In Japan, in line with the post-war national survival through industrialization, companies based in Tokyo developed business activities into local regions. In recent years, however, regional industries have been vanishing following an increasing trend for relocation overseas, especially by manufacturing companies, due to lower land and labor costs. U.S. and European competitors have been demonstrating their presence in overseas markets ahead of Japanese companies, and regional industries have been promoted based on clusters.
    A scheme for making continuous innovations is needed to create regional clusters. To develop active communities, each country creates regional clusters by exploiting local intellectual properties. The functions of clusters consist of research and development, technological development, and other similar functions. Universities also play a role in attracting people from all over the world.
    With a sense of regional crisis as a starting point, clusters grow and advance into stages of growth and continuous growth respectively. Collaboration with other clusters is required especially during the stage of continuous growth. Procedures for designing clusters include analysis of the current status, target setting, actions and measurement of the economic effects. In Japan, Kyoto and Hamamatsu are the regions where clusters have grown and been maintained for up to three decades. If “people want to live in a city with their family members,” they gather in the city and industries are created there. Close intra-regional and inter-company collaboration like that in Kyoto and Hamamatsu is the key to success for the development of clusters. At the same time, international collaboration between regional clusters is vital for their continued successful growth.

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Takashi Moritake
Director of Japan Federation of Gyoseishoshi Lawyer’s Associations

    According to a survey on the entry of overseas companies into the Japanese market, impediments to access to the Japanese market are as follows: complicated procedures (the first reason), lack of information on legal systems (the second) and lack of information on specific regions and markets in Japan (the third). Based on a program for promoting direct investment into Japan, efforts are being made to transmit information, both domestically and internationally, develop the business environment for companies, review administrative procedures, and improve employment and life environments as well as regional and national systems. To improve services for overseas companies aiming to enter the Japanese market, EABUS is engaged in promoting services with regard to both administrative procedures for market entry, improvement in business and employment environments, and the provision of continued support after the start of operations.
    The purport of the establishment of EABUS is to comprehensively provide high-quality services to support overseas and other companies aiming to newly start up regional businesses, based on a network of qualified persons such as administrative scriveners. EABUS’s activities are as follows: to attract companies, support small and medium-sized companies, complete administrative procedures on behalf of clients, engage in international business exchange and hold all kinds of forums. As far as attracting companies is concerned, EABUS provides information and other similar services based on internal databases on corporate attributes, related information and qualified personnel. EABUS is also engaged in alternative dispute resolutions (ADR) via both support for administrative procedures relating to Japanese market entry and continued support for operations after the business start-up. In completing administrative procedures on behalf of clients, EABUS strives to reduce the burden of administrative procedures by mediating in such procedures. With regard to international business exchange, to facilitate international mutual business exchange, EABUS provides not only information on corporate technology and products in four languages, by preparing databases mainly on venture companies, but also comprehensive services for companies planning to start up new businesses, covering all business processes from market entry to business operation.

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Professor Seon-Gyu Go
Electoral Training Institut
National Election Commission, Korea

    As for the IT business, the necessity for collaboration within the Asian region was highlighted with the economic crisis in the latter half of the 1990s. We considered forms of competition based on different technologies to be useless and that trilateral collaboration among Japan, China and Korea would generate synergy effects. The governments started to build frameworks and cooperate with ECOM. We considered that the experiences of Japan and the momentum of Korea would effectively complement each other at different levels. Trilateral cooperation will be important in creating new IT, because the stage of competition will shift from production to standardization in future.
    Korea is ranked as the world’s No. 1 in terms of Internet penetration, No. 2 in terms of the Internet utilization rate, and No. 5 in terms of e-government evaluation. Compared with other countries, Korea has recorded the quickest growth in its information and telecommunication environment. In accordance with the U-Korea Strategy; targeting national competitiveness, improvements in industrial productivity and other similar objectives, Korea has been focusing on the development of eight services, three infrastructures, and growth products in nine areas up to 2012. As a basic strategy to promote U-Korea, the Korean government has been advancing the development and use of infrastructures, innovation in the state and social system, investment infrastructure development, and the efficient division of roles between the public and private sectors. Electronic governments in Korea are serving as a driving force of promotion for innovating processes and systems in individual areas.
    The global IT market and trade shares of the three East Asian countries are 14.7% and 20.3% in the world respectively. Based on this market background, Korea has been playing a leading role in international organizations and has been striving to close the global digital divide and to develop other similar activities. Expert conferences by IT bureau managers, conferences by IT ministers and other similar meetings were held in 2001, which was a turning point in IT-related measures.
    Thanks to ECOM cooperation, Japan, China and Korea have been collaborating in promoting electronic commerce, while Japan and Korea will also cooperate in e-municipality systems. However, future problems, such as a lack of multilateral cooperation organizations, are expected. The following changes are also expected in future: the rise of the Chinese economy, recovery of the Japanese economy, IT industry-led economic structures of Japan, China and Korea, the promotion of activated trilateral cooperation in IT until 2010, etc.

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Mr. Wang Wen
Lawyer (expert in China inward investment and related business affairs), China

    As a law firm in Shanghai, whose clients are Japanese-affiliated companies with operations in China, we have been engaged in processing paperwork, eliminating troubles and solving other similar problems relating to Chinese market entry. Today, instead of showing you macro data, I would like to talk about what kind of schemes are created and the kind of preventive measures that are taken when Japanese-affiliated companies enter the Chinese market.
    Overseas companies enter the Chinese market in the form of equity joint ventures, cooperative joint ventures and foreign-owned enterprises, name borrowing, interest transfer, M&A, etc. Japanese-affiliated companies are not unfavorably treated even if they lack any political relationships. Local governments want to attract many Japanese-affiliated companies in proportion to their size. There are various kinds of business areas to enter, such as the manufacturing of automobiles and other similar products, resident offices, retailing and wholesaling for which bans were lifted this year, consulting, recruiting, restaurant and entertainment, franchise, contents, construction and logistics. With the elimination of all kinds of unnecessary regulations in line with WTO entry, the Chinese government is expecting companies to enter the local market.
    The Chinese society holds the technologies, financial resources and expertise of Japanese-affiliated companies operating in China in high esteem, as well as Japanese workers’ company loyalty, diligence and professionalism, the development of human resources, and legal awareness, etc. Working experiences in Japanese companies are considered to represent business careers. On the other hand, while Japanese companies are based on a life-time employment system, Chinese companies are based on a contractual employment system. Many companies pay salary compensation in order to downsize. Contractual documents must be scrutinized and literal reading of what interpreters say is inadvisable, due to the cultural differences existing between Japan and China, which are likely to lead to misunderstanding. There are countermeasures such as human resource strategies, the accumulation of expertise, business management systems, communications, risk prevention, etc. It is also necessary to clarify wage provisions.
    As for anti-Japanese feeling, my opinion is that overreactions from the mass media stir it up. In spite of existing country risks, China has a huge market, and legal systems are now being developed with increasing contractual consciousness. Investment into China is now in an adjustment stage. Although the Chinese authorities have not yet eradicated problems such as connections, pipelines, commissions and rebates, they have started to take preventive measures. I think that personnel, morale, administration and other similar risks can be avoided by fully implementing preventive measures based on legal knowledge and labor contractual documents, etc.

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Coordinator
Professor Katsumori Matsushima
Department of Meta-Technica Engineering, Engineering Research Institute,
The University of Tokyo
Panelists
- Mr. Kazuaki Yuoka
Director-General, Invest Japan Department, Japan External Trade Organization
-Mr. Kenji O’oishi, Special Advisor of Advanced Software Technology & Mechatronics Research Institute of Kyoto
-Mr. Toshihiro Kose
Chief Executive, Industry and Science Promotion Bureau,
City of Kitakyushu
-Mr. Yasuhiro Fukushiba
Manager of Asian Venture Business Project Promotion Office, Economic Affairs Bureau, City of Kawasaki
-Mr. Kan Hayashi
Legal Consultant/Administrative Scrivener of the Association for the Promotion of International Trade, Japan

(Mr. Yuoka)
  As for the current status and problems of investment into China and attracting enterprises, the Japan External Trade Organization has been supporting an action program that covers five areas and eighty-two items, aiming to double the balance of investment into Japan within five years starting from January 2003. Although we previously focused on supporting Japanese companies’ relocation overseas, we are now also striving to attract overseas companies into the Japanese market. Japan has advantages such as a large market and sophisticated technologies. In recent years, with reinforced collaboration among Japan, China and South Korea, Japan serves as a hub for overseas countries to develop businesses in Asia.
(Mr. Oishi)
    I would like to talk about a successful example of local revitalization in Kyoto thanks to regional clusters. Kyoto is the first city in which regional clusters with a focus on science and technology were established in Japan. Following a sense of crisis for Kyoto residents, following the shift in the capital to Tokyo, Kyoto Prefecture has been striving to revitalize industries by introducing European science and technology. It has already started to create Kyoto clusters that are designed for the 21st century, and has been promoting business-academia collaboration, measures to develop regional industries in cooperation with the City and Prefecture of Kyoto, and more. In relation to business collaboration among Japan, China and Korea, Kyoto Prefecture established the Kyoto Foreign Investment Promotion Committee, centralized contact points and continues to support its activities.
(Mr. Kose)
   I would like to present the geographical position of the city of Kitakyushu, its development history as an industrial city, the Kitakyushu Renaissance that started in 1988, the city’s main projects, etc., as measures to develop both regional industry and collaboration in East Asia. Automobile industries are concentrated in Kitakyushu. With an established production system of 1.4 million vehicles in Kyushu and Yamaguchi, the city of Kitakyushu is striving to maintain and strengthen international competitiveness as a hub port for the Yellow Sea Rim Economic Zone. It has been advancing a new scheme for collaboration among ten East Asian cities and is working toward the conclusion of inter-regional FTAs in East Asia.
(Mr. Hayashi)
    As for the current legal problems with corporate collaboration in East Asia, I would like to present legal problems, visa problems and problems with establishing foreign corporations in Japan, such as banking transactions, office rental, board members, and the status of residence. The total number of immigrants in 2003 was 5.7 million, nearly three times that of twenty years ago. In particular, the number of Chinese immigrants has increased tenfold to 0.5 million people, compared with twenty years ago and it is quite difficult to obtain visas. One of the common problems is that corporate registration and guarantors are required to complete procedures for renting offices while offices are needed to complete corporate registration. A considerable degree of effort is required to establish corporations in Japan.
(Mr. Fukushiba)
    I would like to explain about the concept of the Asian Venture Business Town in the city of Kawasaki. We created this concept by exploiting our own experiences in suffering from and eventually overcoming environmental pollution. We intend to make international contributions by introducing political measures and corporate expertise (environmental measures) that were useful in overcoming environmental pollution into Asia. We are supporting Asian entrepreneurs in Japan, but there remain major barriers, such as the status of residence and guarantors. We opened the Asian Venture Business Town last November. People from Asia and other regions collaborating with companies inside the city are accepted as tenants in the Asian Venture Business Town. Once they become tenants, their rents will be lowered and they will be entitled to receive business foundation and livelihood support. We are supporting entrepreneurs in many aspects such as the status of residence, toward the creation of Asian businesses, including the environmental industry, in the 21st century.

(Panel Discussion)
    The discussion theme was that Japan, China and Korea have differences in business customs, despite their geographic and cultural proximity. Discussions proceeded under the theme of nations both close and distant.

Coordinator Professor Katsumori Matsushima The University of Tokyo

• Working as a business bridge between Japan and China, we are torn in working between conflicting demands due to differences in consciousness. We are caught in a dilemma because business customs differ between Japan and China. One of the reasons is presumably that capitalism has not yet taken root in the latter.
• People in Japan, China, and Korea have different senses of speed. To solve this problem, it is necessary to accumulate experiences and make use of good coordinators like Mr. Wan.
• Some Japanese companies enter the Chinese market based on the belief that they will be able to make money or obtain the support of a third party there, but rather, they should do so based on clear strategies. Businesspeople in Kyoto advise that the common keys to business success in China and Korea are top-level commitment, swift and clear decision-making, thorough market research and product selection, and the utilization of local human resources.
• Japan, China and Korea are nations that are both close and distant at the same time. Keywords covering potential misunderstandings in business are considered to include the following: cultures and institutions, senses of speed, relations of mutual trust, performance-based business evaluation by Japanese people, and languages (linguistic understanding).

In addition, there are many issues that should be proposed to the Japanese government with regard to actual collaboration in international business, starting with the example of that business office address is required to submit corporate registration, but corporate registration is required to obtain an office in the first place. There are many similar problems like this. Based on such circumstances, the coordinator asked the panelists to frankly express their requests to the Japanese government.

Panel Discussion

• The issuance of visas is problematic because each immigration bureau judges based on different standards and on a case by case basis. It is quite difficult for foreign people wishing to develop business ventures in Japan to acquire the status of residence. I hear that judicial scriveners are here today and that one-stop support for businesses in Japan, China and Korea will be provided. I definitely expect it.
• The biggest hurdle in designated special zones for structural reform is a visa problem. Although “designated special zones for structural reform” sounds like a progressive thing in Japan, the Japanese government has actually implemented nothing more than a slight relaxation of regulations. For example, in Incheon, Korea, companies are exempted from corporation taxes for the first seven years, and corporation taxes have been reduced by 50% for the three following years. These represent major differences in incentives.
• Japan has been promoting support measures for designated special zones to encourage structural reform. However, I think that compared with other countries, Japan has not fully eliminated unnecessary regulations and provides fewer incentives. My impression is that decision-making is slow because local regions have not been empowered to eliminate unnecessary regulations and take other similar measures.
• I think that the problem with the status of residence will be gradually solved because each immigration bureau is applying examination standards more thoroughly than last y ear. Procedures are also being gradually improved, as shown by the establishment of a r egistration system in English, etc.
• The biggest problem with investment into Japan is whether any business is present here or not. We sometimes advise those coming to Japan to make investments and do business here to find business partners in Japan and advance into overseas market together with them.

    This forum was held all day, from 10:00 a.m. to 5:00 p.m. Participants’ responses to a questionnaire showed that the lectures and panel discussion by a total of ten active front line lect urers were extremely satisfying; both in quality and quantity.
    Lectures that were omitted due to limitations of space and th e details of the panel discussion will be released on the of EABUS web site (http://www.eabus.org) from September.

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