Second Cities: Osaka Makes Its Move

Japan’s second city, Osaka, is gearing up to take on Tokyo for Asia’s business. Brian Covert reports on the preparations for battle.

Last November, in what was regarded as a bold move, city officials in Japan’s second city, Osaka, set up an unprecedented promotional event on the home turf of a leading contender. The intention was to acquaint the 300-member audience with a subject it apparently knew little about: the historical significance of Osaka-ben, the raw, rough-sounding dialect of the merchant in this traditional centre of Japanese commerce and trade. That the host city for this most unusual gathering was no overseas stranger but next-door neighbour Tokyo itself seemed to matter little to event organizers. The point was made: Watch out for No. 2.

Osaka is seeking to widen its sphere of influence dramatically. The city is out to challenge all-powerful Tokyo’s preeminence — a goal that has many observers both exuberant and worried.

Next year looks to be Osaka’s big year of change. And the nucleus around which all else will revolve is the new Kansai International Airport, based five km offshore in southern Osaka Bay.

When it opens in summer 1994 as the country’s first 24-hour commercial airport, the Kansai Airport is expected to revolutionise Japan’s entire travel picture. It is built to serve more than 30 million domestic and overseas travellers and handle at least a million tonnes of cargo annually, a 50% boost over the existing Osaka International Airport.

With this in mind, the business community has been placing hopes on the new airport as a ‘gateway to Japan’ that will spur much-needed growth throughout Osaka city and prefecture. Already, countless new office complexes, shopping centres and public transportation expansion plans are being rushed to coincide with the airport’s debut.

Development of the airport, however, hasn’t been all smooth. Construction, at one point, was delayed by more than a year. There were worries, since allayed, that the runways, built on landfill, were sinking. And the private sector, in the wake of the burst of Japan’s economic bubble, is finding it difficult to dish out any more financial support for the ¥1 trillion (US$8.5 billion) project. There have been occasional rumblings that the project may be a white elephant.

But, as perhaps the most influential business leader in Osaka, Osamu Uno, chairman of the Kansai Economic Federation (Kankeiren), maintains an optimistic view. ‘I think this will all be solved in a realistic way,’ he says. ‘This is my hope.’

There is more than just the airport at stake. Following the airport’s lead are a plethora of bay-area development projects, most notably the city’s own ¥2.2 trillion (US$18.8 billion) Technoport Osaka — manmade islands that will be home to a 55-storey World Trade Centre building, an Air Cargo Terminal linked to the Kansai Airport, and telecommunications and high-tech facilities.

With a ¥120 billion (US$1.025 billion) Asia and Pacific Trade Centre also in the works, this ‘City of Rivers’ believes it is aiming at just the right target: ‘While Tokyo has long prioritized contact with the West,’ says Uno, ‘Osaka plans to capitalise on its centuries of trade ties with the East.’

Seoul, Hong Kong, Singapore, Bangkok, Kuala Lumpur, Manila and Jakarta already have solid ‘Business Partner City’ ties with Osaka, which also boasts of Shanghai as a ‘sister city’ and Pusan, South Korea, as a ‘sister port’. The Kansai area’s exports account for nearly one-third of Japan’s total figure and a remarkable 30% to 40% of all Japanese exports to China.

But the road to riches has not always been free of pitfalls for Osaka, which at one time was the political, commercial and cultural capital of Japan. Tokyo began to overtake that power base in the early 1600s, and the Osaka that rose from the ashes of World War II was a mere skeleton of its former self.

Remnants of the longheld Osaka-Tokyo rivalry can be found today in everything from stocks to sports. The Osaka Securities Exchange has gone from being a virtual unknown since it started out in 1949 to a major global player that now ranks fourth worldwide in trading value. The OSE hopes to stand out from the rest by focusing on the listing of firms from Asian countries that are expected to be closely linked with the Kansai region’s fiscal recovery.

But is Osaka’s ongoing quest for success leading it along the same road to problems as the nation’s capital? Some analysts are beginning to wonder.

At a time when congestion has reached critical mass in Tokyo, Osaka keeps right on expanding. It already has the distinction of ranking second only to Tokyo as the most expensive city in the world.

On top of that, the powers-that-be in Tokyo are now considering the formerly unthinkable — relocating branches of the national government to various locations, including Osaka. Ironically, the freedom from just such political burdens has long been regarded as one of Osaka’s best attributes.

City officials remain confident that Osaka can make its mark by avoiding the mistakes of its counterpart. Says Tsukasa Fujimoto of the municipal Economic Affairs Bureau: ‘We should think of Osaka as a city in the world. Osaka should be in the world economy — not compared with Tokyo.’