Japan’s Economic Regions
Tokyo and surrounding area
Tokyo is the first choice for many franchisors though due to the high costs of opening an outlet it should not be assumed to be the only choice for a company taking its first steps into Japan. Being the capital however, it is the centre of government, business, fashion and culture.
The region centred around the capital is known as the Kanto region and produces 40% of Japanese economic strength. It has a population of 13 million and the main metro area is surrounded by the suburb prefectures of Kanagawa, Saitama, and Chiba giving a total population of over 35 million-roughly equivalent to the New York and Los Angeles metropolitan areas combined.
Tokyo has a well developed transport system and airport links.
The Kansai region in western Japan is the second most important economic centre and has the second largest population. Kansai consists of Kyoto, Mie, Osaka, Hyogo,Wakayama, Shiga, Nara, Fukui, Tokushima and Tottori prefectures. Kansai would rank as the world’s 11th largest economy if compared to the world’s leading economies. Kansai’s Gross Regional Product (GRP) is $917 billion.
Kansai covers only 12% of Japan’s total land area but has a population of almost 25 million people concentrated in the cities of Osaka, Kobe and Kyoto. The biggest city is Osaka with a population just shy of 3 million and has an international airport. Consumers in Kansai are very receptive to new ideas hence the traditional Japanese saying that you should go to Kansai to see what the rest of Japan will soon be buying.
Successful foreign firms such as Procter & Gamble use the Kansai area as a test market for launching new products in Japan.
As of 2010, 236 foreign-affiliated companies maintained their Japanese headquarters in the region. Osaka offers benefits to foreign corporations to set-up in the region, such as the country’s first ‘zero local tax’ system.
The Ch?bu region has the third biggest population in Japan. The area consists of nine prefectures: Gifu, Shizuoka, Fukui, Ishikawa, Aichi, Mie, Nagano, Toyama and Yamanashi. The region accounts for 17% of Japan’s GDP, and nearly 70% of Japan’s total trade surplus with the United States. The biggest city is Nagoya with 2.2 million inhabitants and is Japan’s fourth largest city.
The majority of industry is concentrated in the four prefectures of Aichi, Gifu, Mie, and Shizuoka. The region is the main centre of Japan’s processing industry and approximately 20% of Japan’s industrial production occurs here.
The region’s infrastructure has been greatly extended around the Aichi-Expo site. The Chubu Airport Centrai has daily connections to Europe and a there is a new logistical hub for DHL. There has also been a certain trend, discernible for decades, for companies to relocate their headquarters away from Tokyo back to the Chubu area.
The Kyushu/Yamaguchi region is Japan’s fourth largest economic centre representing about 10% of national GDP and consists of seven prefectures: Fukuoka, Oita, Saga, Nagasaki, Kumamoto, Miyazaki, Kagoshimaand Yamaguchi with a combined population of about 15 million.
The region has a $480 billion economy and accounts for 8.8% of Japan’s GDP. The biggest city is Fukuoka with a population of nearly 1.5 million. The region is traditionally known as Japan’s gateway to Asia and has good trade links with continental Asia, particularly South Korea, Taiwan and mainland China.
There are two convenient airports: Fukuoka Airport and Kitakyushu Airport. About 450 foreign-owned companies are located in Kyushu. Average monthly office rents are 53% and 78% of those in Tokyo and Osaka respectively and average monthly wages are 71% and 86% of those in Tokyo and Osaka respectively.