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REGIONALISM REVITALIZES JAPAN — THIRD IN A SERIES

Japan Invests in Rebuilding
Promoting economic vitality in the Japanese countryside is a central plank in the Abe government’s program for revitalizing the nation. A special emphasis in Japan’s resurgent regionalism is Tohoku—the northern end of the island of Honshu. Numerous communities in Tohoku suffered horrific devastation in the Great East Japan Earthquake and tsunami of March 11, 2011. The rebuilding effort there has benefited from immense input from Japanese companies and individuals, as well as from the national and local governments. Here are some examples of entrepreneurial ventures that are helping to lay a foundation for lasting renewal in the region.

Mobilizing for Regional and Demographic Vitality

Fashionable Sustainability

Tamako Mitarai wanted to contribute to the recovery effort in Japan’s northeast through a sustainable business enterprise. Her solution is a remarkable company that has garnered a nationwide clientele with fashionable woolen wear.

Work at Kesennuma Knitting has proved an opportunity for restoring spirits, as well as for supplementing household finances.

Kesennuma’s newest product offering, a top-of-the-line sweater, debuted in autumn 2014 (photo: Kazumi Kurigami).

Mitarai launched her knitting project in 2012 in the coastal city of Kesennuma, Miyagi, and incorporated it in 2013. Her knitters, who now number 36, turn out cardigans and sweaters that eager buyers queue to purchase at high-fashion prices.

Some of the knitters have been knitting since they were children. All of them experienced the horror of the March 11, 2011, temblor and tsunami. Some lost loved ones. Some lost their homes or workplaces. Knitting has been an opportunity to heal and reconnect with the world.

“The city’s connection with the world came as a surprise to me,” says Mitarai. “Kesennuma is a small city. But it’s the port for a deep-sea fishing fleet, so the men in that fleet travel the world. And that has invested the city with a cosmopolitan air.”

Kesennuma’s fishing tradition, Mitarai learned, had also engendered a knitting connection. Mending fishing nets is part of life for fishermen and for their wives and daughters. But Mitarai has provided the women at her company with more than just jobs in a familiar line of work. “We wanted to invest the women’s lives,” she explains, “with joy and dignity. That has shaped our activity from Day One.”

Mitarai went to work at the global business consultancy McKinsey & Co. on graduating from the University of Tokyo in 2008. She took a year off in 2010 to assist the Bhutanese government in developing sustainable tourism. Back at McKinsey, she received a life-changing career proposal.

Shigesato Itoi, a prominent advertising copywriter, became acquainted with Mitarai through a blog that she maintained while in Bhutan. And he enlisted her to lead a project that he had conceived to contribute to post-quake recovery.

“We were determined,” explains Mitarai, “to do something based in local culture and history.” Kesennuma’s fishing and knitting traditions called to mind the woolen sweaters of Ireland’s Aran Islands, and Mitarai flew to Ireland to observe the islands’ knitting industry firsthand.

Skills born of mending fishing nets over generations have engendered a Kesennuma tradition of knitting.

First come, first served

On returning to Japan, Mitarai began recruiting Kesennuma women for her enterprise. All were able knitters, though few had any professional knitting experience. The city’s fishing industry was reeling from the aftereffects of the earthquake, so the income from Kesennuma Knitting was invaluable to the women’s households.

Mitarai knew that viable pricing would be crucial to fiscal sustainability. So she opted for products that could command prices as high-end fashion apparel, not just handicrafts. A noted hand-knitting designer, Mariko Mikuni, was an acquaintance of Mitarai’s, and Mikuni designed Kesennuma Knitting’s inaugural product, a cardigan.

The first cardigans went on sale on the Internet in December 2012. Orders outstripped supply severalfold, obliging the company to fill orders by lottery. Kesennuma launched a second product in November 2013, a pullover, and a third product, a top-of-the-line sweater, in autumn 2014. Demand continues to outstrip supply, so sales are on a first-come, first-served basis. With an eye to lasting growth, Kesennuma Knitting has launched an English-language version of its online store to serve customers worldwide.

Fashionable Sustainability

Abukuma Foods Co., Ltd., a food processor based in Fukushima Prefecture, has achieved an interesting and delicious breakthrough in processing green peaches. The new processing method benefits peach growers by providing a commercial application for fruit that formerly went to waste.

London’s MATSURI St. James’s features Abukuma Foods’ product in its popular offering Baby Peaches, Lychee Sorbet, and Sparkling Sake.

Agriculture occupies a central position in the life of rural Japan, and fortifying the economic viability of Japanese agriculture is therefore indispensable in fostering regional vitality. Japanese farms are small by global standards, placing the farmers at a disadvantage in regard to economies of scale. Farmers and food processors in Japan work to offset that disadvantage through continuing advances in productivity and in product innovation.

New vistas

Abukuma Foods, established in 1972, built a strong position in tsukemono pickled vegetables, a traditional staple in the Japanese diet. Demand for tsukemono has declined, however, amid changes in Japanese eating habits. Abukuma Foods was therefore in need of a new source of revenue. What fulfilled that need was a crop surprisingly close to home. Fukushima Prefecture accounts for more than 20% of Japan’s peach production, second only to Yamanashi Prefecture.

The people at Abukuma Foods took a look at the peach business with an eye to identifying potential for generating new value. They achieved a breakthrough with a processing method for rendering green (unripe) peaches delectably edible.

“Our processing softens the inner flesh,” explains the company’s vice president, Hidetaka Suzuki, “without causing the intermediate flesh to become overly soft. The processed green peaches add a tasty and fun touch to confectionery, to beverages, and to other gourmet delights. Even their seeds are soft, so diners can chew and swallow the peaches whole. The result is something completely different from ‘green’ or ‘unripe’ peaches. So I named our new product Baby Peach.”

Peach growers thin the green fruit on their trees to allow the remaining peaches to grow large and juicy. Traditionally, they have simply discarded the unripe peaches picked in the thinning, since the green fruit are hard and inedible as is. Abukuma Foods’ patented processing technology brings the peaches to an optimal and consistent softness.

Abukuma Foods’ food-processing breakthrough allows Fukushima peach growers to sell green peaches that formerly went to waste.

A wake-up call

By broadening the market for peaches, Abukuma Foods has reinforced the foundation of the prefecture’s agriculture. Especially welcome among Fukushima’s peach growers is the timing of Abukuma Foods’ purchasing of the unripe fruit: late May to early June, when the growers’ chronically strained cash flow has traditionally been especially tight.

No sooner had Abukuma Foods developed the new processing technology than Fukushima experienced the Great East Japan Earthquake, the subsequent tsunami, and the resultant disaster at a nuclear power plant in the prefecture.

“The disaster was a wake-up call,” says Abukuma Foods’ Suzuki. “Our business had suffered a serious blow, and the outlook was uncertain. But that prompted us to look beyond Japan for possibilities. The Japan External Trade Organization (JETRO) provided introductions, and we have won spots on restaurant menus in Germany, Hong Kong, Spain, and the United Kingdom.”

“Employment at our plant has expanded dramatically,” glows Suzuki. “And we look forward to contributing to further growth in Fukushima agriculture.”

For the Children

The future of the children weighed on Takashi Tachibana’s mind after the Great East Japan Earthquake. Tachibana translated his concern into the delivery of 100,000 meals to schools and evacuation centers in the affected areas. And he has since engineered a platform in a tsunami-devastated village for enriching the education of children from near and far and for hosting corporate retreats.

Volunteers of all ages take part in refurbishing the 90-year-old school building that houses Moriumius classrooms and dormitory rooms. On the blackboard are messages from former students to their beloved school, such as “Sayonara” and “Thank you.”

Tachibana launched his project in the Miyagi Prefecture village of Ogatsucho, where fishermen have long harvested scallops, oysters, and salmon. Forestry and farming are also important livelihoods. And local quarries account for 90% of Japan’s domestically produced slate. But the tsunami of 2011 nearly erased the village from the map.

“What was Ogatsucho is a reminder,” says Tachibana, “of what happened in the disaster. The tsunami claimed about 250 lives there and washed away 80% of the homes and other buildings in the village. Only about 1,000 people remain—less than onefourth the population before the tsunami.”

Tachibana, a native of Sendai, Miyagi, joined the trading house Itochu Corporation in Tokyo on graduating from Tohoku University in 1994. He handled foodstuffs at Itochu and left in 2000 to set up his own distribution company for food products. Tachibana rushed to Miyagi after the 2011 temblor to check on his family and ended up throwing himself into the relief effort.

Joint work on refurbishing and building facilities at Moriumius spawns a sense of community.
Stays at Moriumius are exciting opportunities for city children to experience nature up close.

Hands-on, real-world experience

Participating in the relief effort resulted in an encounter with a junior high school in Ogatsucho. Tachibana essentially adopted the community, providing support to the school and leading the refurbishment of a long-abandoned school building in the village. The refurbished school building has become a platform for children’s educational programs and also for corporate retreats and for university study sessions.

“A school building,” reflects Tachibana, “serves generations of students and teachers. It’s like a repository for the soul of a community. So closing a school robs a community of its soul. Children leave to attend school and don’t return. The population declines, and no one is left to bear children to reverse the decline. I want to arrest that trend and restore vitality to communities.”

Tachibana christened his platform Moriumius, an allusion to the Japanese words for “forest” (mori), “sea” (umi), and “tomorrow” (asu) and to the English “us.” Visitors gain hands-on experience with work they might never encounter in an urban setting: commercial fishing, forestry, and farming. Among the corporate guests have been such household names as Google and Salesforce.

The interchange with visitors of all ages is occasioning a resurgence in Ogatsucho’s primary industries. And it is occasioning new possibilities in traditional lines of work. An example is oysters. Tachibana has spearheaded the development of new oyster beds in the waters off Ogatsucho.

“Oyster beds ordinarily take years to come into production,” Tachibana exclaims. “But our new ones started yielding oysters on a commercial basis in the second year. And they’re delicious! We’ll be taking our oysters to New York later this year to promote them through restaurants there.”

Creative input

Moriumius has hosted some 4,000 schoolchildren and about 2,500 corporate and university visitors. Tachibana’s vision begins with garnering attention in Japan, attracting volunteers to build the platform, and becoming a model for other Japanese initiatives. Having attained those goals, Moriumius moves into the next phase of Tachibana’s vision: garner attention internationally and become a model for initiatives worldwide.

In fulfilling Tachibana’s bold vision, Moriumius benefits from creative input from around the world. “We had a group of graduate students here,” recounts Tachibana, “from the Harvard Business School. Part of their itinerary consisted of writing up proposals for our project. One of the proposals outlined a strategy for using social networking services. And we have adopted that strategy to good effect.”

“The depopulated space here,” admonishes Tachibana, “is more than a reminder of the disaster. It’s a vision of Japan’s possible demographic fate. It’s a warning to act now to avoid that fate and to find ways to attain social sustainability.”

Fiscal Engineering

Joint enterprise by public- and private-sector partners can leverage local governments’ shrinking revenues in projects that benefit communities greatly. Witness the Ogal Project in the Iwate Prefecture city of Shiwacho.

The Ogal Project’s bustling market for local produce is popular with tourists, as well as with neighborhood shoppers.

Construction began in 2009, and the project has yielded a public library, office space, a hotel, a market for local produce, shopping and dining facilities, a residential housing development, a world-class volleyball gymnasium, a soccer complex, and—due to open in 2015—a new city hall building. Spreading among the structures is a verdant and spacious plaza.

“Ogal” is a play on a word for “grow” in the local dialect, ogaru, and the French word for train station, gare. The project is unfolding on more than 21 hectares (53 acres) in front of the city’s central train station. And it has exceeded even the most optimistic hopes for growth, drawing some 800,000 visitors a year.

Occasioning the Ogal Project were two problems common to regional towns and cities throughout Japan: the enervation of the city’s commercial center and the exodus of young people to big cities. Shiwacho’s success in addressing those problems has captured attention nationwide. The project has garnered further attention since 2011 as a fulcrum for efforts to revitalize Japan’s quake-battered northeast.

What has drawn the most attention to the Ogal Project is the public- and private-sector interaction. Operated as a public-private partnership, the project is largely self-sustaining on the strength of tenant rents and other income. The city leaders and their private-sector counterparts capitalized the project by issuing equity shares backed by the project’s land and buildings. That has allowed them to launch and run the Ogal Project without relying on government subsidies and without imposing an increased tax burden on the residents.

Mobilizing for Regional and Demographic Vitality

The Akita forum panelists addressed the issue of regonal revitalization from diverse angles.

The Japanese government adopted a slate of measures in December 2014 for increasing the appeal of regional towns and cities. And the government is urging Japan’s prefectures, cities, and towns to draft local action plans by March 2016 for the same purposes. It sponsored a series of forums across Japan from January to March this year to promote the action planning. The forums took place in each of nine geographical blocs that cover the entire nation. Typical of the forums was one held in the city of Akita on February 8.

The Akita forum was for the Tohoku geographic bloc, which comprises the prefectures of Akita, Aomori, Fukushima, Iwate, Miyagi, and Yamagata. Delivering the keynote address there was Masaaki Taira, who represents a Tokyo district in Japan’s House of Representatives and who serves in the Abe government as a state minister of the Cabinet Office.

Masaaki Taira, a state minister in the cabinet office, addresses the Akita forum.

Appealing work

Taira touted the success of the Abe government’s package of economic stimuli. He offered as examples the upturns in corporate earnings and in equity prices. Taira acknowledged concerns, however, that rural communities and small companies have not benefited as much from “Abenomics” as Japan’s big cities and big corporations have. And he pointed to demographics as the chief issue in that differential.

“[Our program for] regional vitalization,” declared Taira, “is about breaking out of the vicious circle of population decline and economic stagnation.” He emphasized especially the need for new approaches to designing work.

“The biggest employers across Japan today,” observed Taira, “are service-sector industries. So those industries warrant careful attention in measures for promoting regional vitality. We also need to devote careful attention to primary industries, such as farming, fishery, and forestry, and to tourism. For those industries play a huge role in maximizing the value of regions’ basic resources.”

“Simply generating jobs,” Taira cautioned, “is insufficient to ensure regional vitality. Employers in all of these sectors,” he stressed, “need to offer work that is appealing in the light of contemporary values. Regional vitality hinges, meanwhile, on asserting each region’s resources in ways that are appealing to people elsewhere, that will attract visitors and residents. Tourism promotion is therefore especially important. Promoting tourism is an opportunity for reaffirming regions’ fundamental appeal and for reasserting that appeal to attract visitors from elsewhere in Japan and from overseas.”

Taira noted the declining viability of Japan’s traditional approach of fostering economic growth through public works spending. And he called for stepped-up attention to fiscal sustainability in designing regional business models.

Counterintuitive approaches

The forum segued from Taira’s keynote address into a panel discussion among five entrepreneurs from different industrial sectors. Among them was Shu Kakuta, who heads a travel promotion firm in Aomori Prefecture and runs the Tsugaru Blizzard Experience. Kakuta seconded Taira’s observation about the value of tourism in nurturing regional vitality. And he stressed the value of counterintuitive approaches.

“We’ve been running our blizzard tours for 28 years,” explained Kakuta. “At first, the notion of promoting Aomori’s snow as a tourist attraction seemed like a nonstarter. The first thing that came to mind for most people about Aomori in the winter was ‘dark and cold.’”

Kakuta tackled people’s preconceptions of Aomori’s winter head on and promoted Japan’s snowy north as fun to visit. Note that he went all out, advertising not merely “snow” but “blizzards.” And he has succeeded impressively.

The participants in the Tsugaru Blizzard Experience enjoy wearing traditional winter apparel, including snowshoes, and wander across Aomori’s snowfields. “Inbound tourism [from overseas] is really growing fast for us of late,” reported Kakuta. “We’ve added Chinese to our signage for Taiwanese visitors. And we’ll add Thai next year.”

Kakuta concluded his remarks with an observation about the importance of action. “Nothing happens while people are simply talking. Do something. Try something, and think as you go. That’s the way to invigorate communities.”