Background

There are numerous reasons for wishing to do business with or in Japan: According to data from the Japan External Trade Organization (JETRO), Japan has enormous potential to become a regional centre for R&D in Asia, and enjoys an unparalleled reputation for excellence in R&D among Western and Asian businesses. Second, Japan plays an important role as a “bridge nation” between the East and the West, connecting Asian enterprises and markets with the West. Third, Japan enjoys a reputation as a trend setter due to its status as a cultural superpower and Japanese consumers’ sensitivity to fashion. This makes Japan the ideal test market before entering other Asian markets, owing to the fact that Japan heavily influences trends for fashion and entertainment in the rest of the Asia-Pacific region.

JETRO, Investing in Japan, 2013

Additionally, Shinzo Abe’s government is providing incentives to companies which bring high value-added activities such as R&D and regional headquarters business. Key to this strategy is a newly unveiled 7% effective corporate tax cut lasting for 5 years, which will reduce corporate tax from 38% to 31%. Combined with special local government tax breaks, this figure is further reduced to 20%. In tandem with this, the government has accelerated visa-issuing procedures and if offering subsidies to international companies in order to cover some of the costs of establishing themselves in Japan.

Financial Times, Japan Teetering on the Edge of Recovery, 2013

Japan is a particularly attractive market for Small and Medium Enterprises (SMEs). SMEs are the backbone of the Japanese economy, accounting for 99.7% of all enterprises and 70% of all employees in Japan. Famous Japanese multinationals such as Toyota, Honda and Sony all began as small regional companies and the majority of products made by large enterprises are made up of parts produced by SME subcontractors. SMEs are therefore the lifeblood of the Japanese economy, and can play a major role in the revitalization of the Japanese economy and the creation of future employment opportunities.

Organization for SMEs and Regional Innovation Japan, SME Support Japan, 2012

Latest update: November 2013

Picture: Ground-plan of the Dutch trade-post on the island Dejima at Nagasaki, 1824-25
Picture copyright: Wikipedia of public domain