New data show a growing number of companies in the Tokyo metropolitan area are relocating their headquarters to Japan’s northernmost prefecture, lured by subsidies and other incentives in uncertain times.
Many companies find that having their main offices in Hokkaido is a good way to insulate themselves from risk in the event of an emergency.
It is also becoming less important for corporations to remain in the greater Tokyo area, due to the spread of telecommuting.
The Hokkaido government and the city of Sapporo are encouraging companies to relocate by offering subsidies and other forms of support, and while they are now reaping the benefits of those efforts, it’s unclear how long the boom will last.
Lupicia Co., which has 150 stores inside and outside Japan that sell tea products from around the world, moved its headquarters to Hokkaido from the Tokyo metropolitan region.
“Dense populations in urban areas present great risks in the event of natural disasters and outbreaks of infectious diseases,” said Hiroki Mizuguchi, president of Lupicia. “The coronavirus crisis has made that much clearer.”
It moved to Hokkaido’s Niseko from Tokyo’s posh Daikanyama district in 2020. The company’s factory, restaurant and tourist facilities for employees have already been located in Niseko.
About 20 staff members have migrated there from the capital. Once the planned staff housing complex and new office are completed in February next year, around 100 people are expected to be on duty in Niseko.
Lupicia posted record profits for the financial year ending June 2021 thanks to brisk online sales during the pandemic.
“Increasingly advanced information technologies have been introduced after the coronavirus outbreak and have revealed that companies can do most of their tasks through low-cost, low-risk remote work,” Mizuguchi said. “Moving to local areas will gradually become more common.”
Mizuguchi said Hokkaido’s “natural environment” is a big part of its appeal.
“Although some people argue that important information can only be gathered in Tokyo, placing (the company) in nature helps to improve the creativity of workers,” he said.
According to data from Teikoku Databank Ltd., 2,258 corporations nationwide changed the location of their headquarters in 2021.
Of these, 351 left the Tokyo metropolitan area for other locations, 20% more than the previous year.
It was the first time in 19 years that more than 300 companies moved out of the metropolitan area.
A record 33 companies came to Hokkaido, which was third behind Osaka Prefecture with 46 companies and Ibaraki Prefecture with 37.
The number of business immigration from Hokkaido has increased fivefold since 2019, the highest rate of increase among all destinations.
“Hokkaido is attracting attention as a possible destination because of its lower population density and other elements,” said a representative of Teikoku Databank.
Wellnet Corp., an electronic payment service provider listed on the main segment of the main market of the Tokyo Stock Exchange, returned from Tokyo’s Minato Ward to its founding site in Sapporo last year.
Although Wellnet moved its main office to the capital in 2009 to expand its business, it chose to build its new headquarters in its “hometown”.
Wellnet said it had made the decision before the pandemic as it was “difficult for our company to stand out from many other companies in Tokyo”.
The dangers of having only basic facilities in and around the capital became clear to many during the Great East Japan Earthquake and Tsunami of 2011. Since then, more companies have begun to relocate their headquarters to other regions to increase their sustainability.
Among these companies is overseas-affiliated Axa Life Insurance Co., which established its head office in Sapporo in 2014.
Axa considered non-earthquake-prone areas when it chose Sapporo from among 65 cities across the country, so the new office can handle contracts, payments and other processes vital to business continuity.
Local municipalities, struggling with declining birthrates, an aging society and shrinking population sizes, are competing to attract businesses by stepping in to help with business relocations.
Axa relied on the Sapporo city headquarters’ “exchange” grant program, which distributes up to 150 million yen ($1.09 million) to cover staff costs and up to 60 million yen for construction costs.
Eight corporations have benefited from the program since 2013.
“More offices are available as a result of the redevelopment of the area in front of Sapporo Station,” said a Sapporo city official. “We expect many more companies to come.”
The Hokkaido government is also helping companies relocate their headquarters by taking advantage of Japan’s special tax system for local revitalization and introducing an office rental subsidy of up to ¥10 million.
Data from the Teikoku Databank survey show that more corporations left the Tokyo area than entered the area for the first time in 11 years.
However, many companies strongly believe that being located in the metro region still offers many key business advantages, such as hiring new employees and maintaining links with suppliers and customers.
This suggests that the growing number of companies moving to Hokkaido may be just a temporary boom.
