Starting a Business in Japan
Your guide to starting a business in the land of the rising sun
The Japanese economy is improving and the market (consumer) is always looking for new and unique services and products. Japanese consumers are selective and one of the toughest to please when it comes to quality. At the same time, they love services/products from overseas. The Japanese market seems to already be considered a mature or closed market, which is difficult to enter; however if you take the right steps, there are big opportunities. Here are a few tips to entering the Japanese market.
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Market Research
The first thing to do is to learn about the market. Without knowing the market size, trends, major players/consumers and distribution channels, you cannot formulate a successful business strategy. Many manufacturers would like to sell services/products as they are. In a perfect world that would be the case. However, in most cases, this does not work. You need to understand the market and need to adjust to market demands.
Market Research Experts in Japan
One of the most important steps during the early stages is to make a decision whether you can bring your services/products as they are or need to adapt them. For that purpose, market research is a “MUST”. It needs to be conducted to understand the market via desktop research, interviewing related people/companies or quantitative/qualitative research, etc. You need to gather as much information as possible, analyze and accept the data in order to make the best business plan.
Business Development
Developing sales channels is an important task. The Japanese market has major business culture differences such as the decision-making process taking too long or vague attitudes. It is either YES or NO. The Japanese economy is part of the global economy and many companies operate under global standards. On the other hand, it is true there are still old-fashioned business practices depending on the industry or company.
Seek, identify and select the right partner(s) for your business (or sales channel) development. You can develop sales channels by yourself or by working with partners; however, the most important thing is to respect the market and be flexible in your approach. Be careful, however, as distribution channels for some industries are still complicated and protective toward foreign companies. Another important factor is that Japanese consumers are very sensitive to customer service (they arguably have the best in the world), so do not underestimate the importance of customer service.
Getting an Office
Again, Japanese consumers/companies request local presence for customer services in Japanese with Japanese materials. It is fine to ask your local partner to undertake that role; however, if you have a local office by yourself, you will be able to build much higher credibility. Unfortunately, about 40% of the population is gathered in the Tokyo Metropolitan area and it is the core for business. You may be aware that rent in Tokyo is one of the most expensive in the world, and involves such customs like paying 6 or 12 months deposit in advance or need for guarantors.
Serviced Offices in Japan
- Open Office Japan (Japanese only)
Make sure to hire experts to study several options including office rental or an incubation office provided by government or related organizations like JETRO. Many prefectural governments provide this type of office and it would be sensible to explore this option too. Japanese companies/consumers care about the location of an office, so it is better to have your office in a well-known central area. Do not forget that most commuting is done by train, and usually very packed. Find a good balance between cost and commuting time!
Legal
This is the difficult part because the law and language are different. Simply hire experts to provide you with this service. The contract format is completely different, so recognize and prepare it in advance. Some companies will accept Western-style contracts, which are described to the finest detail. However, many companies want to have Japanese style ones, simple and not so detailed. This is because when issues arise, the solutions can be discussed and resolved case by case. Take time to understand it and make a decision as to what kind of contract you want to have. Abiding by Japanese law is important. Do not underestimate the quality level. If you have wrong information or sell products with false information regarding country of origin, Japanese consumers and media react sensitively and you will be kicked out of the market.
Getting Financed
If you need to raise funds in Japan, it is possible but challenging all the same. Opening a bank account requires credibility and an entity. Try to knock on doors of local governments; they have support systems specifically for foreign companies, which are not well known as yet. It is worth taking the time to research. If you want to approach Japanese venture capital firms, understand system/cultural differences. The key point: Is it really investment? Understand the importance of mortgage in the Japan banking system.
