Complete guide to doing business in Japan in 2025, for growing startups and entrepreneurs

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Japan expansion overview Why expand business operations to Japan? Challenges of doing business in Japan How to set up a business in Japan? Which cities and areas in Japan are best for businesses? Business etiquette and culture in Japan Tips for doing business in Japan Grow your business in Japan with Wise Business

Thinking of expanding your UK business, and have your sights set on Japan?

The country has lots to offer to foreign entrepreneurs, from its highly skilled workforce to exciting opportunities in tech. There’s also access to the broader Asia-Pacific region.

However, it also comes with significant challenges, especially when it comes to differences in culture and language.

In this comprehensive guide, we’ll cover all the essentials you need to know about doing business in Japan.

We’ll explore the benefits, opportunities and obstacles, along with business etiquette and corporate culture in Japan. Plus, we’ll look at some of the most business-friendly cities and regions in Japan.

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Japan expansion overview

Research is key to success when expanding to Japan, to understand local culture, business etiquette and regulatory requirements.

Consideration	Description
Opportunities/benefits	Lucrative consumer market, highly skilled workforce, supportive start-up ecosystem, opportunities in tech
Challenges	High consumer expectations, complex bureaucratic systems, language and culture barrier
Most attractive cities and regions for foreign entrepreneurs	Tokyo, Fukuoka, Nagoya City

Why expand business operations to Japan?

There are lots of reasons why UK businesses choose to expand their operations to Japan, and not just because it’s one of the world’s largest economies.

Businesses are flocking there to access highly skilled workers and a large and potentially lucrative consumer market, and to take advantage of the country’s famously start-up friendly business culture.

We’ll explore these and other benefits of starting a business in Japan below.

A lucrative consumer market

Japan is one of the most populous countries on the planet, with a population currently sitting at over 123 million.¹ For entrepreneurs looking to expand there, this not only means an opportunity to tap into a large market - not to mention gain access to the wider Asia-Pacific region.

But Japan’s consumer market is also known for its high proportion of wealthy households with plenty of disposable income. One recent statistic even found that 1 in every 17 Japanese households have over $1 million USD in disposable assets.²

While this isn’t good for the country’s well-publicised wealth gap (Japan is known for having greater wealth inequality than many other countries), it does present an opportunity for businesses looking to market premium products to this consumer base.

A highly educated, skilled workforce

Investment in education in Japan is a government priority, and enrolment in higher level education is much higher than the world average. Around 64% of all eligible Japanese children started university or other tertiary education according to 2022 figures, compared to an average of just 38% worldwide.³

This prioritisation of education seems to be paying dividends, as Japan has become famous for the quality of both its education systems and its highly skilled workforce.

This could make it the perfect place to find the talent needed to drive your new business forward.

Supportive start-up ecosystem

Over the last few years, the Japanese government (supported by the private sector) has been making concerted efforts to make the country a thriving hub for startups. In fact, it has ambitious plans to make Japan the largest start-up hub in Asia.

As part of a Startup Development Five-year Plan announced in 2022, the government revealed plans to reach a target of 100 unicorns and 100,000 startups⁴ - through a combination of initiatives and programs, local and foreign investment.

One of the best initiatives running so far is the J-Start Program, spearheaded by the Ministry of Economy, Trade and Industry (METI). It aims to support and promote promising Japanese startups, particularly those with global potential. This makes everything from business registration to accessing funding easier, as well as providing startups with access to a wide range of resources and incentives.

There are also a number of start-up visas for Japan, which aim to make it easier for foreign entrepreneurs to start enterprises in Japan. Some offer a stay of up to 2 years and remove many of the former obstacles to securing a visa.

Opportunities in tech-driven industries

As you may expect from such a technologically advanced and innovative country like Japan, some of the best opportunities for startups and scaleups are in tech-driven industries.

These include Software as a Service (SaaS), life sciences and healthcare, fintech, advanced manufacturing - the latter of which is one of the biggest industries in Japan.

💡 Read our international expansion checklist

Challenges of doing business in Japan

While Japan may present many exciting opportunities for UK entrepreneurs and growing startups, it also has its challenges.

It’s good to be aware of these from the outset, so you know what to expect and can prepare accordingly.

Here, we’ll take a look at a few of the most common challenges UK startups face when launching in Japan.

Meeting consumer demand and expectations

While one of the main benefits of starting a business in Japan is access to a growing consumer base with increasing amounts of disposable income - it can also be a drawback.

The demands, needs and expectations of Japanese customers may be quite different from what you’re used to in the UK.

This market is known for expecting very high quality products and services, with hard-to-meet demands over everything from product information to packaging and delivery. They also prioritise quality over price, and expect exceptional customer service - known as the art of hospitality or Omotenashi.

To win over these customers, you’ll need to do extensive market research into the part of Japan and types of customers you’re targeting. And then you’ll need to compete with established local and international brands.

A highly bureaucratic tax and regulatory environment

Japan is known for its strong legal and regulatory framework, which is undoubtedly an advantage for businesses looking to expand there. However, this can lead to hard-to-meet compliance regulations, paperwork and extra costs.

This is a country which loves its bureaucracy, which can make things burdensome and complicated for business owners - especially if you don’t speak the language or have multi-lingual staff.

In fact, data from 2020 found that dealing with Japan’s corporate tax system resulted in a whopping 130 hours of management time - and required nearly 20 payments across a typical tax year.⁵

Aside from tax, the business registration process can be complex, as can getting to grips with the country’s mandatory tax invoicing, social and labour insurance, and property registration systems.

You may need to work with specialists and local experts to keep up with a small mountain of regulatory requirements.

Language barrier and culture shock

One of the biggest obstacles UK entrepreneurs will need to overcome when starting out in Japan is the language barrier.

You’re likely to need to speak at least some Japanese to get by in the business world. In some cases, you may find that clients, suppliers and associates speak no English at all.

According to the EF English Proficiency Index in 2024, Japan ranked at just 92 out of 116 countries when it came to English proficiency.⁶

There’s also the fact that many documents will either be or need to be written in Japanese, and some banks only provide services and support in the local language.

This means you’ll need to brush up on your Japanese language skills - or employ the services of translators - if your business is to thrive there.

You’ll also need to do as much research as you can on the culture and business etiquette, as you’ll find that it’s quite different to the UK. We’ll offer some tips on that later in this guide.

💡 Learn more about navigating risks of international expansion

How to set up a business in Japan?

The process of setting up an entity in Japan generally involves the following steps:

• Market research and planning, including developing a comprehensive business plan and conducting feasibility studies
• Choosing a suitable business structure - in Japan, you can choose from the following:
  • Kabushiki Kaisha (KK) - similar to a limited company
  • Godo Kaisha (GK) - similar to an LLC
  • Gomei Kaisha - general partnership company
  • Goshi Kaisha - hybrid between a general and limited partnership
• Registering your business with the relevant authorities - to do this, you’ll need to get a seal registered at the Legal Affairs Bureau
• Registering for taxes, and for employee pension and social insurance plans
• Getting the required licences and permits
• Establishing a physical or virtual office in your chosen country
• Opening a local business bank account - you can also use an international account such as Wise Business.
• Recruiting and hire employees, ensuring your follow local employment regulations
• Setting up financial and accounting systems

You may want to work with an international business consultant and/or a global company formation provider.

A specialist with knowledge of Japan can help you navigate the process and understand the specific requirements for establishing a business there.

Which cities and areas in Japan are best for businesses?

The part of Japan you choose to start your business in will largely depend on your market research, as you’ll want to go where there are the most opportunities and demand for your product or service. You may also have connections to a particular city, or already sell there.

But generally speaking, some cities and areas in Japan are more attractive for UK-owned startups than others. Let’s take a look.

Tokyo

Anyone looking to start or expand a business to Japan has to consider the nation’s capital. Tokyo is not only an international hub of business, but it’s also a hotbed of startup activity - home to nearly 70% of the country’s total number of startup companies.⁷

The city’s main attractions for entrepreneurs include the following:

• World-leading transport and infrastructure
• Highly skilled, educated workforce
• Government and private sector subsidies available for SMEs
• Availability of office space and business premises
• Key areas include Shibuya: home to Startup Hub Tokyo, Minato: home to tech giants Apple and Facebook, and Shinagawa: known as the Silicon Valley of Tokyo.

Fukuoka

Over on Kyūshū Island, you’ll find the city of Fukuoka - an island paradise with a subtropical climate. However, Fukuoka has also been designated one of the country’s ‘start-up’ cities by the government. This means that startups founded there benefit from a range of special incentives and support.

Other reasons to consider starting a business there include:

• A lively expat scene
• Active tech community, with a full calendar of conferences and events
• Home to Fukuoka Growth Next - a cooperative startup support facility
• Funding opportunities
• Pilot zone for testing out products and services on real-world markets.

Nagoya City

Nagoya City is on Honshu Island, along with Tokyo, but is part of the Aichi Prefecture. It’s known as a thriving area for shipping and manufacturing, especially automotive, robotics and advanced manufacturing.

Other attractions include:

• A dedicated portal for startups
• Home to the new Station Ai research institute and innovation base - which aims to support the creation of new businesses
• Prestigious universities such as the Nagoya Institute of Technology and Nagoya University
• Home of the Government-backed Nagoya Startup Tech Garage - offering co-working spaces and support for new businesses.

Business etiquette and culture in Japan

One of the hardest things to adjust to as a UK entrepreneur expanding to a foreign market is the difference in culture - both inside and outside of the business world.

The business etiquette and culture in Japan is quite different to the UK, Europe or the US. There are hundreds if not thousands of tiny nuances and customs to get to grips with, and it will take time to learn these.

But the most important thing to remember is that new arrivals in Japan need to respect the strict hierarchy that exists in Japanese businesses. Politeness and respect, especially towards senior professionals, is absolutely crucial.

Building trust and relationships is also important in the Japanese business world, but it takes time. The process can be much slower than you’re used to in the Western world, so you’ll need to be patient.

It’s crucial to do your research carefully, to make sure you understand all the details of customs and etiquette, so you can avoid costly missteps and misunderstandings.

Tips for doing business in Japan

• Do as much research as you possibly can - into local culture and etiquette, as well as business opportunities and target customers.
• Get expert advice from specialists in the region you’re targeting - this includes legal and tax advice, and support navigating local bureaucratic processes.
• You’re likely to need a local bank account from the start
• Familiarise yourself with company registration and legal structures in Japan so you can choose the most appropriate one for your new business.

💡 Read more about doing business in Asia ✈️

Grow your business in Japan with Wise Business

While having a corporate bank account may be an essential for starting a company overseas, you can also use Wise Business to help grow your business in Japan.

Open a Wise Business account and you can manage your company’s finances in 40+ currencies all in one place, including JPY, GBP, EUR, USD and all other major currencies. You’ll be able to pay suppliers and staff in their own currency, as well as receiving payments in multiple currencies.

Wise payments are fast and secure (even for large amounts). Best of all, you’ll only pay low, transparent fees and always get the mid-market exchange rate.

With Wise Business, you’ll also benefit from the following features:

• Issue business debit and expense cards for you and your team
• Cashback on eligible card spending
• Generate invoices and payment links to receive money easily from customers
• Access accounting integrations, batch payments and a powerful API
• Wise Interest - which lets you earn returns on money held in GBP, USD and EUR. Capital at risk. Growth not guaranteed. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you’re uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

It’s quick and easy to open a Wise Business account in Japan, with a fully digital application, verification and on-boarding process. Check out the requirements here.

Wise works almost everywhere, and you can also open an account in other Asia-Pacific countries such as Australia, New Zealand, Malaysia, India, Indonesia and Singapore.

Register with Wise Business🚀

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Sources used:

1. Worldometer - Japan Population
2. Carter JMRN - Market research in Japan: the 5 most important things you need to know
3. The Global Economy - Japan: Tertiary school enrollment
4. Cabinet Secretariat - Startup Development Five-year Plan
5. TMF Group - Challenges of doing business in Japan
6. EF English Proficiency Index - Japan
7. Japandev - Top Cities in Japan for Startups in 2025

Sources last checked on date: 23-Jul-2025