How To Start A Business In Japan

Japan is the third-largest economy in the world with the United States claiming the top spot along with China becoming a close second. Since Japan is in the top three in the global economy it is normal for businesses wanting to be a part of that booming economy. Thousands of businesses start in Japan every year which is a major reason for them being successful economically as a country.

Japan is at the forefront of innovation and they are one of the most developed countries in the world. Another thing about Japan is everything operates smoothly; they believe in punctuality and even the government offices operate properly and value your time although they require you to jump through several corporate hoops.

Another lucrative thing about Japan is its consumer base. Japanese people are very developed and are better at recognizing what is good for them and what is not. Businesses tend to use the Japanese market as a test market to see if the product they offer is appealing or not. And if your business is successful in Japan, the chances of your business being successful somewhere else increases.

Ways to Bring your Established Business to Japan:

If you are an established business and want to expand in Japan then there are three ways you can do it. One way of expanding your business in Japan is getting a representative office.

A representative office in Japan is an establishment that is not able to engage in any type of sales or transactional activities. For example, You are in the business of selling shoes, if you choose to establish a representative office in Japan you will not be able to sell any shoes. But then why would you do it? Representative offices are great for marketing the product and educating them about it which helps increase the reach of your business in turn increasing your customer base.

Another option is for you to open up a branch office or a subsidiary office in Japan where your business will not be restricted and will be able to function properly.

What to do if you do not have an Established Business?

If you are looking to start a business from the ground up in Japan the path will be difficult for you. Notice how I phrase it is going to be difficult but not impossible. If you think your business idea will work in Japan and it is the right place for you then bet on yourself and take action to start a business in Japan.

Establishing a new business in Japan will require you to have a different visa which is known as a “Startup Visa”. This visa makes the life of entrepreneurs who do not hail from Japan a tad bit easier.

The validity of the Startup visa is for 6 months and the Japanese government provides a startup visa in the following regions: Tokyo, Hiroshima Prefecture, Aichi Prefecture, Sendai City, Niigata City, Imabari City, and Fukuoka City.

What are some of the difficulties in starting a business in Japan?

One thing entrepreneurs in Japan complain about is the language barrier. Most Asian countries have their government or official paperwork in English but not in Japan. In Japan, all the paperwork will be in Japanese. So, for business owners who do not know how to read in Japanese, it becomes very difficult for them to run their business smoothly.

You need to know the Japanese language not only when you are handling official documents but for essential things like telephone contracts, supplies for your business, and many more. If you want these services in English it will cost you much more than what it costs to have them in Japanese. So, learning Japanese will not only help you handle official government documents but will also help you run your business more cost-effectively.

Another thing that stresses business owners in Japan is their corporate banking. Online banking websites are not user-friendly and it hinders the functionality of businesses.

The thing we complimented about Japan’s consumer base can also be a drawback. The consumer base is different from other parts of the world. In Japan, there is a lot of competition from local businesses and people prefer buying from local brands to international ones. To overcome these hurdles, businesses need to tailor everything to the Japanese market starting from their billboards to their websites.

Can a PEO help you start a business in Japan?

PEO stands for professional employer organization and is one of the biggest saving grace for small and new businesses. A PEO will handle all your human resources needs which include employee insurance, payroll, and the other employee facilities you need.

Now how can a Japanese PEO help you? If you are looking to start a business or expand your business in any country you will need local employees. For example, if you are a company in the US that is expanding its business in Japan, you need 200 employees to run your business there. Will you bring those 200 employees from the US to Japan? No, that is not a healthy way to run a business. You want to hire locally. So, you will have to make use of PEO services in Japan who will help in the recruitment process. You tell them the type of employees you need and they will find them for you. Plus, you will not need to worry about paying your workers individually, you will be paying the PEO and the PEO will be paying them accordingly.

Another thing about PEOs is they can provide much better healthcare insurance to your employees than you can as a standalone entity. This is because PEOs buy insurance for thousands of employees and they get a lower premium. This is important if you want to attract better and more skilled employees.

Starting a business isn’t easy but I hope this article helped answer some of your questions.