Japan Business: A Paradise for Entrepreneurs

March 12th, 2010By Category: Starting a Business

I have worked around Asia and the experience has been fantastic. On the business front, it has provided markets many times (or orders of magnitude) those I could access from my native Australia. In addition to shear size, these markets come with a population density that offers great opportunities around economies of scale and low distribution costs. On all the countries I have seen, no one stands definitively head and shoulders above the rest and this includes both my native Australia and adopted home of Japan. Never the less, combinations of factors makes Japan, for my money, a better place to be an entrepreneur than anywhere else in Asia – and this includes the rapidly expanding China. So why do I see Japan a paradise for entrepreneurs?

There are few entrepreneurs here.

The Global Entrepreneurship Monitor is a country-to-country comparison of entrepreneurship. In Japan, adults involved in early-stage companies (startup to owner operated 3.5 year businesses) comprise just 3.5% the workforce which ranks Japan the lowest of the 54 countries in the survey (in comparison, the rate in America is about two and half times higher). This dearth of entrepreneurs will not last forever for changing social attitudes toward Japan’s lifetime employment and labour mobility will encourage seniors and women with personal savings to invest in creative business ideas. Even so, for today’s entrepreneurs there is a decade before the percentage of entrepreneurs in the market reaches the level of other countries.

The place is wired!

Japan’s population density supports some great IT infrastructure (even my home in rural Gunma-ken has super high speed fibre optic cable). And this infrastructure is widely used for Japan has 94,000,000 internet users (about 75% of the population) which overshadows China which has about 27% internet penetration. Not only is the reach there but it also gets a lot of use with Japanese sending 4 times as many messaged per capita as Americans. Things do not get much better than this for businesses that want an efficient online environment capable of reaching a broad market and all demographics.

Customers, customers everywhere.

If online is not for you and you want physical customer relationships, then look no further than some of Japan’s major cities. The population of greater Tokyo for example is around 12 million swelling to over 16 million on a working day. Compare this to Australia’s 21 million spread out across a continent and add in the fantastic public transport system and it is easy to see that if you need physical access to customers, moving even 10km around my office in Tokyo will provide me with more and highly logistically efficient customer opportunities than I could reach in Australia in my working lifetime. China might be growing rapidly but… At purchasing power parity per capita income in Japan stands not far behind Australia at around US$34,000. Compare this with China where PPP per capita income is US$6,500. If you want to live in rural China, US$6,500 may be fine but if you are looking to use your earnings overseas, then there is little point in having customers who cannot afford to pay an amount that generates meaningful spending power for you.

A workforce who cares

“Kaizen” or the drive for constant improvement permeates the Japanese workforce. This means that your employees are constantly looking for how to better serve YOUR customers and how to more efficiently operate YOUR business. In Japan I take this degree of engagement as normal and thus I am amazed when I am overseas that service standards continue to centre on what employees want to provide rather than being customer centric. In terms of having and engaged workforce, Japan stands head and shoulders above anywhere else I have worked. As an entrepreneur, what more could you want for your businesses. Don’t get me wrong; I am not saying that Japan is an easy place to do business. Japan is after all renown for its complexities and unique cultural and social norms. Rather, if you can get on top of these unique aspects of doing business and building relationships, Japan has the all the elements that an entrepreneur needs to thrive. ———————- This post originally appeared by Japan Today Insight. The article, written by John Sparks is available along with further advice for doing business in Japan at insight.japantoday.com.

Author of this article


GaijinPot is an online community for foreigners living in Japan, providing information on everything you need to know about enjoying life here, from finding a job and accommodation to having fun.

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  • Ben says:

    Always been a dream to visit Japan at least once before I die.

    Such a Great culture and work ethic the japanese have. We can learn a lot. Plus their internet is really fast 🙂

    Mergers And Acquisitions Law Firm

  • mikemechanic says:

    The opportunity for business here is huge. The commentor just listed all the reasons why. Everybody is leaving and gives up. He/she doesnt understand how to get on top of the game. The game is getting past all the negatives and working it from there. Sure, there are plenty of barriers, but Costco is making it huge here, so is Krispy Kreme. In my hometown of Alabama, nobody could care less about the KK on every corner, but over here they line up for hours. Its getting the franchise over here thats a challenge. Service in Japan is weak, another sector that is now being exploited by many foriegners. Its all about exploiting the areas that have been shut down. Youll hear many Japanese say, oh we cant eat American food, its too sweet, but then youll see them wait in line like fanacitcs to buy the crap. Youve got to work the systems and keep an open mind. Sure its a challenge, but the rewards are huge.

  • n/a says:

    I am sorry but I absolutely disagree with your post. If I don’t consider the bad language skills, complex beurocratic procedures, social and cultural issues, expensive and inflexible labor market, stagnating economy, high logistic costs, enormous competition on the market in pretty much every segment, close minded customers sticking to only certain proven “brands” without willingness to try new things (that’s why so many new products and services fail on Japanese market) than its the extremely big taxes that makes you mad for sure.

    To sum up making business in Japan is nowhere near the good old “golden days”.

    But better than pushing my own views let the facts speak for themselves: “Sayonara Japan; Foreign Firms Head For Greener Pastures

    TOKYO (Nikkei)–Major foreign businesses are leaving Japan one after another to chase better opportunities elsewhere.
    Japan's balance of payments data for 2009 shows that foreign direct investments in Japan plunged 55.7% on the year.

    The number of foreign businesses listed on the Tokyo Stock Exchange has also declined sharply, with just 15 remaining as of Tuesday, compared with a record 127 in 1991. The number is expected to drop further, as Aegon NV (8689) of the Netherlands and UBS AG (8657) of Switzerland are slated to delist later this month and next month, respectively. Meanwhile, no new foreign company stocks have debuted since 2008.

    (The Nikkei March 10 morning edition)”

    Read full article here: http://www.nni.nikkei.co.jp/e/ac/tnks/Nni201003