Why Do Business In Japan?

Japan: A Key Market for International Business

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 2023).

Japan is the 5th largest exporter and 4th largest importer of global goods (Santander Trade Markets, 2023). 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, 2023)

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 2021, 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 2023: Steve Crane OBE



Questions about doing business in Japan?