Starting business in Japan is not difficult and neither does it need to be expensive. If you have a unique and good quality product or service then by carefully controlling your starting costs you will be profitable in your first year in the Japanese market. It’s that simple. The trick is understanding Japanese business and the mentality of Japanese businesspeople well enough to be able to control your costs.
2004 is an unusually good time to start doing business in Japan. European companies will benefit from the buying power of the presently strong Euro while US companies will benefit from the new US-Japan tax treaty. The costs of starting business in Japan have reduced dramatically due to the domestic recession and resulting price deflation of the past 8 – 10 years. Office rents are significantly lower as land values have continued to decline since the bursting of Japan’s property bubble at the end of the 1980s. Japanese salaries have reduced in real terms as many companies have used the recession as rationale to decrease the summer and winter bonuses traditionally paid to most Japanese employees and for many employees guaranteed annual salary increases have become a thing of the distant past. Also, Japanese employees’ previous expectations of regular annual salary raises, jobs for life and other former obstacles to foreign companies setting up a Japanese office or Japanese company have been radically reduced in the past 10 – 15 years.
Given the presently low cost of entering the Japanese market, there is no reason why a foreign company with a competitive product or service and a winning attitude should not make substantial profits in Japan within their first year of operations here and, depending on industry-specific factors, be contributing 30% to your global profits within 3 years.
Any foreign company thinking of starting business in Japan first needs to be properly prepared and thinking as a team from frontline sales-marketing to Board director. A properly prepared entry into the Japanese market will generate substantial levels of revenue and profit and significantly enhance a company’s valuation (investors will correctly perceive that a company able to succeed in the Japanese market is a company that will succeed everywhere). Conversely, a failed attempt at Japanese business is not only soul-destroying for those involved but can cost a company heavily both in cash and credibility.