Doing business in Japan information
by Venture Japan
PLEASE NOTE - Japan's revised Commercial Code and new Company Law take effect on May 1, 2006. From that date it is possible to establish sole director kabushiki kaishas and the paid-in capital requirement is effectively eliminated. This site will be extensively revised in the next few days to include the effects of these changes.
In the previous section introducing the kabushiki kaisha for doing business in Japan, I mentioned that in 2006 your customers are unlikely to be concerned about the corporate entity you use for doing business in Japan - more likely they will be far more interested in the quality of your product or service and the quality of your local team. Many customers will simply be impressed that you are making the commitment to start a direct presence in the Japanese market - it is a fact of Japanese business culture that even Japanese believe that doing business in Japan is difficult and therefore often have considerable respect for foreigners who make the effort!
Due to its statutory requirements, there are certain situations where you should use a kabushiki kaisha for doing business in Japan:
In any of those situations the kabushiki kaisha is the entity of choice.
If you do not have a quantifiable reason to incorporate as a kabushiki kaisha then don't - you will spend a lot of cash and valuable management resource administrating it. I managed the kabushiki kaisha subsidiary of a small US software vendor whose financial department seemed to spend almost as much time in Japan administrating the kk as they spent in the US administrating the head-office. Worse still, they were spending US$10,000 - US$15,000 per month with a big-5 accounting firm's Tokyo office and an international law firm's Tokyo office. I estimated they spent around US$250,000 a year administering that subsidiary - that is enough base salary for 3 - 4 good salespeople!
If you really must setup as a kabushiki kaisha then carefully consider how best to reduce its administration costs and burden on your head-office resources before you proceed. Alternatively, start as a yugen kaisha and then convert the yugen kaisha to a kabushiki kaisha (if you need to) as your needs and understanding of the Japanese market evolve. Entering any new market and building a strong enduring brand is resource consuming and all companies, large and small, have resource constraints. My advice is to maximize your resources on generating revenue and not on creating an unnecessarily complex administrative structure.
In summary, the key administrative and statutory requirements for a kabushiki kaisha 'kk' are:
pages in this section:
www.venturejapan.com ©2003 - 2009 Venture Japan LLC All Rights Reserved, contact: