Background

There are numerous reasons for wishing to do business with or in Japan: according to the Japan External Trade Organization (JETRO), Japan is a growing economy, a sophisticated market and an innovative hub. 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. Japan also plays an important role as a “bridge nation” between the East and the West, connecting Asian enterprises and markets with the West. Finally, 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

Additionally, Japan’s government has provided incentives to companies bringing high value-added activities such as R&D and regional headquarters business. Among the latest measures unveiled by the 2020 tax reform, one may cite the "Open innovation tax incentives" and the "Tax incentives for 5G technology". In tandem with this, the government has accelerated visa-issuing procedures and is offering subsidies to international companies in order to cover some of the costs of establishing themselves in Japan.

JETRO, Incentive Programs
MOF, Tax Reform
EY, Japan release 2020 tax reform outline, 2019

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
Small and Medium Enterprise Agency-METI, Support for SMEs' New Business Activities in Japan

Latest update: October 2020

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