GLOBAL MEDIA POST / Texas report 2018

Japanese partnerships boost state’s economy

GLOBAL MEDIA POST

A huge wave of excitement and optimism swept through Texas’ business community after Japanese automaker Toyota Motor Corp. announced that it would move its North American headquarters to the Lone Star State last year.

“The time for Texas has arrived,” said Bexar County Economic Development Director David Marquez. Bexar County, in San Antonio, welcomed the state’s first major Japanese investment courtesy of then-mayor Henry Cisneros when Toyota chose the area for the assembly plant of its Tundra pickup trucks.

Since then, Japanese investments in Texas have diversified into high-value-added manufacturing and assembly, most especially in the automotive, semiconductor and chemical industries.

“The way that Japanese companies conduct business and invest in Texas is evolving. For over half a century, the Japanese presence in Texas, represented by the large Japanese trading companies, mainly revolved around the state’s wealth in oil and the energy sector,” said Honorary Consul General of Japan in Dallas John Stich.

Mitsui & Co. (U.S.A.) was one of the first Japanese trading houses to set down its roots in the resource-rich state. Initially focused on procuring resources needed to fuel Japan’s rapid industrialization in the 1950s, Mitsui has remained financially committed to Texas, more specifically in the burgeoning shale gas industry through the Eagleford field.

“As Texas grows, we also grow,” said Mitsui & Co. (U.S.A.) Senior Vice President Yasushi Kokaze, who also heads the firm’s Houston headquarters.

Lately, Texas has become a preferred destination of Japanese companies in the United States to set up their regional headquarters. While the trend may have been driven by the decision of Japanese manufacturers, like Daikin and Kubota, there are several other factors that have sustained this development.

“The central location of Texas means that executives based here can fly to either of the coasts in the morning and be back in Texas by dinner time. Japanese businesses in Texas also have easier access to Mexico’s large market and people,” Stich said.

Once focused on energy and semiconductors, the second-largest economy of the United States has also nurtured fast-growing sectors, such as life sciences, education, health care, information and communications technology, professional services, aerospace and defense, tourism and hospitality, logistics, construction and engineering, as well as real estate.

Because of this rapid growth in employment opportunities, Texas has experienced a net increase in its working-age population. According to The Dallas News, on average, 1,000 people move to Texas every day.

“To continuously attract new investors, Texas offers zero percent corporate tax and other tax incentives. And helping to achieve this objective are several well-run economic development corporations and chambers of commerce that promote the state’s advantages,” stressed Japanese Consul General in Houston Tetsuro Amano.

A sign of its growing importance to the Japanese business, the state was chosen to host the second summit of the U.S.-Japan Business Council, held in Houston from May 7–9.

Within Texas itself are dynamic growth centers for incoming businesses ― large companies and startups alike. The state’s largest metropolitan areas of Dallas-Fort Worth and Houston each have their success stories to share.

Houston has remained the state’s oil and gas capital. Despite the periodic slumps in the industry, the city maintains a strong Japanese presence with the arrival of Japanese trading companies, Mitsui & Co. (U.S.A.) and Sumitomo Corp., in 1968.

Since then, other Japanese companies, like Chubu Energy and TEPCO, have established offices in the city to access U.S. oil and liquefied natural gas.

Houston’s George Bush Intercontinental Airport has reported record passenger growth from Asia, with a significant number of executives in the oil and energy sectors.

“We are confident that passenger traffic will rise further. Passengers can expect the best customer service and convenience once they land in Houston,” said Molly Waits, director of Air Services for the Houston Airport System.

Meanwhile, with around 8 million people, the Dallas-Fort Worth area has remained the fourth-largest metropolitan area in the United States after New York, Los Angeles and Chicago.

“The DFW area is home to about 215 Japanese companies. We are optimistic that the number will grow in the near future because we are prepared to provide Japanese investors with access to talent and skill,” said Dallas Regional Chamber Vice President Sarah Carabias-Rush.

As far as Japanese foreign direct investment is concerned, one of Dallas-Fort Worth’s recent success stories is the City of Grapevine, which in 2015, was selected by Japanese tractor and machine manufacturer Kubota for the location of its North American headquarters.

“While we are at the heart of a very dynamic mega-region, the city’s cost of living is considerably lower and we have easy access to talent.  The City of Grapevine is honored to be the home of Kubota,” said City of Grapevine Director of Economic Development Bob Farley.

Meanwhile, Kubota Americas CEO Masato Yoshikawa cites another advantage: “Being in Texas means we are closer to our customers than ever before. Texas is not only a gateway to Latin America, which is an important and growing market for us, but it is also a launchpad for the Midwest, America’s breadbasket and industrial heartland.”

And the wide variety of restaurants, groceries, and Japanese schools has made Dallas-Forth Worth a desirable area for Japanese expatriates. 

“The infrastructure for the Japanese lifestyle is set up and well established. Parents can send their children to schools with curricula accredited by the Japanese government,” NEC America Chairman Shin Takahashi said.

The area is also known for top-notch universities, such as Southern Methodist University (SMU) and the University of Texas in Dallas (UTD), which have extensive partnerships with Japanese universities and companies.

Through its Star and Stripe Program, SMU invites prominent Japanese and American politicians to talk about U.S.-Japan relations. UTD, meanwhile, arranges internships in Japanese companies for its MBA students.

The Lone Star State has also distinguished itself as a leading center in life sciences. The University of Texas in Austin and University of Texas in Arlington are pioneers in the field of regenerative sciences, a field that has attracted much Japanese interest and investment.

Avazzia, a medical device manufacturer that specializes in wound-care rehabilitation, has attributed its success to the talent and expertise found within the walls of those two universities.

“Avazzia draws from a large talent pool all across the state. As a medical device company, Texas is a good place to be successful because we are filled with eager people who want to contribute to society and be part of something bigger,” said Avazzia CEO Tim Smith.

Perhaps the most recognized event held in the Texan capital Austin is South by South West, or SXSW, which showcases the latest technology innovations and has been attracting an increasing number of entrepreneurs, venture capital funds, startups, and large companies every year.