New data shows a growing number of firms in the Tokyo metropolitan area are relocating their headquarters to Japan’s northernmost prefecture, lured by subsidies and other incentives during uncertain times.

Many businesses view having their main offices in Hokkaido as a good way to insulate themselves from risk in the event of an emergency.

It is also becoming less important for corporations to remain located in the greater Tokyo zone, owing to the spread of teleworking. 

The Hokkaido government and Sapporo city are encouraging businesses to relocate by offering subsidies and other forms of support, and while they are now reaping the benefits of those efforts, it is unclear how long the boom will last.

Lupicia Co., which has 150 stores in and outside of Japan that sell tea products from all over the world, moved its headquarters to Hokkaido from the Tokyo metropolitan region.

“Dense populations in urban areas pose huge risks in the event of natural disasters and infectious disease outbreaks,” said Hiroki Mizuguchi, the president of Lupicia. “The coronavirus crisis has made it much clearer.”

It relocated to Hokkaido’s Niseko from Tokyo’s posh Daikanyama district in 2020. The company’s factory, restaurant and resort facility for employees has been already located in Niseko.

About 20 staff members have now migrated there from the capital. Once the planned staff housing complex and new office are completed in February next year, some 100 people are anticipated to be on duty in Niseko.

Lupicia logged record-high profits for the business year ending in June 2021 thanks to brisk online sales during pandemic.

“Increasingly advanced information technologies have been introduced following the coronavirus outbreak, and they have revealed that companies can do most of their tasks via remote work at low cost and low risk,” Mizuguchi said. “Relocations to local areas will gradually become more common.”

Mizuguchi said Hokkaido’s “natural surroundings” are a big part of its appeal.

“Though some people argue important information can be gathered only in Tokyo, placing (the company) in nature helps improve workers’ creativity,” he said.

According to data from Teikoku Databank Ltd., 2,258 corporations nationwide changed the locations of their headquarters in 2021.

Of these, 351 left the Tokyo metropolitan area for elsewhere, up 20 percent year on year.

It marked the first time in 19 years that more than 300 firms moved out of the metropolitan zone.

A record 33 enterprises arrived in Hokkaido, which came third after Osaka Prefecture at 46 companies and Ibaraki Prefecture at 37.

Hokkaido’s businesses immigration number has risen fivefold from 2019, the largest increasing rate among all destinations.

“Hokkaido is attracting attention as a possible destination because of its lower population density and other elements,” said a Teikoku Databank representative.

Wellnet Corp., an electronic payment service provider listed on the Tokyo Stock Exchange's top Prime Market segment, returned from Tokyo’s Minato Ward to its founding site of Sapporo last year.

Although Wellnet moved its main office to the capital in 2009 to expand its business, it chose to build its new headquarters in its “hometown.”

Wellnet said it had actually made the decision before the pandemic, as it was “difficult to make our company stand out from many other enterprises in Tokyo.”

The dangers of only having core facilities in and around the capital became clear to many during the 2011 Great East Japan Earthquake and tsunami. More businesses have since started relocating headquarters to other regions to raise their sustainability.

Among those firms is foreign-affiliated Axa Life Insurance Co., which set up its Sapporo main office in 2014.

Axa considered areas not prone to earthquakes when it chose Sapporo out of 65 cities throughout the country, so that the new office can handle contracts, payments and other processes vital to business continuity.

Local municipalities, which are struggling with the dwindling birthrate, graying of society and shrinking population size, are competing to attract companies by stepping in to assist with corporate relocations.

Axa relied on Sapporo city’s headquarters “switch” subsidy program, which doles out up to 150 million yen ($1.09 million) to cover personnel costs and a maximum of 60 million yen for construction costs.

Eight corporations have benefited from the program since 2013.

“More offices are available as a result of the redevelopment of the area in front of Sapporo Station,” said a Sapporo city official. “We expect far more companies to come in.”

The Hokkaido government is also helping companies relocate their headquarters by taking advantage of Japan’s special tax system for local revitalization and introducing an office rent subsidy of up to 10 million yen.

The survey data from Teikoku Databank shows that more corporations left the Tokyo area than those flowing into the zone for the first time in 11 years.

Many firms, however, strongly believe being located in the metropolitan region still offers many key business advantages, such as in hiring new employees and maintaining links with suppliers and clients.

That has some thinking that the growing number of companies relocating to Hokkaido may just be a temporary boom.