Osaka in transformation – innovation, liveability, and global ambition of Japan’s second largest city
Osaka, Japan's second largest city, is undergoing a major transformation, revitalising its urban landscape and economy. Historically a prominent trading hub and industrial powerhouse, Osaka experienced a decline after Japan's economic bubble burst. However, recent developments like the Grand Green Osaka project, the upcoming 2025 Osaka-Kansai Expo, and a planned integrated resort are injecting new life into the city.
Osaka is leveraging its strengths in pharmaceuticals, biotechnology, and tourism to drive economic growth. Known for its compact urban structure and relatively low cost of living, Osaka ranked 10th in the Economist Intelligence Unit's 2023 Global Liveability Ranking. While challenges remain in terms of international competitiveness, Osaka's unique culture, entrepreneurial spirit, and ongoing urban development initiatives position it for a resurgence on the global stage.
Inauguration of Grand Green Osaka
Grand Green Osaka opened its doors on 6 September 2024, on the north side of JR Osaka Station. This building complex is part of the redevelopment project for the 'Umekita district', formerly the site of Umeda Freight Station. Since 2002, this area, dubbed 'Osaka's last prime location', has undergone extensive redevelopment. Grand Front Osaka, which opened in 2013, marked the first phase, whilst Grand Green Osaka represents the second phase.
The project features a vast 4.5-hectare green park at its centre, surrounded by commercial facilities, hotels, offices, and hubs for industry-government-academia collaboration. In addition, a new underground platform at JR Osaka Station, the 'Umekita Area Underground Platform', was completed in March 2023, improving transport connectivity with the introduction of the Osaka East Line.
On the commercial side, 19 stores have opened, including the Hilton brand hotel, “Canopy by Hilton Osaka Umeda.” In the business sector, 113,000 square metres of office space have been made available, made available, with companies such as Kubota and Shionogi Pharmaceutical relocating their headquarters, and Honda establishing a new software development centre, contributing to the concentration of businesses in the area.
Grand Green Osaka is set to become a prominent landmark as Osaka gears up for the 2025 Osaka-Kansai Expo. The total project cost is approximately 600 billion yen, making it a massive project exceeding 1 trillion yen when combined with Grand Front Osaka.
Large-scale development in Osaka is not limited to Grand Green Osaka. Nearby, "JP Tower Osaka" and "Inno Gate Osaka" have fully opened, and Hankyu Hanshin Holdings is also planning an integrated development of Hankyu Osaka Umeda Station and Osaka New Hankyu Hotel.
Furthermore, the bid for an integrated resort (IR) including a casino at Osaka’s Yumeshima district is almost certain, signalling a new phase in Osaka’s urban development.
While such news paints a bright future for Osaka, the city has in fact struggled with a decline in its standing for over 30 years since Japan's bubble economy burst. Osaka was once called 'Dai-Osaka' (Great Osaka). The character for "Dai" (大) originally meant an expansion in area, but it also conveyed a sense of pride in having grown into an industrial city representing Eastern Hemisphere. From those days of economic prosperity, Osaka has experienced a relative decline in its position amidst the growing concentration of economic activity in Tokyo.
However, with large-scale development projects like Grand Green Osaka, the hosting of the 2025 Osaka-Kansai Expo, and the IR development, Osaka is now at a major turning point, striving to reclaim its former vitality.
History of Osaka
Osaka is one of the first areas in the Japanese archipelago where an advanced society was created. Naniwa-no-miya Palace was built in the mid-7th century, earlier than the capitals of Nara and Kyoto, indicating Osaka’s early political importance.
From the medieval to the early modern period, Osaka developed as a commercial centre, leveraging its geographical advantage as a transportation hub. While Kyoto was the centre of aristocratic culture centred around the emperor, Osaka had a strong spirit of self-governance by merchants, fostering a unique townspeople's culture and thriving economic activity.
Entering the Edo period, Osaka became the core of Japan’s economy. Rice, which was essentially the real currency of the time, was all gathered first in Osaka and then distributed throughout the country. The Dojima Rice Exchange was renowned for its scale and sophisticated trading system, earning recognition as the world’s first commodities futures market.
Even after the Meiji era, Osaka rode the wave of modernisation and developed as an industrial city. Modern industries, centred on the textile industry, flourished.
In the 1920s, for a brief period following the Great Kanto Earthquake around Tokyo, Osaka's population surpassed that of Tokyo, making it Japan's largest city. This period, known as 'Dai-Osaka', was when Osaka prospered most in all aspects - political, economic, and cultural. With the second expansion of the city area in 1925, Osaka City's area increased to about 181 square kilometres, and its population exceeded 2.11 million, surpassing Tokyo and becoming the world's sixth-largest city.
During this 'Dai-Osaka' era, urban planning projects were carried out in Osaka, rapidly advancing infrastructure development as a modern city, including the expansion of Midosuji Street and the construction of the Underground. Entertainment districts like Shinsaibashi-suji and Dotonbori were lined with department stores and cinemas, fostering a vibrant, modern urban culture.
Post-war Osaka and Its Decline
Historically known as the “Nation’s Kitchen”, Osaka thrived as a commercial and logistics hub since the Edo period, and this tradition continued into the modern era with many major companies originating from the city. Some notable companies founded in Osaka by sector are:
- Pharmaceuticals: Takeda Pharmaceutical (1781), Shionogi Pharmaceutical (1878), Sawai Pharmaceutical (1929), Astellas Pharma (2005)
- Food and Beverages: Asahi Breweries (1889), Suntory (1899), House Foods (1913), Ezaki Glico (1919), Itoham (1928), Nissin Foods (1948), UHA Mikakuto (1949), Marudai Food (1954)
- Finance and Banking: Sumitomo Mitsui Banking Corporation (1895), Nomura Securities (1918), Nippon Life Insurance (1889)
- Electronics and Precision Instruments: Panasonic (1917), Zojirushi (1918), Tiger Corporation (1923), Omron (1933), Roland (1972)
- Textile and Machinery: Toyobo (1882), Daihatsu (1907), Yanmar (1907), Shimano (1921), Daikin (1924)
- Housing and Construction: Obayashi (1892), Sekisui House (1960)
- Imaging and Photography: Fujifilm Holdings (1934)
- Stationery and Office Supplies: Kokuyo (1905), Olfa (1967)
- Media and Publishing: Asahi Newspaper (1879), Sankei Newspaper (1933)
- Entertainment: Konami (1969), Capcom (1979)
Post-war Osaka was particularly strong in manufacturing, with the electronics and textile industries developing as major industries. Large electronics manufacturers such as Panasonic and Sharp grew with Osaka as their base, and the textile industry was also thriving.
However, with the economic stagnation following Japan’s bubble burst in the 1990s and the rise of emerging economies like China, Osaka’s industrial structure faced a significant turning point. As the competitiveness of its electronics and textile industries waned, Osaka struggled to find new core industries to replace them.
Meanwhile, Tokyo continued to develop, centred on the financial, media, fashion, and advertising industries, and accelerated its globalisation. As a result, the gap in economic power between Osaka and Tokyo gradually widened.
One of the factors behind Osaka's economic stagnation was the prevalence of small and medium-sized enterprises and business practices that emphasised continuous human relationships. These characteristics slowed down the speed of response to rapid changes.
Osaka's commercial culture had a strong belief in the idea that 'business is about people', tending to value long-standing relationships and trust. While this culture brought stability, it made it difficult to respond flexibly to changes such as new business models and the expansion of trade with overseas countries.
Additionally, compared to Tokyo, Osaka’s corporate culture tended to emphasise familial and close-knit relationships, which, while fostering loyalty among employees, also hindered the introduction of new talent and ideas.
These traditional business practices and culture, in a way, became a constraint for Osaka in the rapidly changing global economy. As a result, Osaka lagged behind Tokyo in nurturing new growth industries and enhancing its international competitiveness.
However, while recognising these challenges, Osaka still occupies an important position as Japan's second-largest economic zone. Its unique culture, history, and entrepreneurial spirit hold the potential for a new era of revitalisation.
Osaka Today
While Osaka has experienced a decline in its former economic status, it has been showing strong growth in new industrial fields in recent years. In particular, the city boasts one of Japan's leading competitive edges in the pharmaceutical and biotechnology domains.
This strength is the result of a fusion of long-standing tradition and contemporary initiatives. Known as the “city of medicine” since the Edo period, Osaka has developed its pharmaceutical industry centred around Doshomachi Street. The presence of long-established pharmaceutical companies such as Takeda and Shionogi and many others forms the backbone of this industry.
Furthermore, the city’s efforts today include leveraging research institutions such as Osaka University and Osaka Prefecture University, promoting industry-academia-government collaboration under the ‘Osaka Bio Strategy,’ and government support through the Kansai Innovation Comprehensive Special Zone. The formation of clusters like the Saito Life Science Park and Northern Osaka Bio Cluster also supports the development of the bio-industry.
These factors combine to create Osaka’s distinctive strength in pharmaceuticals and biotechnology, positioning it as a major hub in Japan and driving new economic growth.
The growth of the tourism industry has also been remarkable, with Osaka boasting popularity surpassing Tokyo, especially due to the rapid increase in inbound demand. Leveraging its geographical advantage of having Kansai International Airport and good access to Kyoto and Nara, Osaka has become a key destination for foreign tourists. Tourist spots such as Universal Studios Japan, Osaka Castle, and Dotonbori are popular, and its unique food culture is also a major attraction.
Osaka is home to diverse foreign communities, with particularly strong Chinese and Korean communities. The presence of these communities enhances Osaka's international character and increases its appeal as a multicultural city.
In terms of business, Osaka's cultural characteristics serve as a unique strength. Osaka's business practices, which are less bound by formalities, are said to have high affinity, especially with Asian business partners. There are voices evaluating that there is an environment where business can be easily conducted once human relationships are established.
Osaka is characterised by its compact urban structure and relatively low cost of living. Due to these factors, it often ranks high in global 'most liveable city' surveys. For example, in the Economist Intelligence Unit's (EIU) 'Global Liveability Ranking 2023', which evaluates the liveability of 173 cities worldwide by quantifying five categories - stability, healthcare, education, culture & environment, and infrastructure - Osaka ranks 10th.
The city’s atmosphere is also a key part of its charm. While Kyoto is known for its traditional Japanese culture and historical buildings, Osaka is characterised by its modern urban life and vibrant atmosphere. Its diverse food culture, including B-grade gourmet and food stall culture, is also a major attraction of Osaka.
However, Osaka's development as an international city is still halfway there. Its ability to conduct business in foreign languages and infrastructure for foreign companies to start businesses are not as advanced as in Tokyo. For example, there is room for improvement in multilingual administrative services and business support systems for foreigners.
In this context, finding the right partner is crucial for succeeding in international business in Osaka. Collaborating with a partner who is familiar with local business practices and culture, and who also has an international perspective, will be key to business development in Osaka.
With its unique culture, emerging growth sectors, and improving international environment, Osaka has significant potential for future growth. However, to become a truly global city, continuous efforts are required to address language barriers and improve business infrastructure. It will be essential for the government, companies, and citizens to work together to build a more open and international city, maximising Osaka’s potential.