Writer: Ryan Gandolfo
3 min read November 2023 — As the United States’ leading foreign investor, Japan has formed strong business ties in nearly every part of the country, but its longstanding relationship with Minnesota highlights both business growth and community building.
Following a business development mission to Japan at the end of 3Q23 that involved Gov. Tim Walz, Destination Medical Center and Greater MSP, among others, the state and the country are looking to continue their momentum to expand and activate industry growth.
“Over the past four years, there has been a nearly 50% increase in Japanese firms doing business in Minnesota,” Peter Frosch, president and CEO of Greater MSP told Invest:. “Today, 30 Minnesota-based companies are operating more than 1,000 business locations in Japan, including globally leading companies with names you know, like Cargill, 3M and Ecolab. Here in Minnesota, more than 40 Japanese companies employ thousands of people.”
Minnesota generates nearly $2 billion in annual exports to Japan, with companies investing around $2.1 billion in the state and creating 10,800 jobs as of 2022, as cited by the Minnesota Department of Employment and Economic Development (DEED).
Frosch and the regional economic development partnership attribute the growth in part to cultural connectivity and strong sector connections, highlighting strategic industries like medical technology and microelectronics.
According to the International Trade Administration, value-added manufacturing in Japan has accounted for more than 20% of the country’s gross domestic product (GDP) over the past decade. “Japan has a lot of advanced manufacturing and process expertise that has direct application to the industries we have in Minnesota,” said Frosch. His team is currently working with Japanese-owned Polar Semiconductor and Takeda to expand their footprint in Minnesota in part by accessing funding from the $52 billion CHIPS & Science Act.
“The impact is that collectively, our semiconductor sector – an industry that was born in Minnesota – is very actively looking to double its size in the coming years, which would result in thousands of high-paying, automation-resistant jobs,” Frosch added.
But beyond the semiconductor cleanrooms and sizeable agricultural exports, the country and state “share a culture of teamwork, humility and respect that makes it easy for our citizens to relate to each other,” as Japan America Society of Minnesota (JASM) Board Member Peter Hill explained in a response to Invest:. “This mutual affection is demonstrated by the seven sister city relationships between Minnesota and Japan, including the oldest in the country: St. Paul-Nagasaki.”
JASM has spent more than 50 years promoting Japanese culture and customs in the state, supporting Japan-related organizations on business etiquette and cross-cultural nuances to foster stronger ties. Serving as a bridge between Minnesota entities like DEED and the state trade office to strengthen and expand local operations for Japanese companies in Minnesota, Hill sees the challenges in sustaining or increasing market investment in Minnesota tied to the Japanese expats who live and work there.
“Many of the Japanese companies located in Minnesota have limited Japanese expats. Their primary focus is on managing the operations or improving the business results,” said Hill. “They do not have the time nor the internal resources to rely on to educate and train the internal staff members on how to conduct themselves effectively at a Japanese-owned local company on a regular basis, let alone offer specific guidance on the best practice of a long-term partnership with Japanese companies to their vendors or business partners.”
While organizations like JASM continue their efforts to assimilate Japanese companies and organizations in Minnesota and create a better understanding of Japanese business practices and parent company expectations, the two sides’ shared industry interests set up a promising look at the future.
“GREATER MSP is where the next economy for this region is being built. Many efforts are underway right now — in MedTech, sustainable aviation fuel, bio-proteins, bio-plastics — which are all areas of focus for Japan. The opportunity is for us to accelerate Minnesota’s growth in these cutting-edge sectors by developing these relationships and accelerating basic scientific research, commercialization, startups and manufacturing,” said Frosch.
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