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Uncut Gem Pt. II: Tokyo and its new direction into the future

Written by Unleash Tokyo Published on 

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In order to further promote Tokyo as the next hotspot for business, the Tokyo Metropolitan Government plans to run a large-scale event in March 2021.

Explore Tokyo from a whole new angle— the Tokyo Metropolitan Government is supporting initiatives focused on attracting start-ups interested in doing business in Tokyo, and as part of this focus will run an event to introduce Tokyo as an innovation hub. Running early March, it will be essential for businesses looking to expand into one of the world’s most famous cities. Stay tuned for more updates coming soon.

For many decades Japan has been powered by industries that are synonymous with its national identity. Sectors such as electronics, automobiles, chemical manufacturing, and textiles have driven the economy to new heights. In recent years however, Japan has seen  innovation and technology grow to enhance its traditional strongholds. Entrepreneurship has increasingly been embraced as a result of this change of mind. The number of startups and investment funds exploded since the early 2010’s, together with company valuations, fostering an ecosystem that is buoyed by success stories such as Mercari and headline-grabbing investments of Softbank’s Vision Fund. With 30% of the top 100 innovators based in Japan and 10 Nobel laureates in the past decade, the country’s strength and sustained investment in hi-tech research and talent has created an ideal and sound environment for researchers and developers.

Tokyo, Japan’s administrative and economic capital, has been the focal point for this progress. The desire to evolve and capture new trends have transformed the Shibuya and Otemachi areas in recent years. Shibuya, which is located on the west side of central Tokyo, has been the preferred area for the younger generation since the Dot-com Bubble of the late 90’s and has been regarded as “sacred” for venture capital firms since that era. More recently, large-scale development around Shibuya station has progressed and with Google deciding to move its headquarters to Shibuya, the area is gaining good momentum. Many levels of the Tokyo local government actively supports overseas companies and the presence of organizations that make cross-border connections such as Plug & Play add to the appeal of Shibuya. With the attention Shibuya has attracted, Otemachi, which is located on the east side, has also seen a transformation with the traditional large companies situated there.

Otemachi is Japan’s leading financial district and a place where the long-established large companies based its headquarters. In recent years, it has also become a convenient area for startups to expand their business. Many tech startups are regularly launched in Japan and many of these now gather in Otemachi in search of partnerships with major companies. This has meant this area has become an innovation hotspot for new services and businesses especially in the area of fintech. In addition to these areas, other parts of Tokyo such as Toranomon, Roppongi and Shinjuku are taking on new challenges while showing its strengths.

With this mentality, Tokyo has seen its startup ecosystem grow and mature. Not only has the number of new businesses increased, but also the number of VCs and community partners such as co-working spaces. The number of flexible offices in the 23 wards of Tokyo jumped from 46 in 2011 to 569 in 2020, with the total cumulative area increaseing rapidly from 60,000 m2 in 2011 to 530,000 m2.

Akihabara, Tokyo. Photo courtesy of Shutterstock.

Japanese companies looking outward for innovation

An important factor in the innovation push has been the willingness of traditional corporates to work with startups and foreign companies. Innovation programs have created opportunities for them to cooperate with established local businesses and bring in fresh ideas. Corporate Venture Capital investing has also increased since 2011 with the likes of MUFJ, SMBC, MIZUHO, Softbank, and SBI leading the way.

One company that benefited from this is Snapask. Founded in 2015, this Hong Kong startup runs an online learning platform and has built a presence in Tokyo due to the new open-minded attitude. CEO and Founder Timothy Yu told KrASIA it is working with high quality partners in Tokyo. “We are super lucky to have great partners and great team members. The local set up and operation is very smooth” said Yu. He admitted they had some misconceptions when they approached the new venture. “We were under the impression that when doing business in Tokyo, traditions and protocols would take precedence and, in some sense, prohibit innovation and breakthroughs. By closely working with business partners and talents in the company, we realized that the success comes from the ability to effectively integrate traditions into innovations and materialize breakthroughs and follow-through with a strong sense of commitment. Tradition becomes the sharpest weapon for Tokyo in doing business with the world,” Yu added.

Tech startups from Asia are becoming leaders in consumer economy

Another company that expanded into Japan is the Singaporean startup Visenze. An AI solutions provider that allows consumers to search retail products by image, Visenze has partnerships with companies such as Rakuten and UNIQLO. “I have observed that Japanese retailers looking for more innovation and they are looking to learn from other leading markets. I see a very strong quest for knowledge and learning, both in terms of adaptation, reinvention, and modern technology,” co-founder and CEO Oliver Tan told KrASIA. “They are now looking at new strategies that merge offline retail with online. Tokyo is leading that effort,” he added. For him, a new generation of Japanese are changing attitudes. “There’s another side of Japan itself, where we have millennials, who are no different from millennials in other parts of the world, who embrace modern practices and the entrepreneurial spirit. They will be representative of the future of Japan.”

Rainbow Bridge. Photo courtesy of Shutterstock.

Connecting Tokyo and Asia to information

The enthusiasm for creating valuable long-term partnerships has also increased, as shown by 36Kr’s efforts. In 2019 they partnered with the Tokyo-based Nikkei. The alliance between Japan’s leading economic newspaper and 36Kr, China’s largest tech and venture media platform, shows that industry leaders across Japan are seeking cutting-edge information from across Asia. It also shows the willingness by Japanese companies to collaborate with other Asian counterparts.

Because of this alliance it allowed 36Kr to make a foray into Tokyo. “This partnership undoubtedly boosted our traffic and influence, helping us further establish our brand in Japan,” said Max Ma, CEO of 36Kr Global. “Similar to our alliance, other Japanese companies are looking for long-term and strong partnerships with Asian companies, and their post-entry cooperation is very solid” added Ma.

Tokyo creates opportunities for startups

Tokyo has made efforts to provide assistance, not only to local startups, but foreign ones as well. The Tokyo Metropolitan Government (TMG), along with organizations such as JETRO (Japan External Trade Organisation) intend to make the entry into the city as smooth as possible. TMG is aiming to attract advanced and high quality foreign companies as well as publicizing the initiatives of Tokyo by developing resources such as “Access to Tokyo”. As part of these initiatives on February 8th, the “Tokyo Financial Award 2020” Award Ceremony will take place to celebrate the work and growth in financial innovation and ESG (Environment, Social, and Governance) Investment.

Tokyo Financial Award 2019. Photo courtesy of Accenture Japan.

In order to further promote Tokyo as the next hotspot for business, the Tokyo Metropolitan Government plans to run a large-scale event in March 2021. This event aims to promote the dynamic elements of life in Tokyo, present the key advantages for setting up a business in the city, as well as the resources that are available, and dispel any misconceptions that people may have. It is part of the drive to attract 2400 foreign companies by March 2031. It’s an event that cannot be missed and a great gateway to the next big startup hub in Asia.

What is the true attraction of Tokyo as seen from Hong Kong and Singapore? UNLEASH TOKYO

This article is in partnership with Unleash Tokyo.

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