Crisis prompts huge exodus of executives from Tokyo

Foreigners in particular are among those leaving, as concerns grow about the possibility of a catastrophic release of radiation and governments urge their citizens to consider seeking safety elsewhere in Japan or overseas.

Much as in 2003, when the Sars virus slowed business around Asia, a peculiar psychology has taken over Tokyo, where businessmen with the wherewithal are weighing whether to decamp to cities south and west of Tokyo — or wait and see whether the nuclear emergency escalates further.

The confusion, in addition to the distraction of relocating employees, is preventing some companies from addressing urgent problems in shattered plants and facilities along the northeastern coast of the main island, Honshu, which was ravaged by the earthquake and tsunami last week.

And the oppressive atmosphere of fear has made concentrating on even routine tasks difficult. Meetings are being canceled, salesmen have given up visiting clients and stores are cutting back hours or closing entirely. Getting a table in even the most popular restaurants has suddenly become easier.

There are no open signs of panic on the streets of Tokyo. But executives from a growing number of banks, law firms, consultants and other businesses have started to rent space in Osaka or Fukuoka or other cities farther from the badly damaged nuclear reactors. With thousands of Japanese also fleeing the quake-stricken areas in the north, travel on domestic airlines and bullet trains headed away from northern Japan has climbed, and rooms in hotels considered out of harm’s way are filling up.

In many cases, the Tokyo evacuees are expatriates, often prompted by their governments’ embassies, which have recommended that their citizens seek shelter elsewhere as a precaution. The German government, for instance, advised its citizens in Tokyo and areas north either to leave the country or head to the Osaka area. The United States Embassy said it would help fly American citizens in Japan to safer places. Britain, France, Italy, the Netherlands and Australia are among the other countries whose governments have told their nationals to consider leaving Tokyo and to refrain from traveling to Japan’s northeast.

Two Czech military planes landed in Prague on Thursday morning after evacuating 106 people from Japan, mostly Czechs but also several nationals of Poland, Slovakia, Bulgaria and Korea, the Associated Press reported. Also onboard were 41 members of the Czech Philharmonic Orchestra that had been touring Japan since March 6, as well as 11 children. China has already evacuated more than 3,000 nationals from Japan’s north coast to Niigata in the west, Xinhua News agency reported. Japanese authorities have responded to these various moves by urging governments not to sound alarmist. But Japanese companies, too, have started to move some of their employees — or give them the option of working from home. The reaction is partly in response to the reduction in train service in the Tokyo region caused by rolling blackouts that are meant to conserve energy.

The French nuclear power operator Areva is one of many companies moving workers and their families away from areas affected by the disaster or the possible path of radioactive fallout. Eighteen of the firm’s 100 employees left a mission they were on at the Fukishima nuclear plant when the earthquake hit, a spokeswoman said. Since the weekend, Areva has been relocating the families of expatriate workers who want to leave Tokyo to the Kyushu region in the south, although employees considered most vital to operations have been asked to stay in the city.

Many other companies are responding in one of three ways: giving employees the option of leaving the area; moving some staff to Osaka while maintaining a skeleton staff in Tokyo, or shutting down operations in Tokyo and setting up elsewhere.

German software giant SAP, which has about 1,000 employees in Tokyo, has instructed all employees to work from home for now. The company has also given them the option of moving to hotel rooms in Kobe or Osaka, at company expense, if they choose, and to take their families with them.  Martin Reilly, an Irish software designer who works for the French insurance giant AXA, said his company had given employees the option to move.

Though he said he was not fearful, Reilly was nevertheless taking the precaution of traveling to Osaka. “I’m taking my work with me, and I can be back in three hours when this is cleared up,” Reilly said at Tokyo Station before boarding a train. The disruption could provide an extra blow to Japan’s economy because so much of its business takes place in the capital, although it is too early to quantify the effect on consumer spending and business investment.

Tokyo-based Dai-ichi Life Research Institute chief economist Hideo Kumano said some companies were clearly taking the initiative in leaving the city, particularly in the foreign community. But short of an evacuation order, most people will remain in the city because so far, “it’s hard to judge just how dangerous it is,” he said.

The growing number of departures, sometimes with little warning, has in some cases worsened the tensions that often divide local and expatriate staff. The International Bankers Association, which represents foreign financial institutions in Tokyo, said in a statement that its 59 member institutions were operating “business as usual.” But privately, spokesmen for major Western banks said that many of their employees had chosen to take vacations now until there was more clarity on the situation.

While economic activity in Tokyo has slowed, business in cities like Osaka has picked up, a welcome development — despite the circumstances — given the sluggish economy. Shuhei Otsuka, an employee of railroad operator JR-East at Tokyo Station, compared the number of Japanese riders in the last few days with the New Year’s holiday rush or the summer vacation travel peak. Many of the Japanese travelers were families, or mothers with children, while the number of businessmen traveling was about normal, Otsuka said.

Domestic travel agents said that reservations for flights to the islands of Kyushu and Okinawa surged starting Tuesday. Bookings at hotels that cater to the well-heeled and to expatriates have picked up as well. Many customers who have arrived this week appeared to have left their homes in a rush, said Osaka-based Ritz Carlton spokeswoman Matsuko Akesaka. Many guests have booked rooms, which start at 58,000 yen ($720), for only a few nights until they decide whether it is safe to return.

“Business is nothing like during the bubble economy, but compared to the last few years, it’s picked up” in the last few days, she said, noting that her hotel had set up a playroom for children who had accompanied their parents. Some companies are planning to stay in cities like Osaka and Kobe for far longer.

Demand for office space at full-service backup operations providers like Regus and Servcorp has surged as companies set up or expand their remote operations outside the Tokyo area, said Osaka-based Colliers International account manager Brett Jensen. “The nuclear issue is one of the main drivers, but there is also concern about the ability to have a stable supply of electricity even after the nuclear issue is resolved,” Jensen said.

The influx of newcomers has been noticeable in central Osaka in recent days. Ken Shimabuku, who works for a large executive search firm in Osaka, said he had been surprised Tuesday by the number of people carrying suitcases through the streets. “It was so obvious that people were going away,” he said. “Not just foreigners, the ones coming to Osaka, but the Japanese.”
The New York Times