October 19, 2020

Japanese businesses plan to leave the capital Tokyo

A series of Japanese companies are considering relocating a part of their headquarters from the narrow and expensive capital Tokyo in order to minimize the risks following the Covid-19 outbreak.
According to Nikkei Asian Review, about 50% of Japanese listed companies are headquartered in Tokyo. However, teleworking became popular in East Asia when the Covid-19 epidemic broke out. And this is an opportunity for businesses in this country to find their way out of the overload in the capital and create a better environment for their employees.

"The pandemic is a necessary push to push us to conduct reforms across the company," Nikkei quoted Kaori Takahashi - director of the system development firm ID Group, based in Tokyo - said.

At the end of August, ID Group announced it would move part of its headquarters to Yonago, a city in Tottori prefecture in western Japan. The movement will begin next November.

The new office will be the centerpiece of the cloud computing segment as well as departments such as sales and HR. The company plans to increase the number of employees in this office from 11 to nearly 50 by 2025 and aim to have a total workforce of 100.

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Many Japanese businesses consider moving away from Tokyo. Photo: Japan Times. Change of habits
During the pandemic, ID Group issued regulations on remote working but found it difficult to change the habits of engineers, who often sit in customers' offices. ID Group's largest overseas branch was located in the city of Wuhan, where the Covid-19 translation broke out.

After that, the city was strictly sealed off for two months. Mr. Takahashi said the event "made us realize that poor resilience stems from the concentration of many functions of the office in the same place". That situation forced the company to take a closer look at the possibility of a similar emergency in Tokyo.

Japan suffers from many natural disasters, from super typhoons to earthquakes. The Kanto region - which includes the seven prefectures of Gunma, Tochigi, Ibaraki, Saitama, Tokyo, Chiba and Kanagawa - is not immune to major earthquakes. And if an earthquake occurs in the capital, the network of businesses based there could be paralyzed.

ID Group is one of many Tokyo-based companies looking to move out of the city. Human resources firm Pasona Group - with nearly 20,000 employees - earlier this month announced it would move part of its operations, including its human resources, accounting and business development, from Tokyo to Awaji Island in Hyogo Prefecture.

“We want to promote the lifestyle and work of the new generation, in harmony with nature. This helps us to have a more seamless business plan, ”said Motoyoshi Takagi, CEO of Pasona Group.

Tokyo is not the corporate revenue of Nhat hau Covid-19 brother 2
Tokyo has some infrastructure weaknesses like traffic congestion and a lack of kindergartens. Photo: AFP.
According to the plan, Pasona Group will move about 1,200 employees - equivalent to 2/3 of the employees working in Tokyo - to the new headquarters by 2023. Their salaries will remain the same as in Tokyo. Over the past few years, Pasona Group has committed to the development and operation of restaurants, hotels and cinemas on Awaji Island.

Previously, Daido Life Insurance previously required activities such as insurance claims processing to be done at the headquarters in Tokyo or Osaka. But now the insurance company allows employees to do these things in other areas if they wish.

Daido Life Insurance also realized that it wasn't a big deal for employees to work out of the way during the period when the Japanese government declared the emergency in April and May.

Tokyo is less and less attractive
Many companies reassess the role of Tokyo's business hub at the same time, as the Japanese government encourages people to move to rural areas through a subsidy program aimed at promoting pushed the revival of these areas.

Specifically, from April 2021, the Japanese government will subsidize up to 1 million yen ($ 9,500) to those moving to rural areas and continue to work remotely for companies in Tokyo. The government will also provide grants of up to 3 million yen to founders of information technology companies in rural areas.

According to data from the Ministry of Land, Infrastructure, Transport and Tourism of Japan, 51% of companies listed in the country are headquartered in Tokyo. Although Tokyo is often congested in traffic and has high office rentals, many companies are hesitant to leave, partly because the majority of customers and suppliers are located there.

Another problem is that recruiting people is more difficult in areas other than the capital. Now, however, "big businesses have begun to consider the possibility of moving part or all of their headquarters" because they have spent time working remotely during the pandemic.

5G telecommunications is also a compelling factor for this shift, said Takanori Hara, director of corporate risk consulting at Sompo Risk Management.