A draughty warehouse, stone buildings, sub-zero temperatures and a historic town wrapped around a slate-grey harbour - it could be Dunedin in the depths of winter. No surprise, then, that Japan's northern port, Otaru, is sister city to Otago's capital, Dunedin. About the same size (70,000 households) as Dunedin, Otaru is just an hour's drive north (less on the train) of Hokkaido's main city, Sapporo.

Hokkaido, Japan's northern island, was settled like a Victorian colony about the same time Europeans settled New Zealand. Otaru's Victorian buildings (stone banks and wooden houses) and lamp-posts look familiar. Before that, the island was the preserve of the Ainu people, whose culture has been subsumed by Japan and is today celebrated most visibly through art and craft, natural cosmetic and spa products, and massage techniques.

A visitor gets the feeling that Otaru is happily insulated from the pace of change when several people within an afternoon mention that it was the location for Love Letter, in the same way Matamata trades on its link with Lord of the Rings. Love Letter was filmed in 1995 and drew acclaim for evocative winter cinematography.

The bustling canalside town is a welcome sight from the forest and hill country of Hokkaido's interior. The canal - forming an icy skin as the thermometer displays -6.7C at noon - was a marvel of engineering in 1923 and becomes a sparkling centrepiece on winter evenings, lit by hundreds of floating candles. The illuminations are a charming drawcard to a town rich in history and commerce, and a unique glass-blowing tradition. The old wooden glass-blowing cafe is lit solely by oil lanterns that give it a cosy, smoky atmosphere.