JAPAN ENTRY for Startups from Overseas

 

Japanese companies can be a very appealing collaboration partner for startups. Besides wealth, they are known for strengths in combining technologies for the mass production of new products, a broad customer base, and global logistics. With their networks and global reach, a Japanese partner can help startups to grow in the US, Asia and other parts of the world.
 
 
Naturally Japanese companies are very familiar with their home market. Some of the typical hurdles startups seeking rapid growth in Japan face include regulations, different business practices and language barriers. A Japanese partner can help the startups to navigate through these challenges.
 
 
Japan is also characterized as a single market – the 3rd largest GDP in the world operates with one regulation, one business and one communication style. Understanding how to navigate and operate in this one system therefore gives access to a large market. Entering the Japanese market with a partner who is already present abroad, such as in Silicon Valley, can make the entry easier. Another characteristic of the Japanese market is that many industries have very limited amount of competitors.
 
 
To sum it up, Japanese companies are powerful partners that can help startups to scale their businesses.
 
 
We have interviewed some experts about the advantages and disadvantages of Japan Entry for overseas startups. We would like you to consider entering the Japan Market and we would like to collaborate together.

 

 

 

Advantages 

1. Loyalty

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.

8. B2B 

Japan still has a solid manufacturing/ industrial base, good for B2B technology startups.  

9. Honesty

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.  

15.  Logistics

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.

16.  JETRO

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. 

22. Visa

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)

Nordic Innovation House Tokyo

LINK-J (Life Science Innovation Network Japan)

 

 

 

Japan Entry Innovation Event

US Japan MedTech Innovation Forum (organized by US-Japan MedTech Frontiers) is held annually to connect Innovative medtech companies from US to Japan.

Startup GRIND Tokyo, Startup GRIND Osaka, Startup GRIND Fukuoka (the largest entrepreneur community from Silicon Valley, held in 600 cities, in 125 countries)

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 

 

 

 

Disadvantages 

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.

5. Bank

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  

10. Visa

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.

14. Nemawashi

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.

16. Regulations 

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

 

Yoshiaki Ishii

Director, Science, Technology and Innovation, Cabinet Office, Government of Japan

Yugo Yoshida

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


Tak Umezawa

Chairman, CIC Japan

Motoki Kurita

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


Osamu Katsuo 

Senior Vice President, New Listings, Tokyo Stock Exchange

Hitomi Shibaki

Director, Innovation Leaders Summit


Niklas Karvonen

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


Hiro Sato

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


Kohei Yamamoto

Senior Manager, US Incubation Office & Group CEO office Rakuten USA

Chika Yamamoto Wolfson, 

CEO, Crossbie 


Tetsuo Miyajima 

Secretary General, i University

Michimasa Naka

Founder & CEO, Boardwalk Capital Inc.


Akihiko Soyama

President and CEO, LINK-J

Tak Adachi

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


Tamami Ushiki

Director, Startup GRIND TOKYO

Moeko Suzuki

President, Startup Lady Japan

CEO, Tailor Innovations Inc.


Jean-Dominique FRANCOIS

Japan Advisor, Co-Founder, Hello Tomorrow Japan

Claire BOCHARD

Project Director, Hello Tomorrow Japan


Research by

John Kojiro Moriwaka

CEO, Silicon Valley Ventures 

Director, Startup GRIND FUKUOKA

Official Columnist, Forbes JAPAN


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