The Ten Most Dynamic Cities

Any idea which city in Japan is nearest to Shanghai? Or to Seoul? The answer to both is Fukuoka, which likes to call itself "the closest city to Asia." In a sign that the threat of hollowing out in Japan has been overhyped, many big brands from Toyota to Sony, Toshiba and Canon continue to pour money into manufacturing in and around Fukuoka, the capital city of Japan's southernmost island, Kyushu. All these companies say geography and fast shipping still matter. So does staying close to Japanese suppliers. And Canon, for one, says its plants are so highly automated that Japan's high labor costs hardly matter. The result: investment in manufacturing on Kyushu has grown as fast as 52 percent in recent years (though it slipped to 4 percent last year). Locals now refer to Kyushu as Car Island, or Silicon Island.

Fukuoka is riding the Kyushu factor. Mayor Hirotaro Yamasaki has been aggressively marketing the city as a gateway to Asia since he took office in 1998. Of course, such bold ambitions are almost as common as port cities in this region, but Fukuoka is among the few that are really making it happen. The city's main port, Hakata, is handling 50 percent more shipping containers than it did just six years ago. The local airport is bustling. The regional highway network is both well developed and less crowded than on the other islands of Japan, another Kyushu advantage that draws big name multinationals.

Toyota has built its second manufacturing base in Japan (the first was in Nagoya) on Kyushu. And this year the world's leading automaker began shipping its luxury Lexus models to China out of Hakata. Local officials say this link between the world's leading car company and its largest consumer market is a sign that Fukuoka has become key node in the global economy.

Nor is it just trade that's flourishing. Robust growth for the high-profile corporations has spawned job growth in the service, retail and information-technology companies that cater to them. Fukuoka has long been popular among Japanese tourists for its rich cultural heritage, which dates back 2,000 years, and its famous Dontaku Festival each spring, which has roots in a 17th-century shogun ceremony and features hundreds of costume parades with. Now the number of foreign tourists is on the rise, too, up 50 percent in the last six years. "There is no doubt that tourists from Asia are boosting consumption here," says Kazuya Matsuda, an official of the Economy Ministry who is based in Fukuoka. "And [Fukuoka] attracts young shoppers from across Kyushu, too. They are bringing energy to the city. It's enormous."

So far the foreign visitors are coming mainly from nearby South Korea, but that could change if Fukuoka realizes its growing ambitions. The city is bidding to host the 2016 Summer Olympics, going up against much bigger rival cities--including Tokyo.

Akiko Kashiwagi