Doing business in Japan

The Japanese market offers a number of opportunities with a tech-savvy population, high purchasing power and a strong appetite for innovative products and services. There is a high sense of urgency to transform the Japanese society into a fully digital and sustainable environment. Since the beginning of the 2020s, the Japanese government has become very eager to attract innovative startups and scale-ups from overseas. Looking at this newly emerged traction and the upcoming World Expo 2025 in Osaka, there is a great momentum for international collaboration.

Still, entering the Japanese market can be difficult for foreign companies due to cultural differences, language barriers, complex regulations and other issues.

Overcoming these challenges is possible but requires a strategic approach, deep market research and a willingness to adapt to Japan’s unique business landscape.

Learn more about Japan’s sweet spots, market characteristics and tips for first-time business visits.

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01 Japanese market

As one of the world’s largest economies, with a population of around 125 million, Japan holds significant global influence:

  • Japan is in the top 5 largest importing- and exporting countries in the world
  • Tokyo and Osaka are in the top ten largest Science & Tech clusters (Tokyo 1st & Osaka 7th in 2023)
  • Japan is has one of the highest percentages for R&D expenditures in the world (3.6% of its GDP in 2023)
  • Japan has the largest electronic goods industry and the third-largest automobile manufacturing industry in the world
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02 Market attractiveness

There are several key benefits to doing business in Japan:

  • Japan is economically and politically stable, with affordable labour cost
  • Japanese are known to be loyal and trustworthy business partners
  • Customers are willing to pay a good price for high quality and limited-edition goods
  • Customers are sensitive to added value (good customer service, eye for detail and user/product safety)
  • Abiding by high Japanese standards is a selling point to other countries
  • Japan can serve as a regional hub and gateway to the rest of Asia

There are numerous other industry-specific benefits that companies can profit from.

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Tips for unlocking the gateway to success

Considering the unique characteristics of the Japanese market, a first business visit to Japan can be inspiring. On the other hand, as the Dutch and Japanese business culture are so different, adequate preparation is very important.  Here are six tips when you are visiting Japan for the first time to do business.

 

1. Regulatory and legal requirements

The EU and Japan have an economic partnership agreement since 2019, which makes trading with Japan easier and more attractive. However, be aware of potential disparities between Japanese and EU regulations, along with challenges in navigating specific Japanese rules and the intricate process of managing work permits, visas, business setup, taxes and banking. Still, in contrast to what you may expect, Japanese business people have a preference for thin contracts as reliability of people you trust forms the cornerstone of doing business in Japan.

 

2. Hire an interpreter, agent, distributor or trading firm

Japanese workers often have limited English skills and are known for their indirect communication. Because of the language barrier, it may be useful or even crucial to make use of an interpreter, agent or local partner who can reach out to stakeholders in Japanese on your behalf or join you on your visits in order to pitch your business ideas. When using an agent, make sure that they have expertise and a network in your industry. When it comes to exporting certain products, it is important to note that distributors or trading firms might have high requirements for foreign organisations in terms of global name and track record, but they can be helpful in establishing a network of clients. Agents and distributors can also help to localise your product and marketing strategy to fit Japanese consumers.

 

3. Prepare introductory meetings

More than the Dutch, Japanese business people expect well-prepared meetings to avoid risks or situations where improvisation is needed. Therefore, it is important to schedule meetings well in advance: last-minute get-togethers are very uncommon. Moreover,  extensive presentations, with comprehensive text and no abstract bullet points are shared with the decision-makers, who are usually not present during first-time meetings. For that same reason, it is also a common practice to send the presentation in advance, to have a more effective meeting. In addition, any provided or showcased materials need to be accurate and without (calculation) errors to prove your reliability and commitment.

4. Learn about business etiquettes

Since most business people in Japan do not have LinkedIn, exchanging business cards is a very important ritual. Make sure you bring plenty of formal business cards and learn how to properly exchange them according to the etiquettes. Having them ready at all times is a quick win, and not having them can be a big failure. If it is your first time meeting a contact, it is common to bring a small gift such as traditional Dutch food or other type of memorabilia. Make sure you wear formal attire: neutral colours, covered shoulders, neat & plain socks (in case you have to take your shoes off) and no short pants or above-the-knee dresses.

 

5. Keep promises & be punctual

To gain trust, it is very important in Japan to do what you promise. Under-promising and over-delivering is the Japanese way of working. Traits like punctuality and keeping your word are being highly valued and are important. If you have a deadline, you should meet it: late hand-ins or asking for extensions are not appreciated. Did you promise to call or email back? Do it swiftly. Do you have an appointment at a fixed time? Do not be late. If you do not show this type of commitment, it comes across as disrespectful and Japanese business people might think you are an unreliable contact.

 

6. Take your time to invest in the relationship

As trust is built slowly in Japan, you will need to do follow-up after your introductory meetings by maintaining contact through email or phone: send an appreciative email shortly after the meeting, set up regular meetings to check-in and schedule next courtesy visits to develop and keep your relationship healthy. Also don’t expect quick results from first meetings: decision-making processes are rooted in hierarchy and consensus and can therefore take time. Group interest has priority over individual interest, which means that an agreement needs to be unanimous. Pushing for concrete decisions or answers in the first few meetings is considered impolite. Initially, non-binding reactions are to be expected. You will need to meet multiple times before an agreement can be made. The goal of the first few meetings with counterparts in Japan is often merely to get acquainted and build trust at company-personal level. It requires patience to gain trust, but once gained, it will be long lasting.