Doing Business in Japan from Abroad

November 28th, 2013By Category: Starting a Business

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Michael A., a Solutions Manager with an Australian IT firm that specializes in project management, data services and turnkey solutions was given the task of setting up a Japan subsidiary of his company.

With no “ground presence” in Japan or local contacts the challenges were many. In this interview, we asked Michael to talk about some of the issues he faced while trying to remotely incorporate a subsidiary. Here is what he had to say:

As a small Australian IT company we long ago recognized that the only effective way to compete with the larger established businesses was to offer a service that was of high value, high quality and met the customer’s expectations 100%. Core to this philosophy is the need to leverage our relatively small size by being more flexible than our competitors. If we can deliver what the customer wants faster and more effectively than our larger competitors then we will win and retain the business.

Our company had for some time looked upon Japan as a potential location for a branch office but the demand had never been there. This changed rapidly when one of our existing clients approached us to see whether we could establish a point of presence in Japan to deliver their online content and ecommerce services. We knew that Japan’s infrastructure was world class and that if we established a service for one customer many more might join in. This is indeed what occurred. Within weeks we had two other customers show interest in delivering their online content from Japan based servers and so we committed to the project.

After a significant amount of research we concluded that a Godo Kaisha company structure would work best given the speed and cost demands of the project. There were numerous websites and government sponsored information sites to help us make an informed decision and it seemed like it would be a relatively simple process. In practice however we discovered that finding a service provider who would take the time to understand our needs whilst offering credible alternatives and ideas was very difficult. We had two false starts because the companies we contacted for various reasons either couldn’t or didn’t want to help us set up the company.

It was not until we found a provider that could act as a one stop shop that we finally started to make progress and over the two months that it took to establish our GK we found the process very smooth. Key to the success of the process was the regular and detailed communication between ourselves and the service provider via both phone and email. At no stage did we feel the need to hop on a plane to visit Japan because we were comfortable that everything was being taken care of by our service provider.

Since establishment we have found that doing business in Japan can be very difficult if you are in a remote location (ie. Australia). Obviously the language barrier is a big one and banking tends to be done only in Japanese. Online banking can be rather difficult to set up and so you become very reliant upon your resident representative. That said, if you can establish a strong relationship with service providers (accountants, company registrars, lawyers etc) who specialize in international service delivery then you will have few issues in doing business in Japan. The key is communication and making sure that everyone understands what you are trying to do and why. We found that picking up the phone worked a lot better than emailing which is not surprising. We are very happy with the way everything went with our move into Japan. The regulations make establishing a corporate entity like ours relatively easy, the costs are relatively modest and the service providers (when you find one that is good) make life so much easier.

Company incorporation registrations in Japan are typically performed by a shihoshoshi, a type of licensed legal professional that specializes in corporate and real estate registration. The Tokyo-based shihoshoshi firm Shinonome Group has assisted Michael and many other non-Japanese companies and individuals with company incorporation and branch registration. With a newly opened branch in Sapporo, local services are now available in English as well to clients in the Hokkaido area of Japan as well as periodic blogs concerning incorporation and related matters written by the staff at the Sapporo office in English and Japanese.

Author of this article

Shinonome Group

Shinonome Group provides counsel on a range of matters including business and commercial, immigration and visa, real estate, and estate planning and administration issues in Japan. Our goal is to achieve workable solutions quickly, accurately and professionally. We possess both the business knowledge and the legal expertise required to successfully handle a wide spectrum of issues.

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