What are Japanese community businesses doing?

  In China, community business is becoming a “hot word” developed during the epidemic. But in Japan, it follows another set of development ideas.
  Although it is also called “community business”, the understanding of this term among Chinese participants is still focused on solving the “last mile” community life service problem. Various researches are also focused on investigating the proportion of overseas community commercial revenues in consumer retail to estimate the future potential of community commerce. This has also led to the fact that most of the subjects paying attention to community businesses are real estate developers and companies that combine e-commerce and supermarket services.
  But in Japan, community business is not positioned in the field of profit potential. Japanese community business emphasizes three key points: take citizens as the main body, solve the problems in the region, and use commercial methods as solutions. When Japan first studied the global experience in this field, it referred to various cases in the academic field of “Social Business” (Social Business). There are overlaps between community business and social business, but it emphasizes the use of commercial means to solve social problems. Therefore, although it has profitable attributes, it is still a non-profit enterprise in essence.
  The Japanese NPO (Nonprofit Organization, non-profit organization) corporate community business support center also clarified the point of “whether it is profitable”. It believes that the key lies in the distribution of surplus benefits: profit is the distribution of surplus benefits to the company as income or dividends Associated persons; community businesses give priority to solving regional problems, and the remaining benefits are mainly used for social investment and return.
  There are historical reasons why Japan formed this policy framework. The Ministry of Economy, Trade and Industry of Japan first issued a survey report on “community business” in 2003. At that time, Japan was in an economic downturn. Industries such as steel manufacturing that once supported the manufacturing industry continued to reduce production or even went bankrupt, and the unemployment rate rose to about 5%. The deteriorating employment environment has caused many people to retire early. The Japanese government has begun to look for new strategies to allow these people to continue to obtain employment opportunities in different regions.
Japanese community business involves multiple fields

Data source: Japan Wide Kanto Circle Community Business Promotion Council
Four balances necessary for Japanese community business operations

Data source: Japanese NPO Corporation Community Business Support Center
Social network for the development of Japanese community business

Data source: Comprehensively compiled based on public information such as the Japanese NPO Corporation Community Business Support Center

  Since then, “regional revitalization” and “regional activation” have become high-frequency terms for economic development in various parts of Japan. The Ministry of Economy, Trade and Industry of Japan has also made a series of definitions for community business, and formulated a series of measures in the fields of talent cultivation, intermediate support, event facility preparation, capital, administrative business commission, management guidance, taxation and policy preferences. This is also the foundation of early Japanese community business development.
  In the past ten years or so, the Japanese government has done more detailed community business research, combined with a global perspective, and included it in the social business framework research. The Ministry of Economy, Trade and Industry of Japan formed the “Social Business Research Association” in 2007, and released the “Social Business Research Association Report” the following year to clarify the status quo, existing problems, and solution strategies of social and commercial development in Japan. This government agency also commissioned the research company Mitsubishi UFJ Research and Consulting to publish the “Social Business Statistics and Institutional Discussion Survey Business Report” in 2010, thereby including existing business entities that meet the definition of social business under this definition. At that time, the scale of the Japanese social and commercial market was about 34 trillion to 81 trillion yen (approximately 2.12 trillion to 5.02 trillion yuan). This report focuses on comparing the British social business research framework as a benchmark, and the policy experience of the United Kingdom, Italy, South Korea, and the United States.
  On this basis, not only the Ministry of Economy, Trade and Industry of Japan, but from 2008 to 2015, the Cabinet Office and the Ministry of the Environment of Japan also participated in various policy research projects. The Small and Medium Business Administration of Japan issued operational guidelines for business owners and financial institutions. Participants provide guidance on different standards to be considered when building a business framework and issuing financing.
  It can be said that the above steps are various preparations made by the government at the level of showing its attitude. The reason why the government fulfills this function is also because of the social attributes of community businesses rather than commercial attributes. It requires the government to provide policy convenience and even subsidies to help community businesses complete project establishment and continuous operation.

01 BABA lab Saitama Kobo brings together senior citizens to host events or workshops.

02 The machimori project completed an operation plan for the renovation of an empty house in Atami City, Shizuoka Prefecture. The picture shows a guest house space MARUYA after renovation.

  However, this does not mean that the government needs to use powerful means to guide various entities to participate in the project. On the contrary, the government is positioned as a supporter and partner, and each project still requires business entities to make their own decisions.
  Starting from this premise, the social issues that Japanese community businesses must solve are relatively diverse. General social issues such as aging and declining birthrates are naturally the main points of discussion in community business, but the needs of residents do not stop there: from healthcare and social welfare, to education, environment, tourism and regional activation and development, diverse subjects in different fields You can participate in it. Japan does not impose qualification restrictions on the business entities of community businesses, which can be individuals, joint-stock companies, non-profit organizations, general corporate legal persons (a simple legal personality in Japan) and other legal persons. If you want to apply for a certain government subsidy, you must meet the necessary conditions.

  Around this social goal, business entities, governments, research institutions, regional trade unions, citizen groups, and financial institutions can form a social network to support community businesses from different fields to achieve their goals. Nagasawa Ying, representative director of the Japanese NPO Corporation Community Business Support Center, once sorted out the expected achievements of community business, including: community integration and social interaction, regional regeneration and activation, tax reduction and income increase, employment opportunities, and creation of self-supporting communities.
  If you look at the representative cases of Japanese community business, you will find many examples of the sense of “small and micro entrepreneurship”. For example, in the field of aging issues, an operator named Sang Yuan Jing has been operating an elderly workplace organization named “BABAlab” in Saitama Prefecture since 2011, collecting various needs of senior citizens, launching research and publishing Books, develop various goods and services that fit this. BABA is the name for women of higher age in Japanese. Jing Kuanhara even launched a survey on this word to the elderly, asking how old women can use this name in their hearts—her various survey topics are also relevant to the elderly. The actual topic is related, easy and interesting. At present, the main activities of this organization focus on research, lectures, book publishing, and regional creation planning projects commissioned by various local governments, and have not yet involved the actual product development field.
  Another Keiko Koda, who has positioned his business scope in the field of childcare, established a company called AsMama in Yokohama City, Kanagawa Prefecture. Since its operation in 2009, the business field includes not only childcare activities and exchanges, but also opens up different residential areas. The childcare, education, and other community-assisted undertakings of the community will meet the needs of residents for childcare and solve the employment problems of residents in various places of residence.
  The machimori project in Atami City, Shizuoka Prefecture, unites landlords who own idle properties with real estate dealers. Atami is a famous seaside hot spring resort in Japan. Machimori cooperates with renovation companies to renovate old houses and develop various retail stores, coffee shops, accommodation and event spaces for tourists, companies, and school training groups. This project connects local students, real estate developers, construction companies, landlords, and financial institutions together, and is also a representative project in the field of regional innovation.
  But Japanese community business is not a “big money” industry. To be precise, this is true in many countries. Different countries have different legal systems. Some countries have also set asset restrictions to avoid corruption and resource abuse. Nagasawa Ying, representative director of the Japan Community Business Support Center, pointed out in a 2010 report that about 50% of Japanese community business organizations have an average annual income of less than 10 million yen (about 620,000 yuan). Half of the organizations have fewer than 10 employees. According to a survey conducted by Mitsubishi UFJ Research and Consulting commissioned by the Cabinet Office of Japan in 2015, the proportion of employees under 40 in the Japanese community business sector is less than 10%, and employees over 60 account for more than 70%. This also reflects the biggest challenge within this policy framework: low salary and insufficient talent pool.
  This also reflects another difference between the Japanese community business and the Chinese model in terms of operation: it is precisely because the main participants of the Chinese community business are real estate developers and Internet companies, which are profit-oriented, they still aim more at ownership The middle-class group with stronger spending power provides users with more competitive services. The main business entities in Japanese communities are aimed at solving social problems in the community, and more targeted at disadvantaged groups.
Challenges of Japanese community business

*Note: Although there is also a non-profit corporate model of community business in Japan, tax exemption policies apply to donations at this time, but operating income is still subject to tax. Moreover, non-profit organizations also face difficulties such as high thresholds for the establishment of organizations and restrictions on financing methods.
Source: Comprehensively organized based on public information

  But this does not mean that the model needs to be “generalized.” Japan’s community business programs have played an important role in responding to pressing social issues. At the same time, the “last mile” problem, which has been valued by Chinese capital and business participants, has not been fully resolved in Japan. Although the residential areas of large Japanese cities have realized a combined structure with station commerce as the center and community convenience stores and other commercial forms as auxiliary, logistics is still a key issue hindering service. Due to insufficient human resources and
  high delivery costs, logistics in Japan cannot be as fast and efficient as China’s for the time being. The intra-city delivery of Lotte online shopping often takes one or two days. Even for a self-built logistics company like Amazon, Amazon Fresh’s blowout order during the epidemic often delays delivery by three days to a week. However, in some small cities and towns, where the population is sparse and aging is serious, residents are still accustomed to driving to shopping centers to buy supplies.
  Similarly, in China, while addressing the high commercial potential needs of the middle-to-high consumer groups, various needs for social issues also need to be paid attention to. This may also be an opportunity—because when business interests are sufficiently attractive, “taking into account the social benefits of disadvantaged groups at the same time” can become a bargaining chip with commercial entities and find more opportunities for disadvantaged organizations and groups to obtain resources. Of course, the premise is that joint participants such as the government and financial institutions must also be prepared in time.
Bargaining chip

  In this approach of multi-party cooperation, co-creation of interests, and sharing of resources and development goals, Tokyo also has a representative case-the “Otemachi-Marunouchi-Yurakucho Reconstruction Plan”. The government has stepped forward to reduce the legal volume of the “Damaruari District”. The rate has been expanded from 1000% to 1300% of the “specially applicable volume area”. The historical building Tokyo Station did not fully use these plot rates, so the remaining plot rates could be resold to other building developers and the income used for restoration projects. The entire block has also established a regional co-creation alliance in the past 20 years, formulated a meticulous and green style common development guideline, and constantly communicated with the government, independent administrative legal persons, and developers to open up a new development model for urban renewal through land exchange.