Move over Frankfurt. Forget Paris, Los Angeles and Toronto,
Asian cities are rapidly surpassing each of these metropolises
as centers for global business.
Tokyo, for example, took the No. 3 spot behind London and New
York, according to MasterCard Worldwide's Centers of Commerce
More importantly, Asia had four cities in the top 10, the best
showing of any region. Europe and the United States each had
Ten years after the Asian crisis, booming markets are attracting
capital back to the region. Along with strengthening financial
systems, efforts to build modern roads, airports, power networks
and skyscrapers are paying off.
Actually, make that record-breaking skyscrapers. While cities
such as Shanghai, Taipei and Seoul vie to have the world's tallest
tower, others like Tokyo are experiencing building booms like few
in modern history. Never mind the risk of earthquakes; a new
skyscraper seems to open each week in Japan.
Some caution is in order. Swanky cities alone won't ensure a
pivotal role in the global economy. It's equally important for
market, legal and political frameworks to keep pace with the
construction projects sprucing up wannabe financial capitals.
Tokyo is a case in point. While it's well ahead of Asia's other
major financial centers - Hong Kong, Singapore and Seoul - Tokyo is
bumping up against a glass ceiling of sorts: poor corporate
"Japan is a world-class country with the second-biggest economy,
and it should have a world-class financial system and corporate
governance system as well," Warren Lichtenstein, who controls Steel
Partners Japan Strategic Fund (Offshore) LP, said in Tokyo on June
Until it does, he said, "there is no way" Tokyo will become a
peer of London or New York.
The "Big Bang" of the late 1990s didn't deregulate Japan as
hoped. These days, the financial pages are filled with stories of
companies concocting "poison pills" to fight off mergers, confusion
about the environment in which banks and brokerages operate and
poor transparency in the executive suite.
While things are changing, Taku Yamamoto personifies the growing
sense of impatience hanging over Tokyo. Yamamoto heads the
investment department at Japan's Pension Fund Association, which
oversees US$107 billion of stocks and bonds. The pension manager
plans to use annual shareholder meetings to pressure companies.
"We're after the executives who've mismanaged their financial
affairs," he told Bloomberg News on June 7.
That is, of course, good news. Japan needs more such shareholder
A cautionary tale
Japan's preference for a weak yen is another reason the country
is less than inviting as an investment destination.
These should be heady days in Tokyo. One reminder of that came
in a recent survey by the Economist Group, which declared Japan the
world's most innovative nation.
The rankings were calculated by comparing the number of patents
per million of population for 82 nations. Japan was a clear
Yet China is getting most of the attention in Asia, followed
closely by India. Japan needs to work harder to remind investors
it's recovering, something to which Asia's traditional growth
engine isn't accustomed.
Tokyo is a cautionary tale. It boasts some of the best
infrastructure anywhere, globally dominant companies, a highly
educated labor force and prints Asia's only truly international
Yet Japan's failure to internationalize its markets means its
appeal trails that of Hong Kong, Singapore and Seoul.
There's little doubt Asia, seeking to draw more attention to it
economies, is reaching for the sky -
In 2003, Taipei opened the world's tallest building; prior to
Taipei, Kuala Lumpur was home to the tallest. Soon, Shanghai, Seoul
or Dubai may grab the title.
Asian cities hope such projects will boost their efforts to
become financial hubs. It sure helped Malaysia, where the twin
Petronas Towers brought prestige to an economy that drew little
notice from foreign investors.
When CNN needs an Asian backdrop for a news segment, Kuala
Lumpur's towers often are it. They're among Asia's few globally
Leaders may see gleaming skyscrapers and fancy infrastructure as
vital forms of advertising that say, "Hey investors, check us
That's all well and good, so long as improvements to Asia's
financial systems and investment climates keep pace with
(Shanghai Daily June 25, 2007)