Letter to foreign entrepreneurs

  1. Reasons for choosing Japan as your Venture destination

We are aware that Japan has not yet reached the level of progress made in the USA[2] where tons of ventures appear and are supported by many companies such as venture capitalists, attorneys and CPAs. However, we are also aware that our infrastructure for ventures has been ameliorated in various ways such as the “Mothers”[3] market established by the Tokyo Stock Exchange for listing ventures. Accordingly, the amount of venture capital invested appears to have increased recently though there was a tendency towards decline in investment prior to 2012.[4] In particular, many early stage ventures received investment funds.

Business in Japan and the USA is quite different and sometimes the Japanese language and culture might create extra hardships and burdens on foreigners in order to establish companies. However, there are many foreign people successfully investing their funds in Japan to do business.[5] In addition, the Japanese government has recently considered deregulation of the current investment Visa[6]and of the requirements for establishing corporations.[7] In this case, due to such deregulation, as long as a venture has the potential to make a return on investment and has social value, venture capitalists and other experts as well as the Japanese Government will support it. We expect that foreign investors’ impressions of the investment climate will also soon improve.

Please note that the success of a venture is always a long way from its starting point. Such hardships are also suffered by normal Japanese business people but foreigners who also do not understand Japanese language and culture understandably have extra struggles. On the other hand, foreigners can benefit from the fact that they have different education and cultural experiences, which might give them a leg up. Open-minded people who have strong business backgrounds are able to succeed anywhere despite such difficulties in the beginning.

Networking is important, however if you aim to obtain credit from those with a more passionate and sincere attitude than others, you might find opportunities to meet appropriate persons.

I will not discuss abilities, attitude or luck concerning how to succeed in business in this letter. However, from my experience a good attitude seems to facilitate greater success. If you do not like Japanese culture, such an attitude is (whether intentionally or not) communicated to Japanese clients. It is true that some types of business do not rely on communication with other people. But most business people who begin learning a business need to undertake marketing to improve their services. Without finding niche areas, you need to compete with already established Japanese business, which will create a “red ocean” of saturated market share and the need to compete aggressively. Thus, forming a strategy to differentiate oneself from businesses in Japan is also important.

From now, I will share some information about the road for business ventures – in particular the legal aspects associated with undertaking such ventures for the reader’s reference.

  1. Recent changes and rough foresight

The Act for Partial Amendment of the Immigration Control and Refugee Recognition Act (Act No. 74 of 2014), which was passed and enacted at the 2014 ordinary session of the Diet, was promulgated on June 18, 2014. This Act reorganizes the categories of residence status for foreigners[8]. For example:

  • Establishment of a new status of residence, “Highly Skilled Professional”, for foreign human resources with advanced and specialized skills,
  • The previously named “Investor/Business Manager” status has been changed to “Business Manger”, and
  • Consolidation of the “Engineer” and “Specialist in Humanities/International Services” statuses.

Additionally, the Tokyo Metropolitan Government has established a robust policy to promote foreign investment[9]. In relation to the Act on National Strategic Special Zones, Tokyo is aiming at establishing a one stop center for starting businesses (Tokyo kaigyo one stop center) at the Jetro office. This will facilitate foreigners starting businesses by establishing a single window via which foreign business people can make applications for administrative procedures such as commercial registration, tax, pension, social insurance and status of residence with English assistance in collaboration with the Government. This service is expected to be provided from April 1st this year[10].

Furthermore, as of March 16th this year, it is no longer a requirement to have a representative director who is resident in Japan in order to incorporate a company.

  1. Conclusion

The above are several examples to show that the Japan government is eager to accept foreign investment in Japan. In the future, I am planning to provide an explanation of the regulation and environment concerning venture in Japan.

[1] Website: http://www.ailaw.co.jp/, Phone number: (81)3 3548 2702, Address: 5F Nishikan Honten Bldg 1-10, Kyobashi 1-Chome Chuo-ku, Tokyo 104-0031

[2] http://jvca.jp/inquiry/2012_Data.pdf

[3] Market of the high-growth and emerging stocks

[4] http://jvca.jp/inquiry/2012_Report.pdf, http://www.vec.or.jp/wordpress/wp-content/files/VEC_H26_05_new.pdf , http://www.vec.or.jp/wordpress/wp-content/files/VEC_H27_01.pdf

[5] http://www.nikkei.com/article/DGXNZO72495410Q4A610C1LDA000/

[6] http://www.nikkei.com/article/DGXLASFS18H13_Z10C15A1MM8000/

[7] http://www.nikkei.com/article/DGXLASFS02H30_S5A300C1MM8000/

[8] http://www.immi-moj.go.jp/english/nyukan2015/index.html

[9] http://www.seisakukikaku.metro.tokyo.jp/invest_tokyo/japanese/resources/pdf/leaflet_en.pdf

[10] http://www.kantei.go.jp/jp/singi/tiiki/kokusentoc/tokyoken/dai3/shiryou3.pdf

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