Doing business in Japan information
by Venture Japan
In the previous section on preparing to start doing business in Japan, I noted that Japan's JETRO (Japan External Trade Organization, a government funded agency responsible for encouraging foreign companies to invest in Japan and the Japanese market) may or may not be the best source of practical Japanese business advice but they can provide free office space in central Tokyo (and several other locations).
What JETRO will actually provide 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 3 months. JETRO has Japanese bilingual staff on hand to assist you, although those services will be at extra charge. If you are a US company the Akasaka location is very convenient to the US Embassy which is only a 5 minute walk away. The location is also next door to the ANA Hotel.
In addition to the Tokyo Business Support Center, JETRO has similar facilities in Yokohama, Nagoya, Osaka, Kobe and Fukuoka. Osaka is also competing strongly for foreign business investment and similar free office space is available at the Osaka Business and Investment Center in Osaka's prestigious WTC building. Many foreign companies traditionally opted for Tokyo when starting business in Japan but Osaka is also an excellent choice with much lower 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.
For any foreign company thinking of starting business in Japan on a limited budget, the JETRO free office space and the Osaka Business and Investment Center are without doubt the best ways to establish an initial bridgehead in the Japanese market. The alternative is to rent a serviced office from one of the many Servcorp or Regus locations in Japan, although such serviced offices will cost $2,500 - $7,000 per month (the lower cost is for internal offices without windows). Such offices do have the advantage of bilingual staff on hand (at extra cost) and a month-to-month rental agreement (although in our clients' experience there is often a 3-month lock-in period). Both Regus and Servcorp also offer "virtual office" services which offer prestige addresses and include telephone line and answering service from $450 per month. With any such services, whether physical office or virtual office, you must note that excessive use of meeting rooms, bilingual services and similar extras can result in very expensive monthly invoices.
Even with free office space from JETRO or the Osaka Business and Investment Center, a 3 month initial Japanese market entry activity will need substantial budget for accommodation, meals and domestic travel.
Tokyo hotel rooms range from US$80 per night for a very small but very clean room in a low-end business hotel up to a minimum of US$200 per night at one of Tokyo's many international class business hotels such as the Hilton Tokyo (near Shinjuku Station), the Intercontinental Tokyo Bay (near Hamamatsucho Station) or the ANA Intercontinental Hotel Tokyo (next-door to JETRO's office). If you need and can afford true luxury then the Four Seasons (near Mejiro Station) and several other hotels offer rooms from US$400 per night and up. Reflecting the lower cost-of-living in the region, Osaka hotels are much cheaper, ranging from as little as US$50 per night for smaller (11 sq. m.) but clean rooms up to US$200 per night (and up) for international-class hotels such as the New Otani, Hyatt Regency and Swisshotel.
Hotel prices in Tokyo and Osaka are no longer outrageously expensive compared to other major cities around the world and restaurant prices are also now more comparable with those of other major international cities (one of the benefits of more than fifteen years of deflation). Meals vary from US$6 for a quick burger at McDonald's (there are hundreds in the Tokyo area!), US$12 - US$25 for a business lunch at one of many very good restaurants and up to US$75 - US$100 (at minimum) per person for dinner and wine at a good French or Italian restaurant. Be aware that there are still many extremely expensive restaurants in Tokyo and Osaka and, if your budget is limited or your CFO tyrannical, you should research some good but reasonably priced restaurants in advance of entertaining prospective customers! Also note that while in general there are no service charges imposed or tipping expected at restaurants in Japan (great service here is the standard and you are not expected to pay extra for it!), restaurants located in hotels do impose a mandatory 10% service surcharge. Sales tax is only 5% and all restaurants should by law state tax inclusive prices on their menus.
In Tokyo, Osaka and other major cities, taxis are numerous and will stop literally anywhere you request (although major rail stations have taxi-stands that you must use). Although taxis cost less than US$6 for the first 2 kilometers, keep in mind that Tokyo's roads are some of the most congested on the planet and an anticipated 10 minute US$10 taxi-ride can often turn into a 30 minute US$50 mistake and make you late for a key meeting. Our advice is to use the train! Both Tokyo and Osaka have the world's most reliable (literally to the second!), frequent and extensive railway and subway systems by which you can get to most places for US$2 or less. Throughout Japan railways and subways have platform information displays in both English and Japanese and most system maps show station names in both languages.
Whether you decide to use a Japanese market entry service such as Venture Japan offers, a Japanese distributor, a Japanese trading company or to go it alone and setup your own Japanese office or Japanese company, the value of having an executive in Tokyo or Osaka for 3 months before making that decision cannot be over-emphasized. Those companies that fall foul of the vagaries of the Japanese market and provide the fuel for those Japanese market myths are those that very likely did not take the 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 you will gain in those first 3 months will pay back in millions of dollars of increased future revenue and profits.
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