Foreign Direct Investment

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New FDI helps light up a brighter future with jobs for Tohoku

Luring foreign direct investment to quake and tsunami-hit Tohoku is a way to help revitalize the area from the devastation of March 11, 2011.

Major foreign-capital companies such as GE Japan and IKEA Japan K.K. began with donations to Tohoku, which paved the way to business expansion, while Amazon Japan K.K. built its customer services center in Sendai, Miyagi Prefecture, to secure required talent.

GE believes that two of its global initiatives, “ecomagination” and “healthymagination,” have roles to play in helping revitalize Tohoku through foreign direct investment. Since the reconstruction involves many stakeholders, the key is public-private partnership.

“GE Japan wants to help resolve challenges through technologies and innovation in collaboration with local stakeholders,” said Hiroaki Kitagawa, director of the Reconstruction Assistance & Sustainable City program at GE's Tohoku base in Sendai, which the company established in April 2012. “We will support Tohoku's sustainable growth with win-win models for the private and public sectors.”

LED lights, for instance, could help save energy. GE Japan has collaborated with stakeholders in some areas of Miyagi Prefecture to install LED road lights. Meanwhile, in collaboration with an electronics manufacturer in Ishinomaki, GE Japan is developing solar-powered LED lights for 32 fishing ports.

Another effort involves indoor farms. GE Japan is working with Mirai Co., which operates a farm that grows vegetables inside a building without sunlight, using LED lights instead. A pilot indoor farm in Tagajo, Miyagi Prefecture, is using GE technologies such as LED lights, sensors and software. Commercial-scale production is the next step.

GE sees huge opportunities in Tohoku for large-scale advanced agriculture. In the Netherlands, for example, GE uses a technology called tri-generation (gas-engine generation of electricity, heat, and carbon dioxides to facilitate plant growth) that has made agriculture much more productive and competitive. Moreover, excess power is sold back to the grid by farmers and accounts for more than 10 percent of Holland's total electricity needs, supporting the electricity supply while adding profit to the agricultural industry. This solution would be a perfect fit for Japan.

“Tohoku is facing the challenges of an aging society, limited access to medical care in rural areas, and sustainable development of its cities, making it a microcosm of Japan. The March 11 disaster was certainly a tragedy, but the region now has a huge opportunity to build innovative models that could solve challenges faced by all of Japan, and GE can help,” Kitagawa said.

Contributing locally

IKEA Japan began making donations right after the quake and tsunami, as early as March 2011, giving away futons, towels, toys and other goods to survivors.

“With our mission, 'To create a better everyday life for the many people,' in mind, we wanted to support disaster survivors to restore their pre-tsunami life as soon as possible. We thus opened a temporary store in Sendai in an unusual format,” said Yoko Kitano, manager of the IKEA Sendai Minishop.

The Swedish furniture company's Japan unit had originally planned to open a store in Sendai, its first in the Tohoku region, around 2020, but opened the 1,500-sq.-meter minishop in September 2011, only six months after the disaster, in a rented facility.

“We had more customers come to the minishop than we had anticipated,” she said, adding that the minishop made a profit in the first year, which will be donated to the region at its closing as it is a not-for-profit support store.

IKEA Japan has purchased 18,000 sq. meters of land in another part of Sendai to open a regular store next year after closing the minishop.

Kitano said that IKEA's business in Tohoku has potential to grow because houses are relatively large, more people tend to have cars and spend more time at home because of the cold climate, just like in Sweden.

“Overall, the biggest aid we can give to Tohoku is to open the regular store, hire local people and contribute to the local economy,” she said.

Attractive workforce

Meanwhile, Amazon Japan found Sendai attractive as a venue for its additional customer services center in Japan after Sapporo, Hokkaido Prefecture, for the quality of people there, said Takanori Imai, director of Japan Customer Service of Amazon Japan.

“People tend to stay with one company for longer years and English skills tend to be higher,” Imai said about Sendai, where the online retailer built the customer services center. The company plans to employ 1,000 people at the center.

Amazon Japan had made these plans before the March 11 disaster and the tragedy has not changed their strategy at all, Imai said.

Kesennuma

“After the disaster, though, our feeling to contribute to increasing employment in Tohoku became stronger,” he said.

Produced by The Japan Times