JETRO Invest Japan Report 2022
Chapter2. Business Operations of Foreign-affiliated Companies in Japan Section3. Expansion of Foreign-affiliated Companies into the Region

This section examines how foreign-affiliated companies are expanding into Japan’s regions as the Strategy for Promoting Foreign Direct Investment in Japan calls for expanding foreign-affiliated companies into regions and leading to revitalizing local economies.

Regarding the head office location of foreign-affiliated companies in Japan, 72.4% were in the Kanto region. As for industry characteristics by region, in the Kanto and Kansai regions, the percentage of wholesale trade/general trade companies was high at 38.9% and 42.7%, respectively, while in Chubu region, the manufacturing industry accounted for a high percentage of 34.1% (Chart 2-13). New Analysis

30.6% of the companies had multiple bases in Japan. The manufacturing and retail trade industries tended to have multiple bases (Chart 2-14). By prefecture, Aichi, Osaka, and Fukuoka prefectures were the most common locations for companies with multiple bases, apart from Tokyo. New Analysis

Regarding the business environment in Japan that foreign-affiliated companies find attractive, "market size" was the most attractive feature of the business environment in Japan, chosen by 63.4% of the respondents, followed by "growth potential of the Japanese market" at 32.0%, and "well-developed infrastructure" at 31.9%.

By region, a higher percentage of companies in the Chugoku and Shikoku regions selected "high level of technology and R&D capabilities of Japanese companies." In addition, “quality of living environment" tended to be higher in the south (Chart 2-15). New Analysis

When asked to select what factors were considered important in deciding on a location (regions/prefectures) for strengthening an existing base or establishing a new base, the most common response overall was “potential to acquire new customers” (Chart 2-16). This trend is particularly pronounced in the industries of retail trade, and services and others. On the other hand, “low business costs” is more important in the manufacturing industry.