Japanese Resort Town Aims To Be Next Silicon Valley

Wakayama — A leading resort town in western Japan is attracting more attention as an alternative to working in urban areas as the pandemic has led to the nationwide spread of telecommuting.

In recent years, information technology companies have been moving to Shirahama, Wakayama Prefecture, and locals expect that the town will become an IT-centric area like Silicon Valley in the United States.

■Major firms, start-ups

The logos of tenants Salesforce.com Co. and NEC Solution Innovators, Ltd. appear on an office building overlooking the azure sea. Most of these tenants are based in Tokyo.

At present, the municipal government operates two such office buildings for the companies it has invited. Ten companies, mainly those related to IT and ranging from major corporations to start-ups, have facilities such as satellite offices in those buildings.

Because both buildings are already at maximum capacity, the town is scheduled to open a new seven-room office building this autumn through the aid of private capital.

Shirahama is located in the southern part of the Kii Peninsula and is a major resort town that sees about 3.5 million visitors a year. Rich in tourism resources, the area attracts people with the 620-meter-long Shirarahama beach, the 1,400-year-old open-air hot spring Saki no Yu and Adventure World, an aquarium-zoo-amusement park currently raising a family of pandas. Adventure World is a highly regarded tourist destination for domestic and foreign visitors.

While the location of the resort area is a key selling point for companies, there are other appealing factors as well, such as a network environment that allows connectivity even in the event of disasters and office rent being about a fifth of that in the Tokyo metropolitan area. A further selling point is a convenience of traveling between Nanki-Shirahama Airport and Haneda Airport in Tokyo, only an hour apart.

The novel coronavirus outbreak has led to a growing interest in living away from densely populated urban areas and instead of moving to rural areas surrounded by nature. The town government said it has been receiving an increasing number of inquiries regarding the opening of offices there.

■History of vacancies

In fact, there is a long history of attempts to attract IT companies to the town, including a long period with poor results that may be thought of as the town government being far ahead of the times.

The Wakayama prefectural government began to attract IT companies to the prefecture in fiscal 2001, recognizing the industry’s potential and aiming to create jobs to keep young people from leaving the prefecture. The prefectural government offered generous support, including subsidies for office rent and flights to Tokyo.

The Shirahama town government bought a recreational center from an insurance company in 2004 for ¥110 million and renovated it into a six-room office building to draw companies. These companies did not stay for long and vacancies continued.

However, the 2011 Great East Japan Earthquake caused this situation to change. Concerns over disaster risks drove an increasing number of companies to consider decentralizing their offices.

One company began renting office space in the first building in 2014, and in 2015, the Japanese subsidiary of major U.S. IT company Salesforce.com, which had participated in the planning of the Internal Affairs and Communications Ministry’s verification experiments for telework diffusion, also established an office there. This became a hot topic in Japan.

The following year, the building was fully occupied. The second office building with room for four offices was established in 2018 and was filled within four months.

■Effects, expectations

According to a survey by Salesforce.com conducted 1½ years following the opening of its Shirahama office, the number of business negotiations conducted per person was 20% higher on average per month than in Tokyo.

“The rich natural environment created a sense of relaxation and increased productivity,” said Takao Yoshino, 46, head of the company’s Shirahama office.

Exchanges between companies in the town are also progressing, which locals expect will lead to new business opportunities. The local community is also moving forward with the adoption of IT in endeavors such as experiments with facial recognition systems being conducted at the airport and hotels. The goal is to create a Japanese version of Silicon Valley, and the Wakayama prefectural government also hopes this will come to fruition.

“The time is now,” said prefectural official Yuji Sakano, “when more and more companies are questioning the way they work in urban areas amid the pandemic.”