Starting a Business in Japan: The Essentialist's Guide

Starting a Business in Japan: The Essentialist's Guide

How can I bring my business to Japan? What should I do in preparation? What legalities are involved in entering the Japanese market?

With the world's third-largest GDP, Japan's market is an attractive prospect for companies looking to expand their operations. 

If you have been thinking about bringing your brand, business, or service to Japan, here's a high-level run-through of the primary activities you will need to complete for your business to enter Japan's market successfully

No fluff—just the essentials.  

Step 1. Research your market sector

Many global enterprises have opened in Japan, only to eventually pull out—finding it too challenging to compete with national brands that run campaigns steeped in cultural understanding.

Sephora in the early 2000s, Wal-Mart in late 2020, and Uber most recently are some examples, but there are many more. 

Find out who your direct competitors will be and consider how you will compete against them. Relying on success in other countries doesn't take into account Japan's particular business landscape.

You will need to understand Japanese attitudes toward consumption, learn distributor and marketing costs and expenses, along with upfront operating costs, for a realistic business plan and capital investment appraisal. 

Get a bilingual business assistant to help you with market-entry research for the latest figures and recent developments on the Japanese business horizon.

This information—often only available in Japanese—is crucial in your risk assessment and understanding of the required capital in this endeavor. 

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Step 2. Choose a company structure 

If you are bringing your company to Japan, you have a few primary options. You could open a branch office, or you can establish a subsidiary company, either a joint-stock corporation, Kabushiki-Kaisha (KK), or a limited liability company, Godo-Kaisha (GK).

  • Branch office. The simplest of the three to get up and running, branch offices of a foreign company—once set up—allow you to buy and sell goods and are under the governance of the parent company, with daily running capability but without decision-making power. Therefore, they are not required to have corporate status on their own. The number of applications and procedures to start is less than a KK or GK. Required documents include an affidavit by the head company, a seal certificate of the representative in Japan, and the branch office's seal (that must be registered).

  • Kabushiki-Kaisha (KK). The most well-established company type in Japan. But also with a high number of procedures to get started. A KK is a corporation with stock options (a stock company), allowing you to raise capital as needed and investors to receive dividends. The downsides are the number of procedures and regulations, such as shareholder meetings, etc. But if you are looking to establish yourself in Japan's marketplace, this is likely the best option for you as it can help establish your credibility when networking

  • Godo-Kaisha (GK). A newly developed limited liability company type with fewer requirements than a KK. Limited liability companies are an option for those who wish to operate on a smaller scale and aren't interested in selling company stocks. Benefits include flexibility in operations, as shareholder meetings are not required for decision making. As a GK, you can also outsource management. A slight drawback is that this is a less-known company type, which could slow down gaining consumer or network trust. 

👉 Read the Total Guide to Company Formation in Japan! You may also want to consult with an English-speaking lawyer who specializes in corporate law. Check out our list of English-speaking corporate lawyers here.

Step 3. Get the appropriate visa.

To start a business in Japan, foreign nationals must secure one of three types of visas: the Business Manager Visa, the Four-Month Business Manager Visa, or the Startup Visa.

  1. Business Manager Visa: This business visa is suitable for individuals planning to start or manage a business in Japan. To be eligible, you must have a business office in Japan, invest initial capital of 5 million yen into your company or employ two full-time employees residing in Japan, and have at least three years of business management experience. The visa is valid for one year and can be renewed based on your business's profitability.

  2. Four-Month Business Manager Visa: This visa allows foreign entrepreneurs to stay in Japan for 120 days to set up their business affairs, such as opening a Japanese personal bank account and gathering and submitting all the documents required to register a company. You must provide articles of incorporation detailing your company's trade name, business purpose, capital investment, head office location, investor list, and list of officers to the immigration bureau.

  3. Startup Visa: This start up visa program, initiated by the Japanese government, allows individuals to stay in Japan for up to one year without first securing capital or other requirements for a Business Manager visa. The program is designed to support international entrepreneurs and strengthen Japan's startup culture and economic growth.

Each visa type has specific application procedures, and it's recommended to hire a bilingual lawyer or English-speaking immigration specialist to help navigate the process.

👉 Learn more about the 3 types of visas for doing business in Japan!

Step 4. Hire a bilingual proxy

Choosing a business structure requires a firm understanding of the market you are entering and the resources you have to deploy.

Experts suggest hiring a bilingual lawyer or business consultant well-versed in helping businesses with necessary paperwork at the local government office.

Registering your company requires many procedures—all of which must be completed in Japanese.

Unless you are a fluent Japanese speaker and can write in Japanese with ease, consider hiring either a bilingual lawyer or legal office, a bilingual business consultant, or a bilingual virtual assistant to help you with the paperwork and associated tasks. 

Hiring a bilingual proxy—whether a lawyer or virtual assistant—will allow you to outsource essential to-dos, translate company documents, and make sure official applications are error-free.

Step 5. Find office space

Finding an office space in Tokyo or other part of Japan can be difficult. A Japanese address must appear on your company's registration certificate (tokibo tohon), so your next step is to research and assess real estate possibilities that fall within your budget and meet the requirements of what your business needs from the space. 

One option for businesses coming in from overseas is a virtual office address, a smart, cost-saving solution for business registration in Japan. 

👉 This article, “Virtual Offices in Japan, Explained [Updated 2023],” discusses the benefits of getting a virtual corporate address, allowing you to stay compliant with business regulations without the real estate fees. 

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If you have hired a legal office or a business partner, then this is where they prove their worth. There are 8 official procedures required to open your business in Japan officially. Here's a quick look at the registration process: 

  1. Search the company name, ensuring that it is unique and not already registered.

  2. Make a company seal (¥10,000 for a machine-carved seal or ¥20,000 for a hand-carved seal) and register it with the Legal Affairs Bureau.

  3. Register the company at the Legal Affairs Bureau of the Ministry of Justice.

  4. File the notification of company incorporation and the opening of a payroll office and apply for the approval of blue tax returns.

  5. File the notification of commencement of business at the local tax office.

  6. File the labor insurance notifications and employment rules at a Labor Standards Inspection Office. 

  7. File the applications for pension and health insurance and public welfare pension at a Japan Pension Service office.

  8. File the company application for employment insurance at a Public Employment Security Office.

This list can feel daunting—but if you've hired the right people, most of your business operations can be done by your proxy or representative in Japan. 

👉 Read about employees' health insurance and pension insurance in Japan.

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Step 7. Hire your staff 

Your staff might not need to be bilingual, but you will likely want—at the very least—a bilingual liaison between yourself and your Japanese-speaking staff. 

Local recruiting agencies often profess they can fill positions within a week, but this is rarely the case when looking for individuals with the level of English and Japanese ability needed for liaison duties between a CEO and their employees. 

A simple staffing solution is a VA service with pre-vetted assistants for English and Japanese fluency, knowledge and experience in Japan's startup culture, and native to Japan but with global experience.

As you drill down on what you require of your staff, you may find that you can outsource the majority of duties, giving you a best-value choice for your first years of doing business in Japan.

👉 Check out MailMate's bilingual assistant service—available as a white-glove add-on for users of MailMate's virtual mail service.

Frequently asked questions

Can a foreigner start a business in Japan?

Yes, a foreigner can start a business in Japan. They will need to secure one of three types of visas: the Business Manager Visa, the Four-Month Business Manager Visa, or the Startup Visa. Each visa type has specific application procedures, and it's recommended to hire a bilingual lawyer or English-speaking immigration specialist to help navigate the process.

Can a US citizen start a business in Japan?

Yes, a US citizen can start a business in Japan. The process is the same as for any foreigner, which involves securing an appropriate visa, choosing a company structure, conducting market research, and navigating the legal procedures for starting a business in Japan.

Is Japan good for starting a business?

Japan can be a good place to start a business, as it has the world's third-largest GDP and a robust market. However, it's important to understand the unique challenges of the Japanese market, including cultural nuances and language barriers. Thorough market research and understanding of the Japanese business landscape are crucial for success.

How much money do you need to open a business in Japan?

The amount of money needed to open a business in Japan can vary greatly depending on the type of business and the scale of operations. For example, to be eligible for a Business Manager Visa, you must invest 5 million yen into your company or employ two full-time employees residing in Japan. Additionally, you will need to account for costs such as office space, hiring staff, and legal fees.

In closing

Starting a business in Japan is a complex process that requires careful planning and understanding of the Japanese market and legal system. From conducting thorough market research to choosing the right company structure, obtaining the appropriate visa, hiring a bilingual proxy, finding office space, initiating legal procedures, and hiring staff, each step is crucial to successfully entering the Japanese market.

It's important to remember that while Japan offers a wealth of opportunities, it also presents unique challenges. Understanding cultural nuances, navigating language barriers, and complying with local regulations are all part of the journey.

Consider seeking assistance from bilingual professionals, such as lawyers or business consultants, to help you navigate the process. They can provide valuable insights, translate documents, and ensure that your applications are error-free.

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