JAPAN ENTRY for Startups from Overseas
Japanese consumers are known to be loyal to the brands and products they once choose and that meet with their expectations, and do not typically easily switch. Therefore it can be very important and lucrative to be the first-mover in an industry (eg eBay pulling out of Japan).
2. High Quality
In Japan, the quality expectations both from the customers and partners are very high. This means that if you and your product/service development process in Japan passes the tests, this will help your development process to be a success in other markets as well.
3. Alliance opportunity for Open Innovation
The Japanese MNCs are eagar to collaborate with startups for their open innovation projects.
4. Market opportunity
Especially in manufacturing industry and DX area.
COVID-19 has accelerated interest in Digital Transformation (DX) across industries due changed behaviour, which opens opportunities for companies. There are also new tax benefits introduced by the government to work together with smaller companies and startups.
5. Legacy structures that can be innovated
Some industries such as finance still have plenty of legacy structures that can be innovated
6. Governmental support
Japanese government supports ‘Open Innovation’. Likewise, certain countries are putting a lot of effort into building governmental support systems for smaller companies as well (eg. Nordic Innovation House).
7. The 3rd largest economy
Japan is the 3rd largest economy by GDP, which means that even a niche market can be lucrative for companies.
Japan still has a solid manufacturing/ industrial base, good for B2B technology startups.
Japanese people are honest, polite, diligent in general. Trust is the most important for building the right team and doing the business in Japan.
10. Access to HQ in Tokyo
Most large corporations in Japan have their HQ in Tokyo. Easy to meet them in person, if you come to Tokyo. Transportation in Tokyo is very convenient.
11. No Time difference
Easy to have online meetings for the long term. (eg. Australia)
12. Branch office
Easy to establish branch office and subsidiary
13. Blue Ocean
Due to the uniqueness of the Japanese market, sometimes it’s possible that services and products that face severe competition in the Western countries still find a blue ocean. If the overseas startups find good Japanese business partners, the relationship tends to last for long, meaning stable businesses.
14. Long term Relationship
Japanese place a high value on relationships and if you develop a strong relationship it carries forward many years into the future. Product loyalty is higher than other markets. Japanese customers are not as quick to switch to different products.
Finding a good Japanese partner can lead into a lifelong partnership with the two companies. There typically isn’t a focus on the immediate profits but more in the long term value.
Japanese logistics are exceptional, perhaps the best in the world. Product moves very efficiently in Japan and shipping within Japan is more economical than most large industrialized countries.
Companies coming to Japan should use JETRO’s market entry incentives. They include access to shared office space for a period of time, help with incorporation, etc. JETRO is very helpful.
17. Large population
Japan has many kinds of customers for many industries.
18. Universities has VC Funds
Some Universities has VC funds in Japan, opportunity to collaborate with those Universities, so can get R&D and capital access
19. Good Market
Good market for Mobility, Digital Health, Digital Marketing Startups from Israel and other countries. Mobility startups to collaborate with Japanese car companies. Aging society for solving problems by digital health. Now trend is ‘digital transformation (DX)’ in Japan.
20. Disruptive technology and services
Opportunity to bring the new service which Japan doesn’t have yet.
21. Universal healthcare system
Universal healthcare system is great and fair for everyone in Japan.
It is not difficult to get a work visa compared to the US practice.
23. Trend of Entrepreneurship & Innovation
There are so many accelerators to support startups, Universities teach entrepreneurship and innovation in Japan now. i University (iU) opened in Tokyo in 2020, and this new type of University aims to produce all students starting their own startups.
Advantages for Medical Device Company
1. Second largest single country medical device market
2. Universal healthcare system with product specific reimbursement (ie fixed price so in theory best product wins market share)
3. Transparent regulatory process
4. Japanese data is well regarded around the world, so data from Japanese studies can be used around the world
5. Quality and professional distributors who can effectively manage the entire country (many other markets are regionalized (India for example) so have to have lots of distributors to cover the whole country
Japan Entry Incubation and Event
CIC Tokyo (Cambridge Innovation Center)
LINK-J (Life Science Innovation Network Japan)
Japan Entry Innovation Event
Hello Tomorrow Japan (deep tech event from France)
Japan Entry Startup Program
Startupbootcamp Scale Osaka, helping startups from overseas to enter Japan market to meet potential partners for PoC, marketing, fund raising, etc
1. Language Barrier
Many foreigners overestimate English-language capability of the Japanese. Although each city has advantageous offerings to startups or small companies establishing subsidiaries there, which are also applicable for foreign startups, all are written in Japanese. To succeed in Japan, thorough localization or finding trustful local partners are must.
2. Business Culture
Japanese business culture, must understand the business culture in Japan
3. Time of entry
It takes quite a long time to win a first customer especially when working with big corporations. This is not only for foreign startups but in general.
4. Investment culture gap
Some CVC, who are interested in finding alliance partners, would still think you are subcontractors. Getting investment by VC, CVC isn’t easy – compete against domestic startups. Japanese Investors tend to invest in Japanese startups.
Hard to make a bank account in a bank. Have to go to the bank, not the online process.
Getting a loan by bank isn’t easy but once your business is well established in Japan, it will be easier.
6. Re-think about your business model for Japan Market
You have to re-think about your business model, you might lose your original identity for the Japan Market. You have to be more flexible for your brand to reach more consumers in Japan. (eg. make a new app for Japan Market : co-design with the Japanese corporations )
7. Long decision making process
Internal Process in MNCs Long decision making process. Due to hierarchy based decision making, it takes a long time. The person sitting at the negotiation table usually is a domain expert without authority to make decisions.Long decision making process. Relatively getting quicker for POC, but long process after that. Unless you deal with company owners, most Japanese executives do not make quick decisions due to their risk evasiveness.
8. First Penguin Disadvantage
Japanese aren’t looking for the first mover, but something already known to work. Winning a first customer is hard. But once you win, even their competitor might be interested in you.
9. Saving money culture
Japan is rich but doesn’t spend.
Japanese companies save a lot of money but are hesitated to spend
Self sponsored Visa is necessary even starting in a small scale. However many companies prohibit side job but keeping Visa is necessary for foreigners to stay in Japan. As a result, trying out if business works is not possible. Recently Startup Visa getting more popular for foreign startups.
12. Finding local talents
Many says finding Japanese co-founder is one of the key to success in Japan, but many Japanese are not comfortable working with foreigner.
13. Culture adjustment
Because Japan isn’t multicultural place, so it is tough for Japanese to understand foreign culture and vice versa. Often foreign companies try to start branch companies in Japan and leave that happens because the top try to go with their culture they built and often do not try to adjust Japanese culture. For any country, often top from foreign country has difficulty to build trust with local workers then fail.
Japanese are detail orientated and careful. Trust is everything and “Nemawashi ” is important. Nemawashi is informal process of quietly laying the foundation for some proposed change or project, by talking to the people concerned, gathering support and feedback, and so forth.
15. Lay off
Employees are strongly protected by labor laws and judicial precedents (In general, it is very difficult to fire an employee). It is recommended that you consult with a specialist before hiring an employee.
In general, Japanese laws and regulations are conservative and inflexible. As a result, it can be difficult to overcome regulatory hurdles when a new service enters the Japanese market.
We appreciate our great friends, who helped us to make this list of Japan Entry
Director, Science, Technology and Innovation, Cabinet Office, Government of Japan
Director, Innovation Promotion Div. Innovation and Intellectual Property Dept. JETRO
Takanari Yamashita Chief Executive Director, JETRO San Francisco Fumiaki Ikeno Co-Founder, US-Japan MedTech Frontiers
Chief Executive Director, JETRO San Francisco
Co-Founder, US-Japan MedTech Frontiers
Tak Umezawa Chairman, CIC Japan Motoki Kurita First Secretary, Commercial Attache, Embassy of Japan in Israel
Chairman, CIC Japan
First Secretary, Commercial Attache, Embassy of Japan in Israel
Masato Tanaka Attorney, TMI Associates, Attorney admitted to practice in Japan, California, and Israel Yuriko Matsuno Executive Director, Luxembourg Trade and Investment Tokyo
Attorney, TMI Associates, Attorney admitted to practice in Japan, California, and Israel
Executive Director, Luxembourg Trade and Investment Tokyo
Osamu Katsuo Senior Vice President, New Listings, Tokyo Stock Exchange Hitomi Shibaki Director, Innovation Leaders Summit
Senior Vice President, New Listings, Tokyo Stock Exchange
Director, Innovation Leaders Summit
Niklas Karvonen Community Director, Nordic Innovation House Tokyo Robert E. Claar CEO & Co-Founder, Vorpal Technologies
Community Director, Nordic Innovation House Tokyo
Robert E. Claar
CEO & Co-Founder, Vorpal Technologies
Fuyuki Yamaguchi Managing Partner, Abies Ventures Shigeru Sumitomo Representative Director, CONSELUX Corp
Managing Partner, Abies Ventures
Representative Director, CONSELUX Corp
Hiro Sato Founder, Pendroid, and Former Fuji Xerox Joshua V Flannery CEO, Rainmaking Innovation Japan Director, Startupbootcamp Scale Osaka
Founder, Pendroid, and Former Fuji Xerox
Joshua V Flannery
CEO, Rainmaking Innovation Japan
Director, Startupbootcamp Scale Osaka
Kirk Zeller Co-Founder and Board Member, MedMarket Access, LLC Masayuki Kimura COO Board Dirctor Deloitte Tohmatsu Venture Support in Silicon Valley
Co-Founder and Board Member, MedMarket Access, LLC
COO Board Dirctor
Deloitte Tohmatsu Venture Support in Silicon Valley
Kohei Yamamoto Senior Manager, US Incubation Office & Group CEO office Rakuten USA Chika Yamamoto Wolfson, CEO, Crossbie
Senior Manager, US Incubation Office & Group CEO office Rakuten USA
Chika Yamamoto Wolfson,
Tetsuo Miyajima Secretary General, i University Michimasa Naka Founder & CEO, Boardwalk Capital Inc.
Secretary General, i University
Founder & CEO, Boardwalk Capital Inc.
Akihiko Soyama President and CEO, LINK-J Tak Adachi Queensland Trade and Investment Commissioner Japan
President and CEO, LINK-J
Queensland Trade and Investment Commissioner Japan
Melissa Inooka Director, Queensland Trade and Investment Commissioner Japan Jamie Kats Business Support Officer, Queensland Trade and Investment Commissioner Japan
Director, Queensland Trade and Investment Commissioner Japan
Business Support Officer, Queensland Trade and Investment Commissioner Japan
Tamami Ushiki Director, Startup GRIND TOKYO Moeko Suzuki President, Startup Lady Japan CEO, Tailor Innovations Inc.
Director, Startup GRIND TOKYO
President, Startup Lady Japan
CEO, Tailor Innovations Inc.
Japan Advisor, Co-Founder, Hello Tomorrow Japan
Project Director, Hello Tomorrow Japan
John Kojiro Moriwaka
CEO, Silicon Valley Ventures
Director, Startup GRIND FUKUOKA
Official Columnist, Forbes JAPAN
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