For a long time, the city of Fukuoka has been better known for its food — but it is now grabbing attention in Japan and abroad for a different reason: Fukuoka has been designated the regulatory sandbox for start-up policies that, if proven successful, may progressively be rolled out elsewhere in the country.

And the early signs are somewhat promising.

Fukuoka not only boasts the highest proportion of those aged 15 to 29 in Japan, but is also the fastest- growing major city outside of Tokyo. Its foreigner population has quadrupled over the last five years.

The vibrant port city of 1.5 million people in Japan is a sandbox for start-up policies as the risk-averse country plays catch-up

Japan, which for years had little appetite for start-ups, now has to play catch-up amid intensifying competition for investor dollars in the region.

Consider these statistics: Japan, the world’s third- largest economy, raised over 200 billion yen in private equity and venture capitalist investment for the first time last year. This is but a fraction of China’s $31bn.

For Fukuoka, it all began in 2010 when the city elected its youngest mayor, Soichiro Takashima, then 36. A year later, he visited Seattle, the western US city that bred companies like Amazon, Starbucks, Costco and Microsoft.

Inspired by the parallels between the two cities, he lobbied Tokyo to allow Fukuoka to take a more active approach to woo start-ups.

“Creative ideas are most likely nurtured in a liveable urban environment with easy access to rich nature and culture, good transport networks and excellent and open universities,” he told The Straits Times.

Start-ups have been key to job creation, Takashima noted. Only 8.5pc of all Japanese firms are aged three years and below, but they collectively account for 40pc of the jobs created in the past three years.

“What is more important than anything for Japan is to create a society where those who take risks and challenges are respected,” he said. “This is crucial to overcome the pessimistic prospects associated with a declining birth rate and an ageing population.”

At the heart of his vision is the Startup Cafe, which serves as the first stop for entrepreneurs looking to bring their ideas to fruition.

Set up in October 2014, it is managed by the city government and staffed by civil servants and volunteers who not only assist with the paperwork, but also connect start- ups to experts such as lawyers, accountants and consultants who may offer pro bono advice.

Kenichi Takamasu, the city’s assistant director for business start-ups, said innovation is possible only when there is support.

The city is also trying to woo foreigners with a ‘Startup Visa’ that gives them six months to achieve the basic hiring and capital requirements needed for a business visa.

One beneficiary is Newrocare, the brainchild of Singaporeans Xia Qian and Li Xiaoping, retired lecturers from the National University of Singapore (NUS). Their business, which is also registered in Singapore, is developing brain-related products — including one to help people sleep better. They are working with institutions such as NUS, Harvard and Kyushu University.

Since 2015, the Startup Cafe has helped more than 100 local companies — mainly in the food and beverage, technology and welfare industries — set up shop in Fukuoka.

A further 14 are foreign-owned.

The dynamism arising from the start-up push has also helped the city attract other businesses, said Takeshi Saito, director-general for Kyushu-Okinawa of the Japan External Trade Organisation.

A recent case in point is Chinese bike-sharing firm Mobike, which launched its Japanese subsidiary in Fukuoka in June. Its head of international expansion, Chris Martin, said the city’s innovation-centric culture makes it a ‘natural partner’ for the firm.

Line Corporation, which is best known for its messaging app, also chose Fukuoka as its second base outside Tokyo in November 2013. As of this May, 894 people from 16 nationalities were working in the Fukuoka office.

Noritaka Ochiai, chief executive of Line Fukuoka, said the city’s location allows it to be closer to other key Asian markets such as Taipei and Seoul, while its high proportion of youth lets the city get a better reading of its core users.

But some companies have noted that despite the optimism on the ground, it is still early days yet for Fukuoka. After all, the city has yet to produce a ‘start-up unicorn’ that is valued at over $1bn.

Entrepreneurs such as Ichiro Kimura, 29, of Anect said most of the seed money is still in Tokyo, where most pitch events are being held. Anect, which creates secure online shopping services, has rolled out two apps in Indonesia.

And despite the growing population and high proportion of young people in Fukuoka, the demand for talent still outstrips its availability.

“Good marketing can only do so much,” said Mark Gaensicke, who developed ‘Japanese’, a dictionary and study app that was one of the first apps to hit the iPhone App Store 10 years ago. The 34-year-old German added: “There is commendable effort by the government to help with taxes, management, and to provide documents in English.

“But who builds the product? What are they doing to attract developers? That really is the elephant in the room.”

— The Straits Times/ANN

Published in Dawn, The Business and Finance Weekly, September 18th, 2017