5 Reasons Why Your Business Needs Japanese Standard Rails？

Expanding your business into Japan offers a wealth of opportunities and advantages. Known for its robust economy, technological advancements, and strategic location, Japan provides a fertile ground for growth and innovation.

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In this post, we&#;ll explore the top reasons why doing business in Japan is beneficial, from the country&#;s advanced infrastructure and skilled workforce to the supportive government policies and rich cultural experiences. Each section delves into the unique aspects that make Japan an ideal destination for foreign businesses, showcasing how weConnect can assist you in navigating this dynamic market.

1. Robust Economy and Market Potential

Japan, the world&#;s fourth-largest economy with a nominal GDP of $4.26 trillion, offers substantial market potential for foreign businesses. With a high GDP per capita of $34,001, Japan&#;s 125 million population exhibits significant purchasing power, making it an attractive consumer market.

The Japanese economy is characterized by stability and moderate growth, averaging 0.7% annually over the past decade. Despite facing economic challenges, Japan has maintained fiscal discipline and low inflation, with the Bank of Japan&#;s accommodative policies supporting growth.

The service sector dominates Japan&#;s economy, accounting for 70% of GDP, reflecting a mature and diverse market. Opportunities abound in high-tech industries such as motor vehicles, electronics, and machinery, positioning Japan as a leader in global innovation.

Moreover, recent wage increases are expected to boost consumer spending, enhancing market potential for businesses. Japan&#;s strategic location in East Asia also provides access to a broader regional market, making it an ideal hub for international trade and operations.

In summary, Japan&#;s robust economy, substantial consumer market, and strategic location offer numerous advantages for foreign businesses looking to expand and thrive in the region.

2. Home to High-Growth Industries

Japan&#;s economy is known for its diverse and rapidly evolving landscape, with several industries experiencing notable growth. These sectors provide ample opportunities for foreign investors and businesses seeking to expand their footprint. Here are four of the fastest-growing industries in Japan:

E-Commerce and Digital Platforms: The e-commerce sector in Japan is booming, driven by a shift towards online shopping and digital services. The rise of innovative companies like Campfire, a leading crowdfunding platform, and Nature, which offers smart home energy solutions, exemplifies this trend. Additionally, Japan&#;s robust digital infrastructure and high internet penetration rate make it an ideal market for e-commerce ventures. The pandemic has further accelerated this growth, with more consumers preferring the convenience of online shopping.

Gaming and Digital Entertainment: Japan&#;s gaming industry is experiencing unprecedented growth, especially in online and mobile gaming. Companies such as Playco, known for developing instant-play games, are pioneering new trends in the gaming world. Beyond gaming, digital entertainment, including streaming services and content creation for platforms like YouTube and Twitch, is expanding rapidly. Japan&#;s long-standing reputation in gaming and its culture of technological enthusiasm create a fertile ground for innovation and growth in this sector.

Internet of Things (IoT) and Robotics: The IoT and robotics industries are at the forefront of Japan&#;s technological advancement. Companies like SORACOM, providing comprehensive IoT solutions, and TELEXISTENCE Inc., which focuses on advanced robotics, highlight the significant progress in these fields. Japan&#;s emphasis on integrating IoT technology into everyday life and its leadership in robotics innovation position it as a global hub for these technologies. The government&#;s strategic initiatives to promote AI and machine learning further bolster this growth, aiming to solve societal challenges through technology.

Personal Finance and FinTech: The FinTech sector in Japan is rapidly expanding, driven by a surge in demand for digital financial services. Innovative platforms for personal finance management and investment, such as those leveraging AI for personalized financial advice, are gaining popularity. The rise of digital banking and mobile payment solutions reflects the country&#;s shift towards cashless transactions. Japan&#;s regulatory environment is becoming increasingly supportive of FinTech innovations, making it an attractive market for financial technology companies.

3. High-Quality Infrastructure

Japan&#;s infrastructure is renowned for its efficiency and reliability, making it an ideal environment for foreign businesses. The country has an extensive transportation network that includes roads, highways, railways, subways, airports, and harbors, ensuring smooth logistics and distribution of goods and services across the nation&#;&#;&#;&#;. Public transportation is highly punctual and reliable, supporting both urban and rural connectivity&#;&#;.

Japan also excels in telecommunications, with widespread availability of high-speed internet and advanced 5G networks. This robust digital infrastructure supports the integration of IoT and AI technologies, fostering innovation in smart cities and industries&#;&#;&#;&#;.

Utilities in Japan are consistently reliable, with resilient infrastructure ensuring uninterrupted electricity, water, and gas services even during natural disasters&#;&#;. The government&#;s strategic investment in research and development, exemplified by the Integrated Innovation Strategy , further enhances the quality of infrastructure and services, promoting sustainable growth&#;&#;.

For businesses looking to expand into Japan, these elements of high-quality infrastructure provide a strong foundation for efficient and innovative operations.

4. Skilled Workforce 

Japan&#;s education system is highly regarded globally, with significant investment ensuring high-quality outcomes. The country spends 4.1% of its GDP on education, with an annual expenditure of $13,006 per student, surpassing the OECD average&#;&#;. Vocational training and higher education are prioritized, with 35% of tertiary education entrants enrolling in short-cycle programs&#;&#;.

Japan excels in engineering, technology, and manufacturing. The country faces a digital talent gap, particularly in software-related fields, underscoring the need for enhanced digital skills development&#;&#;. The manufacturing sector, a critical part of Japan&#;s economy, employs the largest percentage of foreign workers&#;&#;.

The Japanese workforce is known for its strong work ethic and productivity. Japan has one of the lowest unemployment rates globally, at 2.97%&#;&#;. Despite an aging population, Japan maintains a culture of long-term employment and company loyalty, contributing to economic stability and growth&#;&#;.

These attributes make Japan&#;s workforce highly skilled, reliable, and efficient, providing a strong foundation for businesses looking to expand into the country.

5. Strategic Location

Japan&#;s strategic location in East Asia positions it as an ideal gateway to other Asian markets. Its proximity to major economies like China and South Korea enhances its appeal for businesses looking to expand their reach in the region&#;&#;&#;&#;.

• Gateway to Asian Markets: Japan&#;s geographical position in the Asia-Pacific region provides direct access to the dynamic and rapidly growing markets of Southeast Asia, making it a critical hub for trade and investment in the region&#;&#;.

• Proximity to Major Economies: Japan&#;s close proximity to economic powerhouses such as China and South Korea facilitates easier and faster trade routes. This proximity allows businesses to effectively manage supply chains and distribution networks, reducing transportation costs and lead times&#;&#;.

• Benefits for Export-Oriented Businesses: For export-oriented businesses, Japan offers numerous advantages, including advanced infrastructure, efficient logistics, and a strong network of ports and airports. These factors support smooth and efficient export operations, helping businesses to capitalize on the growing consumer markets in Asia&#;&#;.

By leveraging Japan&#;s strategic location, businesses can gain a competitive edge in accessing and serving the diverse and expanding markets across Asia.

6. Government Incentives and Support

Japan offers robust government support and incentives to attract foreign businesses, making it an attractive destination for investment and expansion.

Supportive Policies:

• Favorable Business Environment: Japan provides a stable and transparent regulatory framework, with initiatives like the &#;Invest Japan Business Support Centers (IBSC)&#; offering one-stop support for all businesses.
• Simplified Regulatory Procedures: The &#;Invest Japan Offices&#; within relevant ministries and agencies serve as single contact points to streamline the process for foreign direct investment and international businesses&#;&#;.
• Open Investment Climate: Various national and local incentives encourage investment, promoting a welcoming business environment&#;&#;. The incentives are run by different government authorities within Japan, and range from grants for specific activities to tax reductions and exemptions for onboarding employees, purchasing commercial property, and more.

Tax Incentives:

• Reduced Corporate Tax Rates: Special zones such as National Strategic Special Zones offer reduced corporate tax rates and other financial support to businesses operating within these areas&#;.
• Special Economic Zones: Areas like Comprehensive Special Zones and Special Zones for Reconstruction provide tax credits and deregulation benefits for companies that set up operations there.
• R&D Tax Credits: The Japanese government offers substantial tax credits for research and development activities, helping businesses innovate while reducing tax burdens&#;&#;.

Grants and Subsidies:

• Financial Assistance for Startups: Various programs provide financial support to startups, such as the Financial Start-Up Support Program which offers up to 20 million yen to cover the costs of establishing a financial services business in Japan&#;&#;.
• Subsidies for Innovation: The government offers various subsidies for projects that promote innovation, including support for establishing regional headquarters and R&D centers.
• Support for Sustainable Projects: Japan provides grants for businesses involved in sustainability initiatives, such as those targeting climate change adaptation and high-performance semiconductor production&#;.

JETRO Support:

• Market Entry Assistance: JETRO (Japan External Trade Organization) offers extensive services to help businesses enter the Japanese market, including temporary office space, information on investment procedures, and market insights&#;.
• Business Matching Services: Through programs like J-Bridge, JETRO facilitates partnerships between Japanese and foreign companies, enhancing opportunities for collaboration and growth&#;&#;.

Additional Programs and Initiatives

• Regional Development Subsidies: Local governments provide various subsidies to support regional development, such as tax deductions for machinery or property so long as you can show through an approved business plan that it will stimulate local growth&#;&#;.
• Disaster Recovery Incentives: Special incentives are available for businesses setting up in areas recovering from natural disasters, including tax breaks and subsidies&#;&#;.

Sector-Specific Support:

• SME Enhancement Act: Provides incentives for small and medium-sized enterprises (SMEs) to invest in productivity-enhancing equipment and disaster prevention facilities, offering special depreciation rates and tax deductions&#; (OOSGA)&#;.
• Climate Change Initiatives: The Bank of Japan offers zero-interest funds for projects targeting climate change adaptation, available until March .&#;

7. Stable and Business-Friendly Environment

Japan offers a stable and business-friendly environment that is highly attractive to foreign investors. The country enjoys political stability, with a well-established legal framework that ensures the rule of law and protects business interests. This stability is a cornerstone of Japan&#;s appeal, providing a reliable backdrop for long-term business planning and operations&#;&#;&#;&#;.

Japan is also known for its transparency and ease of doing business. The government has implemented numerous reforms to streamline administrative procedures and reduce the bureaucratic burden on businesses. These efforts are reflected in Japan&#;s high rankings in global ease of doing business indices, highlighting the country&#;s commitment to creating a conducive environment for both local and foreign enterprises&#;&#;.

Intellectual property protection in Japan is robust, offering strong safeguards for patents, trademarks, and copyrights. The legal framework is designed to encourage innovation and protect the intellectual assets of companies, ensuring that businesses can operate with confidence that their proprietary technologies and products are secure&#;&#;. This combination of political stability, transparency, and strong intellectual property laws makes Japan an ideal destination for businesses looking to expand into a reliable and supportive market.

8. Cultural Richness and Lifestyle

Although you may have to adjust to a different business culture in Japan, the country as a whole offers an extraordinary quality of life, making it a vibrant and appealing destination for expats and their families. The country seamlessly blends modern amenities with rich cultural heritage, ensuring a unique living experience. From the bustling, high-tech cities to serene rural landscapes, Japan&#;s diversity caters to a wide range of lifestyles. Clean, efficient public services and a low crime rate contribute to a safe, comfortable environment where residents can enjoy peace of mind.

Cultural experiences in Japan are unparalleled. The country is renowned for its festivals, traditional arts, and culinary delights. Whether it&#;s the cherry blossom season, sumo wrestling tournaments, or visiting ancient temples and shrines, there&#;s always something exciting to explore. The emphasis on work-life balance means that people have ample opportunity to engage in leisure activities and family time. Many companies are adopting more flexible work schedules, encouraging employees to maintain a healthy balance between their professional and personal lives.

For expats, Japan is particularly welcoming. International schools, expat communities, and support services ensure that newcomers can easily adapt and thrive. The healthcare system is world-class, and public transportation is incredibly efficient, making daily life convenient and enjoyable. Families benefit from Japan&#;s educational excellence and child-friendly amenities, making it an ideal place to raise children. Overall, Japan&#;s cultural richness, lifestyle benefits, and supportive environment create a fantastic backdrop for anyone looking to experience life in this dynamic country.

9. weConnect&#;s Expertise in Company Setup

weConnect specializes in simplifying the company setup process in Japan (setup is as fast as 8 business days), offering a comprehensive suite of services designed to meet the unique needs of foreign businesses. Our team of experts handles everything from company registration, legal compliance, and tax planning to HR management and office setup. We streamline the often complex process of establishing a business in Japan, ensuring that every legal and administrative requirement is met efficiently and accurately.

One of the key benefits of using weConnect is our deep expertise and speed. With years of experience in the Japanese market, weConnect navigates the regulatory landscape with ease, significantly reducing the time it takes to get your business up and running. 

Our team is proficient in both local regulations and international business practices, providing valuable insights and guidance. Additionally, our native English support ensures clear communication and understanding, eliminating language barriers and making the process smooth and stress-free.

Want more information on Japanese Standard Rails? Feel free to contact us.

Our clients appreciate the peace of mind that comes from knowing their business setup is in capable hands, allowing them to focus on their core operations and strategic goals. With weConnect, you gain a trusted partner dedicated to your success in Japan.

10. Tailored Solutions for Different Business Needs

weConnect offers customized solutions to cater to diverse business needs, ensuring a smooth entry into the Japanese market. Here&#;s how weConnect can assist you:

Different Types of Company Setups:

• Kabushiki Kaisha (KK): Ideal for large r corporations setting up in Japan, offering credibility and flexibility.
• Godo Kaisha (GK): Suitable for small to medium enterprises, with simpler regulatory requirements.  US companies of all sizes may find the option to categorize the GK as a disregarded entity from the perspective of US tax laws advantageous to their overall tax planning.
• Branch Office: Perfect for businesses wanting a presence in Japan without forming a new legal entity.

Personalized Approach:

• Tailored Services: We understand that each business is unique, and we provide customized advice and services to meet your specific requirements.
• Client-Centric: From the initial consultation to final setup, our team works closely with you, handling all necessary paperwork and providing expert guidance.
• Hands-On Support: Ensures a seamless and efficient setup process, minimizing hassle.

Cost-Effective Pricing and Comprehensive Support:

• Competitive Prices: Our services are priced competitively, ensuring businesses of all sizes can afford to enter the Japanese market.
• Transparent Pricing: No hidden fees, offering excellent value for your investment.
• All-Inclusive Support: Our extensive network covers legal, financial, and administrative assistance, ensuring all your business setup needs are met.

Choosing weConnect means leveraging our expertise, personalized service, and cost-effective solutions, all designed to help your business thrive in Japan.

Why Partnering with weConnect is Your Best Move

Choosing to expand into Japan can be a game-changer for your business, and with weConnect, you have a trusted partner to guide you every step of the way. Our extensive experience and personalized approach ensure that your company setup is smooth and efficient, allowing you to focus on what matters most &#; growing your business.

At weConnect, we understand the complexities of the Japanese market and offer tailored solutions to meet your specific needs. Whether you&#;re establishing a Kabushiki Kaisha (KK), a Godo Kaisha (GK), or a branch office, our team provides expert guidance, comprehensive support, and cost-effective services. We pride ourselves on our deep expertise, speed, and native English support, ensuring clear communication and a hassle-free process.

But don&#;t just take our word for it. Our satisfied clients consistently praise our professionalism, reliability, and the peace of mind that comes with knowing their business setup is in capable hands.

Ready to take the next step? Contact weConnect today and let us help you unlock the full potential of the Japanese market. Your success in Japan starts with the right partner &#; choose weConnect for a seamless and successful business expansion.

Japan is the world&#;s third largest economy after the US and China.

The Tokyo Stock Exchange (TSE) is the largest stock exchange in Asia, with more than 3,890 companies listed and a combined market cap greater than $5.6 trillion (January ).

Japan is the 5th largest exporter and 4th largest importer of global goods (Santander Trade Markets, ). Japan&#;s economy relies heavily on global trade, maintaining key trade relationships with various countries.

Global trade accounts for 37% of the country&#;s GDP (World Bank, )

Japan is the second largest computer and telecommunications market in the world, and is highly advanced in technology and innovation, specifically in electronics, robotics, automotive manufacturing, and infrastructure development.

Japan is world-leading in green technology and investing in renewable energy. In , Japan ranked Asia&#;s highest country on the Green Growth Index. 

The Japanese market is characterised by consumers with high levels of disposable income who are drawn to premium, high-end goods and services.

Japanese companies exhibit a global outlook and a willingness to invest long-term in viable products and services.

Japan is synonymous with quality and innovation, and this goes hand-in-hand with Japanese companies&#; commitment and loyalty to business partners. Furthermore, for many foreign companies, Japan has also become the place for development of new products and concepts.

What are the advantages of doing business in Japan?

There are strategic advantages and cost advantages in doing business in Japan:

A stable business environment, possessing strong protection of intellectual property and a reliable financial system, provides a secure foundation for business operations.

Access to a highly skilled and educated workforce. Japan has the 5th highest level of adult education globally and the highest of any G7 country.

Japan has a highly developed, modern infrastructure of roads, highways, railroads, subways, airports, harbours, warehouses, and telecommunications for the distribution of all types of goods and services.

Japan has over 20 ports and 5 international airports. Tokyo International Airport (HND) and Narita International Airport (NRT) are the two major airports in the Tokyo region while Osaka International Airport (ITM) and Kansai International Airport (KIX) are the two major airports serving the Osaka region of Japan. Japan&#;s ports, airports and import processing are generally well organised and efficient.

It is possible to set up a business entity in Japan in just 14 days and successful business in Japan can generate a significant proportion of global profits within 3 &#; 5 years. Use of JETRO&#;s One-Stop Business Establishment Services can cut the time required to establish a business in Japan down to 4 days.

Conducting business in Japan offers access to the local market and the broader Asia-Pacific region.

The highly innovative Japanese environment offers collaboration with Japanese counterparts, which could lead to technological breakthroughs and product development.

If you succeed in Japan, you can succeed anywhere as it means you have developed a product or a service that has met the high expectations of the discerning Japanese market that has extremely high standards for quality.  

Listen to our Podcast discussion with Alex Hughes, CEO of Rutherfords to learn all the tips and tricks of how she succeeded in the Japanese market with the Rutherfords range of luxury hand stitched bridle leather bags.

Is Japan a challenging market to break Into?

International companies may be concerned about Japan&#;s complicated distribution channels, a high concentration of domestic competitors and Japan&#;s unique business culture.

However, thanks to the internet, a lack of physical geographical boundaries means it&#;s easier to reach customers in Japan than ever before.

In addition, global payment gateways and mobile payment solutions offer convenient ways to receive funds in different currencies.

While Japan does have a well-established domestic market in many sectors, there is an exoticness and status associated with Western brands that drives Japanese consumer demand for Western products and services.

Moreover, Japan&#;s business culture isn&#;t as challenging as many businesses believe. Patience, integrity, respect for their business customs and a long-term view to business success are the main ingredients to succeed in Japan.

The Language and cultural differences can seem like a barrier for some foreign businesses. However, our experienced team of local Japanese business experts and partners specialise in bridging this gap. Contact us for further help.

Next Steps?

Contact us at Export to Japan if you require further help entering the Japanese market.

UK companies wishing to submit a request to the Department for Business and Trade ESS service, see here.

Last updated November : Steve Crane OBE

 

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