Many foreign startups and companies are interested in expanding their business to Japan.
This is because the Japanese market is considered large and attractive.
On the other hand, it is also recognized that entering the Japanese market is difficult for these foreign companies.
This article is based on research of related articles and through interviews with people involved in the startup ecosystem.
There are three main reasons why it is difficult for foreign startups to
starting up in Japan
Three main obstacles
1．Differences in culture, especially business customs
2．Language barrier
3. Complexity of procedures
1．Differences in culture, especially business customs
Japan has its own unique business customs.
There is still a strong top-down approach especially in large companies.
Japanese companies take a long time to make decisions, and this can be perceived as a slow pace of work when compared to overseas companies.
On the flip side, though, it may be a good thing that they are cautious and carefully plan their business in advance, reducing the risk of failure.
There are also differences in business manners.
Laws may differ. For example, in the content industry, “broadcasting standards regulations” differ in each country, which may result in Japanese content (i.e., products) not being able to be broadcast (i.e., sold) overseas.
Since I was engaged in the content sales for nine years, I had to be aware of the laws and regulations of the countries I was dealing with when selling Japanese content to media platforms around the world.
What we usually think of as “common sense” often turns out to be not so when we are in different countries.
In addition to conducting market research, it is very important to understand the national character and culture, and to know the differences in business manners.
2．Language barrier
Japan is an island nation with a single ethnic group.
The necessity of using a language other than Japanese in daily life is low.
Furthermore, and I believe that language can be one of the reasons, few people go abroad.
Consequently, it is said that only 7% of the Japanese can speak practical English.
When it comes to business, a high level of specialization is involved and English communication skills are required to an even higher level, which means that only a handful of people are equipped with English skills that can be used in business scenes.
The “communication skills” with understanding cultures and customs to overcome barriers are essential and key in the global business scene.
When setting up an office in Japan, it is important to secure human resources with these skills.
３．Complexity of procedures
Visa procedures, incorporation procedures, insurance, opening a corporate bank account, tax reporting, office rental procedures, finding housing and office space, and other paperwork that foreign companies must go through to incorporate in Japan are significant administrative hurdles. Although it is possible to receive support at start-up support offices in various cities, it is often necessary to contact each office individually, prepare documents on your own... and repeat the process. As a result, at this point, many people find themselves at a loss as to what to ask, who to ask, and what to do.
“You do the rest on your own.”
In other words, there is no “companion” to run the whole race with you in the process and that could be very challenging.
Foreign companies that run into these obstacles can get “lost” along the way, and even if they successfully start a business in Japan, some companies stay in Japan for a year or two and then withdraw.
We believe it is important for overseas start-ups to know about these issues before attempting to enter the Japanese market, and to have a solution to deal with them.
My friend's Case
I actually asked an American friend of mine who incorporated in Japan how his start-up process went. (Incorporated in Osaka ｜Content industry｜Bilingual English-Japanese)
Ｑ．What type of visa do you have?
I started with the Culture Visa, then transitioned to the Startup Visa and now I have the Business Manager Visa. My father received the Business Manager in 1991 which bring my whole family to Japan. I think me and father is first in Japan history to do that, lol. So my childhood + adult = 6 visas in Japan.
Ｑ．What were the top 3 difficulties and obstacles you faced during the process of registering your company in Japan?
１．Synchronizing Visa and Company Registration Timelines:
Managing the visa application process and company registration can be tricky since they occur almost simultaneously, often with overlapping requirements.
２．Office Lease Timing:
Securing an office lease is required for the visa application, but landlords may hesitate without a completed company registration. Navigating this timing issue can be challenging, making it highly beneficial—if not critical—to be in Japan on a startup visa for smoother coordination of the business manager visa and company registration. The same goes for your personal home rental, just give yourself more time to find the right fit and contact rental agents who cater to overseas students and professionals.
３．Engaging Professionals:
It's wise to work with an administrative scrivener or bilingual local lawyer during the startup visa process and engage a tax lawyer once the business manager visa and corporate bank account are established. These professionals can help clarify the process, which is often not fully detailed or explained ahead of time.
Practicle Advice from my friend
Overall, you learn and adapt as you proceed, encountering unexpected steps and rules along the way. While it may feel overwhelming, allowing yourself sufficient time in Japan makes the process manageable. Regional startup offices are incredibly helpful and continuously improving, as they adapt to the unique needs of each foreign applicant.
The process depends on the city, with some areas offering more English support than others. Overall, I observed that the process sometimes requires entrepreneurs to solve issues independently and we are required to go find answers in-person, or over the phone. There is not an email address to contact for every issue, and what’s available publicly online in English might not be the full situation. However, I view this challenge as a valuable step for new startups, as successfully navigating the visa process builds confidence and readiness for other tasks like opening business accounts or personal memberships in Japan.
Established overseas companies can outsource everything for a fee, whereas young startups must handle more themselves. For those who want full assistance, hiring an administrative scrivener/immigration lawyer and a tax lawyer, costing around $3,000–$4,000 USD, is a great option.
Obtaining a visa and starting a company are among life's most significant and stressful experiences, and doing so in a foreign country adds emotional challenges so just try to trust this process, and be clear and specific about your business when working with all the new city and startup workers you’ll interact with in Japan; from when you first apply for a startup visa all the way until you are living here and setting up everything. I met so many generous and helpful people at every step. Just take it one step at a time and give yourself as much time as you can.
Toward the Growth of Japan's Startup Ecosystem
In attracting foreign start-ups and companies to Japan, Japan still has many issues to resolve in terms of its reception system. It is important for us to continue to work on these issues so that as many good overseas companies and talented people as possible can do business in Japan.
We, STARTUPPERS, would like to cover on startup support organizations, companies, and people who are working to solve these issues in the startup ecosystem and to introduce and connect them to the rest of the world.
Article credited to STARTUPPERS
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