[Important] What is attracting overseas companies? Explaining the advantages and disadvantages!

"I want to know about the benefits of attracting overseas companies!"

"We want to attract foreign companies after understanding the benefits!"

"I want to know the disadvantages to attracting foreign companies!"

Due to the various benefits, an increasing number of local governments are seeking to attract foreign companies to their country or region.

However, some local governments are hesitant to attract foreign companies because they cannot see any concrete benefits or are worried about the disadvantages.

So, this time I would like to explain about attracting overseas companies and also list the advantages and disadvantages.

If you are considering attracting overseas companies, or are unsure whether to consider it depending on the benefits, please refer to the contents of this page.

What does attracting overseas companies mean?

Let's take a look at the basics of attracting overseas companies.

As mentioned briefly at the beginning, attracting overseas companies is a policy to encourage overseas companies to enter a country or region.

For example, we provide facilities and an environment that makes it easier for overseas companies to do business, and we also provide support in securing human resources.

Other examples of attracting foreign companies include attracting specific stores.

Since these aspects can be handled by each local government, an increasing number of local governments are implementing or considering attracting overseas companies in order to gain the various benefits described below for their regions.

*Tax incentives and large-scale subsidies also fall under the category of attracting foreign companies, but these would fall under national rather than local government policies.

Benefits of attracting overseas companies

From here, we will explain the benefits of attracting overseas companies.

There are many benefits, so if you are a local government official considering this, please take a look at the various benefits.

Revitalizing the local economy

First, one of the benefits of attracting foreign companies is the revitalization of the local economy.

Although it depends on the type of overseas company you are attracting, the major benefit is that the local economy is revitalized by the companies you attract.

For example, if various retail stores or restaurants are attracted, it is expected that consumer activity in the surrounding area will increase.

Furthermore, even if the industry is different, we can expect related industries to develop, so the benefit of attracting foreign companies is that it can be expected to revitalize the surrounding local economy regardless of industry or genre.

Increasing the brand power of the region

Next, let's touch on the areas where we can expect to improve the region's brand power.

For example, if we are able to attract several well-known foreign companies, many people will flock to the surrounding area.

In addition to local residents, there will be an increase in people coming from far away to visit the overseas companies that have been attracted to the area.

This will revitalize the surrounding area and increase the brand power of the company, making it known that the company is located in the area.

As new businesses and stores increase both domestically and internationally, we can expect a cycle of benefits that will further strengthen awareness and brand power throughout the region.

Increased employment opportunities

We should also mention the increase in employment opportunities.

This is also one of the benefits of attracting foreign companies that cannot be overlooked.

Attracting foreign companies simply creates new jobs and leads to increased income for local residents.

As mentioned in the previous section, the brand power of the surrounding area will be strengthened, and the number of new companies and stores will increase exponentially, resulting in an accelerated increase in employment opportunities.

Another attractive benefit is that the increase in employment opportunities will lead to more people living in the surrounding area, and more people visiting, which will revitalize the entire region.

Increased tax revenue

I would also like to mention the benefit of expecting an increase in tax revenue.

This is a major benefit that local governments should pay attention to, as attracting foreign companies can be expected to increase tax revenues such as corporate inhabitant tax and fixed asset tax.

This is an issue that cannot be ignored, as in some cases it can improve the financial situation of local governments, and when you take into account the increase in employment opportunities mentioned above, we can also expect an increase in various tax revenues due to an increase in the number of residents.

The extent to which tax revenue can be expected to increase depends on the size, reputation, and demand of the overseas companies being attracted, but an increasing number of local governments are considering attracting overseas companies because they can be an important opportunity to revitalize the region.

Improving international recognition

Finally, let's talk about increasing international awareness.

This depends on the size of the overseas company being attracted and the region where it is being attracted, but increasing international recognition is a major benefit.

For example, if we can attract world-famous shops, we can expect to increase the number of domestic tourists as well as tourists visiting Japan.

In other words, attracting overseas companies will lead to inbound tourism marketing and revitalize the surrounding areas.

Even if it is not about attracting stores, there is a possibility that it will lead to the construction of new companies and factories and revitalize trade.

Increasing international recognition brings about cyclical benefits in many ways.

That is why local governments are carefully considering attracting foreign companies, and are considering attracting them as a measure to increase awareness both domestically and internationally and to create a positive cycle.

Disadvantages of attracting foreign companies

From here, let's talk about the disadvantages of attracting foreign companies.

Attracting overseas companies has many benefits, but it is also important to be aware of the disadvantages, so let's take a look at each item.

Intensifying market share and competition

First, one of the disadvantages of attracting foreign companies is the increased competition for market share due to the competition to attract them.

This is a disadvantage because when a well-known foreign company or store opens, competition with surrounding companies and stores intensifies.

However, in some cases, increased competition due to market share can lead to the revitalization of individual companies, so it is not necessarily a disadvantage.

As long as the foreign company you attract does not eliminate all surrounding businesses and stores, it will lead to the revitalization of the local area, so it would be a good idea to select the foreign company you attract with this in mind.

Impact on local residents

Next, let's talk about the impact on local residents.

While attracting foreign companies to revitalize a region is a very good thing, too much rapid revitalization can have an impact on local residents.

For example, it may increase traffic in the surrounding area, change the landscape, and in some cases, cause environmental problems.

The impact of this will depend on the scale of the overseas business being attracted, but the larger the scale, the greater the concern about the impact on the surrounding area.

The larger the scale, the greater the benefits that can be gained, but this is precisely why it is important to establish a support system after the attraction, taking into consideration the impact on local residents.

Regional cultural friction

Finally, I would like to touch on the issue of friction between regional cultures.

For example, if many of the employees of an overseas company that has been attracted to the area are foreigners, there may be cases where conflicts in values and culture arise between them and the surrounding local residents over lifestyles and other factors.

This will depend on the size of the overseas companies that are attracted, but a sudden increase in the number of foreigners could expose surrounding areas to the same risks as a sudden increase in foreign tourists visiting Japan.

Of course, cases where such sudden friction between regional cultures occurs are rare, but care must be taken when attracting large overseas companies (mainly factories, etc.).

In addition, there have been recent concerns in the news and on social media that the extreme increase in foreign employees due to the attraction of overseas companies will lead to a deterioration in public safety.

It can be said that it is the role of local governments to attract foreign companies in a balanced way that avoids friction with local cultures.

If you have any concerns about attracting overseas companies, please contact us.

This time, we have explained the basics of attracting overseas companies and also touched on the advantages and disadvantages.

We have explained various aspects of this, but as long as you are mindful of the disadvantages, there are many benefits to attracting foreign companies.

If you are having trouble attracting overseas companies, please feel free to contact us, as we provide services for local governments.

As part of our "overseas corporate collaboration support" program, we provide support for forming partnerships between local governments and overseas companies, as well as a variety of other services for local governments.

In addition to attracting overseas companies, we also provide support for inbound tourism measures and the creation of tourism content, which are issues that many people are concerned about, so if you are concerned about revitalizing your local area, please feel free to contact us.

We will support local governments in realizing the various benefits while minimizing the disadvantages and risks.