In the previous section about preparing to start doing business in Japan, we noted that Japan’s JETRO (Japan External Trade Organization), the government agency responsible for encouraging foreign companies to invest in Japan and the Japanese market, can provide free office space in central Tokyo and several other locations.
What JETRO provides in Tokyo, is a booth with a desk in the Invest Japan Business Support Center in the Akasaka Ark Hills building. Other than telephone and copier fees, the space is free to use for up to 50 days (it used to be a much more useful 3 months) for companies that meet JETRO’s requirements. JETRO has Japanese bilingual staff on hand to help you at extra charge. If you are a US company, the Akasaka site is very convenient to the US Embassy, which is only a five minutes walk away. The site is also next to the ANA Intercontinental Hotel.
In addition to the Invest Japan Business Support Center in Tokyo, JETRO has similar facilities in Yokohama, Nagoya, Osaka, Kobe and Fukuoka. Osaka City, which also competes strongly for foreign business investment, offers similar free office space at the Osaka Business and Investment Center in Osaka’s prestigious WTC building. While most foreign companies traditionally opt for Tokyo when starting business in Japan, Osaka is also an excellent choice with its lower office rents, lower salaries, and a generally lower stress level when compared with Tokyo. Whether you choose Tokyo or Osaka, you can easily travel between the two cities by shinkansen bullet-train in just 2½ hours.
Even with free office space from JETRO or the Osaka Business and Investment Center, a three-month initial Japanese market entry project will need budget for accommodation, meals and domestic travel.
Hotel prices in Tokyo and Osaka are very reasonable compared to other major cities around the world, although prices are very seasonal and can double or more around national holidays and on Friday and Saturday nights throughout the year. A room at a 3-star hotel such as the Tokyu Stay Shinjuku costs from US$120 a night including taxes. The rooms will be very clean, but at 15sqm are less than half the size of rooms at one of Tokyo’s many international-class 5-star hotels such as the Hyatt Regency Tokyo, the Hilton Tokyo or the Westin Tokyo, which cost from around US$250 a night including taxes. At the luxury end of the market, Tokyo has many luxury brands such as the Imperial Hotel Tokyo, the Conrad Tokyo, the Shangri-La Tokyo, the Peninsula Tokyo, the Mandarin Oriental Tokyo, the Ritz-Carlton Tokyo and the Grand Hyatt Tokyo, starting from around US$400 a night including taxes.
Reflecting Osaka’s lower cost of living, hotels in Osaka are generally cheaper than in Tokyo, ranging from as little as US$80 a night including taxes for small 15sqm but clean rooms at 3-star hotels such as the Best Western Hotel Fino Osaka Shinsaibashi, and from around US$150 a night including taxes for international-class 5-star hotels such as the Hotel New Otani Osaka, the Westin Osaka, the ANA Crowne Plaza Osaka, the Hyatt Regency Osaka and the Hilton Osaka. At the luxury end of the market, Osaka prices are closer to those in Tokyo, with luxury brands such as the Intercontinental Hotel Osaka, the Swisshotel Osaka, the Ritz-Carlton Osaka, the Conrad Osaka and the St. Regis Osaka, offering rooms from around US$300 – $400 a night including taxes.
Decades of deflation means restaurant prices in Tokyo are also reasonable compared with those of other major international cities. Meals vary from US$6 for a quick burger at one of the thousands of McDonald’s across Japan, US$10 – US$20 for a good business lunch at one of many very good restaurants, and US$25 – US$50 for dinner at a good restaurant. There are still many extremely expensive restaurants in Tokyo and Osaka, so if you have a limited budget or a tyrannical CFO, I recommend you to research some good, but reasonably priced, restaurants before entertaining prospective customers. There are generally no service charges imposed, nor tipping expected, at restaurants in Japan (great service here is the standard and you are not expected to pay extra for it), but restaurants in hotels usually add a 10% service surcharge. Sales tax is 8% and be aware that not all restaurants state tax inclusive prices on their menus.
There are thousands of taxis in Tokyo, Osaka and other major cities, which will stop literally anywhere you ask (although major rail stations have taxi-stands that you must use). Although taxis cost less than US$7 for the first 2 kilometers, keep in mind that Tokyo’s roads are often very congested and an anticipated 10 minute US$10 taxi ride can often turn into a 30 minute US$50 nightmare that makes you late for a key meeting. My advice is to use the train, as Tokyo and Osaka have some of the world’s most reliable, frequent (literally to the second) and extensive railway and subway systems by which you can get to most metropolitan stations for US$1.50 – US$3. Railways and subways throughout Japan have platform information displays in both English and Japanese and most system maps show station names in both languages. Be aware that many railway lines run regular, express and limited-express trains from the same platform, so be sure to board a train that will stop at your destination station.
Whether you decide to use a Japanese market entry service such as Venture Japan offers, a Japanese reseller, distributor or trading company, or to go it alone and setup your own Japanese sales office or company, the value of having an executive in Tokyo or Osaka for 3 months before making that decision cannot be underestimated. Those companies that fall foul of the vagaries of the Japanese market and give the fuel for those Japanese market myths, are those that probably didn’t take time to properly understand the market before making the key long-term decision of how best to enter and compete here. The first-hand Japanese market experience and understanding your company will gain in those first 3 months, will pay back in millions of dollars of increased future revenue and profits.