KOBE — Local governments nationwide are racking their brains in search of new ways to attract foreign direct investment.
They might take a leaf out of Hyogo Prefecture’s book, given that an unprecedented 2-year-old partnership between Kobe-based Procter & Gamble Far East Inc. and the prefectural government is beginning to show some results.
In spring 2002, frustrated with the ineffectiveness of official campaigns to attract foreign investment, P&G Far East President Werner Geissler met with Hyogo Gov. Toshizo Ido and offered to provide his firm’s marketing expertise and create a joint team with the prefecture to get more foreign capital flowing to Hyogo.
As a result, three P&G marketing experts began working with three prefectural officials, the first such effort undertaken by a local Japanese government and foreign corporation. Prior to 2002, Hyogo Prefecture had spent a lot of time, effort and money to attract foreign investment. But P&G said the campaigns lacked a customer-oriented approach.
“The key was to shift the mind-set of the prefecture from a traditional bureaucratic mind-set to one where the investor is the boss,” said P&G’s Masako Iwahara, a member of the joint team.
“We emphasized that Hyogo Prefecture should think of itself as a business entity because FDI promotion is a business strategy that is totally different from the administrative services they provide to prefectural residents,” she said.
P&G and Hyogo Prefecture decided to market what they believed were six competitive advantages of Hyogo Prefecture compared with other prefectures in Japan. These ranged from support and services facilities and financial incentives, to access to Japanese and Asian markets and a high standard of living for foreign residents.
To get Hyogo’s message out, the team is now targeting companies that already do business in Japan as well as the consulting firms and investment banks involved in influencing the investment decisions of those firms.
In addition, there is the local connection.
“We want to market Hyogo Prefecture to those decision-makers who already have some kind of relationship with it,” Iwahara said. “For example, those who previously lived here, went to school here, have a spouse or friends from the prefecture, or have any other relations or experiences that make Hyogo special to them.”
One of the small successes of the cooperative effort has been a redesigning of English-language investment guides. The old guide, prepared by bureaucrats, was little more than a direct translation of the Japanese guide and a jumble of government statistics and platitudes that told readers nothing about why they should invest.
“The old guide reflected a Japanese view of Hyogo and appealed to Japanese sensibilities,” Iwahara explained. “But to design an effective guide that appeals to potential international investors, you have to do things differently.”
The result of all of these efforts is that since spring 2002, 29 foreign firms have decided to invest in Hyogo Prefecture.
“The new firms range from information technology and medical firms to trading companies to small service industries,” said Masaaki Akagi of the prefecture’s international economics division and a member of the joint investment team.
On Friday, P&G and Hyogo Prefecture met with foreign business and government officials in Tokyo to explain the program and to ask for the help of those with some connection to Hyogo to help further attract foreign investment.
Akagi said other local governments have expressed interest in Hyogo’s program, and added that the main reason why this unprecedented endeavor is working is because attitudes within the prefectural government are changing.
“The biggest change so far has been in the consciousness among bureaucrats,” he said. P&G and prefectural officials added that other reasons for the success include not only the governor’s enthusiasm and direct involvement in the project, but also his willingness to embrace causes important to foreign residents.
For example, Ido surprised and won applause among human rights groups by opposing the Justice Ministry’s so-called “snitch site,” which calls on Japanese to report on its Web site foreigners they believe are “acting suspiciously.”
“These kinds of human rights issues for foreign residents are connected to the ability of a local government to draw foreign investment,” Akagi observed. “Gov. Ido understands this quite well.”