Trying to Transform

Okinawa is famous for its tropical climate, the longevity of its residents and karate. But the island chain is also known for its unemployment rates—the highest in Japan—and dismal per-capita income, the country's lowest. Aiming to create jobs and attract new investments, Japan hopes to transform Okinawa into an R&D hub.

To accomplish this, the government-funded Okinawa Health Biotechnology Research and Development Center was established to help "revitalize local industry in the prefecture," says Toshihiro Kuba, chief of the New Industry Promotion Division in Okinawa and the official responsible for its management. The center provides free research facilities to qualified biotechnology companies, and currently accommodates nine such firms.

Okinawa is home to the world's highest number of centenarians per capita, a fact the center plans to highlight to attract investment. Okinawans' exceptional longevity—whether the result of their diet, the stability and safety of the island, or the high level of healthcare they receive—is a great advertising tool that the center intends to use in promoting health foods and medical supplies developed there.

Another potential advantage is Okinawa's geographic location, which is much closer to Shanghai and Taiwan than to Tokyo. "When we look for a partner we don't necessarily look to Japan, but to Taiwan, or China, or other Asian countries," says Takanari Ichikawa, a senior science manager at the Okinawa Institute of Science and Technology Promotion Corporation, which collaborates with the center.

An early leader in biotech, Japan has fallen behind. "To be honest, there are really a very limited number of successful biotech companies" in the country, says Ichikawa. "Japan is more than a decade away from the U.S.," and Okinawa is far behind the mainland. Thus, expectations of a successful biotech industry may be premature. Kuba concurs, particularly in light of the recent financial crisis. Setting up new biotech enterprises "generally takes about three years, but in the present climate, there are several projects that have exceeded this time frame. These enterprises haven't fully completed the foundation they need to progress from R&D to product development, production and finally market expansion."

Japan's top-down approach might work for manufacturing, but innovation depends on bottom-up approaches, according to Vivek Wadhwa, a technology entrepreneur. Wadhwa visited Okinawa at the government's invitation last October to hear its plans to turn the island into a global R&D center. He left unimpressed. "In Silicon Valley, venture capitalists make bets, and nine out of ten times their bets fail," Wadhwa says. "How does the Japanese government think they're smarter than the VCs of Silicon Valley?" Only the eventual success or failure of Okinawa's biotechnology center can answer that question.