the influx of visitors is bringing badly needed business to everyone from hotels to izakayas and giving a boost to the economy. But like Hong Kong and many popular tourism destinations, the country has not yet managed to rebuild operations and staffing levels to cope with the demand.
This was highlighted in the media reporting on people having to queue for over two hours to get through security and immigration procedures at Kansai International Airport. But it also highlighted the huge interest waiting to be tapped.
Mission leader and Chairman of the Asia, Africa & Middle East Committee Jonathan Lamport said mega development projects in the centre of Osaka in preparation for Expo 2025 are expected to draw millions of additional visitors, and also reinforce Kansai’s role as a key business and financial hub.
“The ‘Grand Green Osaka’ in the heart of Umeda aims to attract international businesses and talent to the Kansai Region, and they have given a lot of attention to ‘midori’ – or user contact – to make life comfortable and enjoyable for people visiting, working or living there,” he said.
A key feature of the development, which is expected to open in phases starting in 2024, are open and green working spaces designed to allow people work remotely and encourage innovation, Watanabe Hideto, from Hankyu Hanshin Toho Group, told members.
The Kansai Region, with a population of 21.3 million, or 16.9% of Japan’s total population, is a major driver of the country’s economy. Its GDP is around US$805 billion, just behind the Netherlands at US$833 billion. It is Japan’s second largest economic area and business costs are around half those in Tokyo. “The fact that office rents and even wages are lower than those in Tokyo make it more affordable for smaller businesses to dip their toe into the Japanese market,” added Lamport.
Supporting Smaller Businesses
During a visit to MUIC Kansai Innovation Center, a member-based innovation hub for tourism and inbound travel operators, Manager Yasutaka Mashiko explained to members that the facility is a problem-solving, open innovation centre that encourages co-creation solutions for companies.
Foreign companies, for example, could approach the center to seek help in localizing their online platform or business model for Japan.
Kelven Lit, Director, Censpot Trading Corporation, who joined the mission, said the trip was useful to help him meet with a number of tech start-ups and companies founded by young people.
“Unlike the common perception that Japanese are quite conservative, I saw their eagerness to open their markets and willingness to cooperate with overseas companies,” he said. “We, as delegates from Hong Kong, also had the chance to exchange market updates and promote our products through business matching sessions. This will help to facilitate more business opportunities between both sides, especially given that we are all working very hard to recover after pandemic. So this mission was a golden opportunity for us to restart and reach out to the long-absent overseas markets.’
World Expo 2025
Based on the theme “Designing Future Society for Our Lives,” Expo 2025 is set to run from 13 April 2025 to 13 October 2025 on an artificial island located in Osaka Bay, served by a newly built subway station.
Yoshiyasu Takuya, from the Japan Association for the 2025 World Exposition, explained that future society showcase projects will be based on smart mobility, virtual reality, digitization, art, green technology and future life experiences. Visitors to the expo can look forward to travelling on electric buses powered by electric coils built into the roads, or if you are in a rush take a flying car.
Natalia Sukhanova, Senior Corporate Development Officer for Messe Frankfurt (HK) Ltd, said: “It was inspiring to see the designers combining Japanese traditional art and construction techniques with cutting-edge technologies in the grand roof at the Expo site. The roof is an impressive ring-shaped wooden structure with a diameter of 600 m and a circumference of about 2 km. Constructed without nails, it will take about two years to build and will be one of the largest wooden structures in the world. The design symbolizes the idea of ‘unity in diversity’ – standing on the roof, one can connect with the sky and the ocean.”
“I also find the idea of ‘Brilliance of Life Project’ very moving. It is a thematic project directed by eight leading producers from various fields – such as filmmaking, writing and literature, music, mathematics, animation, biology, etc. – to explore life and practise creativity during Expo Osaka 2025.”
During a meeting with the Osaka City Government, Sakata Yuko, Manager for International Business Promotion, said the government was placing great emphasis on contingency plans. This includes creating the necessary infrastructure and know-how, as well as attracting international talent, to allow Osaka to step in should there be a major problem in Tokyo, for example. “Our target is 2050, which is a very long-term vision, but our short-term target is to put in place the foundations of the project in time for the 2025 Expo,” she said.
During a meeting with the Osaka Chamber of Commerce and Industry (OCCI), Imai Masahiro, Chairperson, China Business Committee, said it was good to see business delegations from Hong Kong visiting Japan again. OCCI provides its 30,000 members with market updates on overseas markets, especially Mainland China.
“Japanese SMEs traditionally are not very keen to work with foreign companies or explore overseas markets on their own as the domestic market is so big,” he said. “However, that is now changing, and we have been getting more and more enquiries from our members, but it is difficult for those with only domestic business experience.”
Wakayama’s New Business Model
Located around one hour from Kansai International Airport, Wakayama is hoping to attract tourists and young entrepreneurs to the prefecture by promoting it as a work-ation destination. Boasting beautiful beaches and scenery, hot springs, and even a domestic airport, the Wakayama Prefectural Government is offering tax and investment incentives to businesses looking to set up in the area.
The area is famous for its manufacturing and IT sectors, but it hopes to grow into an IT hub. It has had some successes, with Salesforce, NEC, and Sakurug, among others, establishing offices there. Young entrepreneurs are also being drawn there to shared work spaces.
Another advantage is that it is only an hour from Tokyo to the nearby domestic airport. Katsunori Kobayashi, Director, Office Cloud 9, said Covid forced companies to spread out their workforce and work remotely, which pushed companies to understand that their employees can work remotely.
He added that young entrepreneurs are attracted to work in area by the support that Office Cloud 9 offers to people looking to set up a business in the prefecture. “They are also motivated by the lower costs here, and maintaining a good work-life balance which ultimately increases productivity and innovation,” he said.
An Inspiring Trip
The mission was organized after an Invest Japan Seminar at the Chamber earlier this year, co-hosted by JETRO, introduced the potential of the region. Summing up the mission, Lamport said he saw a lot of opportunities in the Kansai region, not only for tourism, but also in environmental and information technology sectors.
“It was quite inspiring to meet young and passionate Japanese entrepreneurs. They are very open to ideas and very different from the stereotypical impression that Japanese businesses are very traditional and formal. So not only is the business structure changing but so too are the people,” he concluded.