International business in Japan: opportunities for foreign companies

International business in Japan: opportunities for foreign companies

international business in japan

Japan, the Land of the Rising Sun, may be small in surface, but has an enormous footprint in the world of trade and business. Located in East Asia, Japan is an archipelago of 378.000 square kilometres. Japanese products and innovations are known worldwide. 

Japan is business-friendly where it comes to all formalities; Japan ranks 29th in the world when it comes to ease of doing business. However, this does not take into account the barrier of having its own language and writing, and the cultural differences, especially the closed social system. 

Import of goods and services is estimated at 18.99% of the Japanese total GDP. Japan is the third largest economy in the world. The value of imported goods is very high, and this makes it an attractive market, despite the difficulties. 

Japan is seen as a premium market for products and services. However, with its unique business traditions and ways of doing business, prior knowledge of local culture, demand, consumer behaviour and pricing strategy is critical to successful international business ventures in Japan.

Japan's Vital Data (as of 2016)

Population (million) 127
GDP (billion USD) 4,939
GDP per capita (USD) 38,895
GDP per capita PPP (USD) 41,470
Purchasing power per dollar, compared to the USA 101%
Surface area (sq km) 377,962
% of population living in urban areas 93%
% of GDP added by agriculture - industry - services not available for 2014
Ease of doing business index (1 = best, 180 = lowest) 29

What are business opportunities in Japan?

While the Japanese are thoroughbred businessmen, the Japanese market can be highly regulated, and you will need specific knowledge for any International business to succeed. In the current age of globalization, several restrictions are being lifted to facilitate freer trade resulting in emerging business opportunities.

Japan provides several support mechanisms for business and provides a legally safe environment for doing businesses. With several Japanese trade shows internationally and inside Japan, there is no dearth of opportunity for information exchange.

Most Business opportunities in Japan are in the following sectors:

  • Alternative Energy – owing to a high population density, clean energy is a priority; the Fukushima nuclear disaster has added to the urgency for clean fuel
  • Pharmaceuticals & Healthcare – demand for products and services in this sector is growing with a steadily increasing aging population, referred to as the ‘silver’ market
  • Wealthy Nation – As Japan is the third biggest economy in the world, there is demand for high-quality consumer products
  • Advanced Engineering & Tech – Japanese businesses are interested in cutting technologies to maintain their superiority in designing and manufacturing internationally winning products
  • Food and Drink – Given a large population density and ever-diversifying food habits, Japan needs food imports
  • Gaming & Music – Japan is a major gaming centre and has the second largest music industry in the world

What are Japan’s important events?

While the Japanese are extremely hard working, they display an equal enthusiasm for sports. The top sports in Japan are baseball, football, golf, sumo wrestling and martial arts. Sports fans in Japan are often obsessed with their favorite teams and sport. Important holidays in Japan are Showa Day, Respect for the Aged Day, The Emperors Birthday, etc.

In Japan, a mature market awaits with an appeal of premium pricing. If you know how to do international business in Japan profits won't come in the first year, but it will be a stable market as a cornerstone for your company. 

This entry in Asia was updated on April 30, 2018 by specialist.