Starting a business in Japan can be incredibly difficult for foreigners. Japanese bureaucracy can be extremely confusing and demanding, requiring huge amounts of paperwork and documentation, all of which needs to be done just right. This of course makes starting a business difficult enough even for Japanese citizens. However, foreign nationals need to also deal with the additional difficulties that come with the language and the culture.The good news is that in spite of all these difficulties and complications, Japan ranks highly when it comes to factors like ease of doing business. So in spite of how troublesome things may seem initially, most expats find that it’s worth being entrepreneurs in Japan.
The things you need to know and do in order to start a business in Japan could probably fill an entire book – and not a small one – however, here are just four of the most important elements to consider.
Hire a professional to help you with the setup: The two most important people you will need are a shiho-shoshi (judicial scrivener) and gyosei-shoshi (administrative scrivener). As we’ve said before, even local entrepreneurs find it difficult to stay on top of all the regulations, requirements, procedures, and documentation involved in setting up a new business. As an outsider, it’s almost impossible, even if you’re fluent in Japanese.
Hiring the right people will cost you some money, but it’ll help you navigate the entire process without wasting too much time, and without unnecessary rework because something wasn’t done correctly.
The shiho-shoshi and gyosei-shoshi will help you file applications and registrations, obtain licenses, negotiate and draw up contracts, and much more. To some extent, their roles may overlap, but for the most part, they specialize in different areas. They may also specialize in specific lines of business, so make sure you find someone who’s a specialist in the type of business that you plan to start. You will probably also need a zeirishi (a certified public tax accountant) to handle your taxes.
Learn the language: A basic understanding of Japanese is essential if you want to start a business in Japan. Without this, you will always be operating somewhat in the dark, with other people having to explain things to you – and that’s an extremely difficult and risky way to do business. The more proficient you are at Japanese (both spoken and written), the easier it will be for you to start and run your business.
Make sure you have enough capital: This of course applies anywhere in the world, but in Japan, people sometimes get carried away by the fact that the minimum amount of capital required to incorporate a company is one yen. However, you do of course need plenty more, even for a small business. You will need several thousand yen just for government registrations and taxes, and several more for the various professionals you hire. Besides, due to various factors, it may take a while for your business to really take off. Ensure that you plan accordingly.
Understand the culture: This is probably more important for an entrepreneur in Japan than it is anywhere else in the world. It’s not simply about business communication and customs being different – it’s also about extremely fundamental differences in the way the Japanese approach business.
Entrepreneurship in the US, for example, sees risk as inevitable, and perhaps even something to be sought out. Even with successful, iconic entrepreneurs, repeated failure is the norm. This approach can be seen (to varying degrees) in Europe and in much of Asia too.
In Japan, on the other hand, the general approach is extremely conservative – banks are less willing to lend money to entrepreneurs, other businesses are reluctant to form new relationships, whether as vendors or clients, and the Japanese on the whole are rather averse to risk and failure. Make sure you understand this and other cultural aspects that might be unique to your line of business. You need to consider the fact that as an outsider, you may have unique insights, but you may also not fully understand what will and will not work in the market. Remain open to local opinions and advice, and constantly try to learn as much as you can about Japanese business culture.
Those are our four main tips to get you started with business in Japan. Do you have any others to add? Share your thoughts in the comments.