Ibaraki fertile ground for international business: Tokyo's neighbor boasts cutting-edge R & D, an international atmosphere, reasonable prices and a highly skilled work force - Sponsored Section

Japan, Inc., Feb, 2004 by Sam McDowell

THERE HAS NEVER BEEN a better time than now for overseas companies looking to set up operations in Japan, especially for those looking beyond the major urban centers. Regional governments are devising new, more aggressive ways to attract investors to compensate for the outflow of local manufacturers to China and elsewhere.

Central to such measures are financial incentives. Businesses daunted by the prospect of high operating costs in Japan should consider this: Japan Inc Communications K.K. estimates that a company operating a Tokyo-based call center with 40 employees and nearly [yen]18 million a month in operating costs could save over [yen]3 million per month simply by moving to an area like Ibaraki ... The reason? Ibaraki's outstanding financial incentives.

The promise of such savings, coupled with the draw of life away from the hustle and bustle of a large city, makes many lesser-known areas throughout Japan attractive as potential operating bases. But when considering such factors as business costs, local talent, location and quality of life, Ibaraki Prefecture rates particularly highly as an investment location.

Indeed, Ibaraki's safe, comfortable living environment, easy access to first-rate technology, proximity to major urban centers and highly skilled work force have already encouraged more than 40 foreign corporations to set up manufacturing plants in the prefecture.

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Bigger Savings

Land prices in Ibaraki are considerably lower than those in Tokyo and the surrounding prefectures of Saitama, Chiba and Kanagawa, which make up the greater Tokyo metropolitan area. Wages are also cheaper--the average worker makes [yen]290,558 (about $2,526) a month in Ibaraki; in Tokyo, the monthly average is [yen]333,309 (about $2,898).

The Ibaraki prefectural government offers substantial financial incentives to foreign companies, including a three-year exemption from enterprise taxes and a waiver on the real estate acquisition tax. The prefecture also offers low-interest loans to companies that plan on building so-called "mother factories" in selected local industrial parks. Just in case you didn't know, mother factories are the main plant of a given company: a factory complete with a research department, or a facility with the ability to develop and produce experimental versions of new products.

Takatoshi Takahashi, an accountant and specialist in taxation of foreign companies, says that thanks to Ibaraki's tax holiday, given a tax rate of 9.6 percent, a company with a staff of 100 and earnings of [yen]100 million can save [yen]960,000 a year by moving just 10 employees from its call center or back-office operations to Ibaraki. If companies have larger taxable profits per employee and are able to move a larger number of employees, the savings are even bigger.

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Highly Skilled Work Force

Ibaraki is home to Tsukuba Science City, the nation's largest concentration of science and technology facilities and an international hub for high-level research. The city boasts over 300 research institutes and 13,000 researchers, 3,500 of whom are foreign nationals. Big names such as Intel and Texas Instruments have laboratories there. Enhancing the international atmosphere are researchers and academics from over 46 countries, as well as 2,000 overseas exchange students and research trainees from 90 countries.

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At the heart of this city are the Tsukuba International Convention Center and the University of Tsukuba, one of Japan's most prestigious public universities. The university is home to several Nobel prize winners, including Hideki Shirakawa, who won the 2001 prize for chemistry, and a large population of leading scientists and researchers. It is also an international campus, with 50 foreign professors and more than 400 foreign lecturers, research fellows and other faculty members. Walk the leafy streets of Tsukuba, or ride along one of its many bicycle paths, and you're bound to hear English, Russian, Chinese and other languages spoken.

Just outside of the university is Mount Tsukuba, which offers stunning views of Tokyo and the Kanto Plain. Hot springs resorts and hostels are tucked into the side of the mountain. At some of these Japanese inns, you can soak in an outdoor bath and watch the sun set behind Mount Fuji, then retire to your room for a sumptuous dinner that is included in the price of the room.

Excellent Location

Ibaraki is blessed with a diverse geography, including mountains, rivers, lakes and beaches, making it an ideal place to "get away from it all." Residents can spend their weekends hiking in the mountains near Tsukuba, golfing on one of the prefecture's many courses or baking on the beach in Hitachi.

Urban excitement is also never far away, with Tokyo just an hour to the southwest. Mito, the prefectural capital, is 100km from Tokyo, while Narita Airport, Japan's international gateway, is only 40km from Tsukuba Science City.

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