How Can I Bring My Business to 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 quick run-through of the primary activities you will need to complete for your business to enter Japan’s market successfully.
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 and Wal-Mart in late 2020 are two 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 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 how much capital will be required in this endeavor.
Where to go for the latest on industry-specific statistics, consumer reports, emerging market segments, and market analytics for Japan.
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—once set up—allow you to buy and sell goods and are under the company’s head office’s governance, 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, 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. GK is 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.
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Step 3. 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 enter Japan’s market.
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, you should 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 4. Find office space
An 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 ready to go remote is a virtual office, a smart, cost-saving solution for fully remote staff.
This TokyoMate article, “Your First Step to Switching to a Virtual Office in Japan,” discusses the benefits of getting a virtual corporate address, allowing you to stay compliant with business regulations while drastically cutting down on costs.
Step 5. Initiate legal procedures
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:
Search the company name, ensuring that it is unique and not already registered.
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.
Register the company at the Legal Affairs Bureau of the Ministry of Justice.
File the notification of company incorporation and the opening of a payroll office and apply for the approval of blue tax returns.
File the notification of commencement of business at the local tax office.
File the labor insurance notifications and employment rules at a Labor Standards Inspection Office.
File the applications for health insurance and public welfare pension at a Japan Pension Service office.
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 it can be done by your proxy or representative in Japan.
Step 6. 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.
(Stay tuned for upcoming articles on how to start industry-specific businesses in Japan.)
Want to get started on market-entry research for your business?
Our bilingual virtual assistants can get you the information you need to enter Japan’s market.
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