“Does my company really need an office in Japan? What are the benefits and costs for my business?”
Opening an office in Japan can provide your company with significant benefits and often represents the first step of a long-term commitment to the Japanese market.
The decision to open an office in Japan is often customer-driven. Sometimes a major customer demands a presence in Tokyo before increasing its purchases. Distributors may also ask for same time-zone response to customer questions and requests. While in theory the Japanese market can be served from afar, the demanding requirements of Japanese customers, compounded by the difficulties of dealing across time and distance, lead many companies to consider opening a Japanese office in order to take their business to the next level.
In Japan's tightly-knit culture, customers prefer to deal locally with Japanese people and to do business in Japanese. Many Japanese customers, partners and suppliers see a local presence in Japan as a sign of your commitment to the Japanese market which makes them much more ready to commit to your company's products or services. They also want to pay in their own currency as to avoid the expense and risk of international payments. Sometimes customers require the presence of a local entity in Japan before establishing business connections is even considered. If a company's products and services are truly sought after and competitive in Japan, a strong local presence here often drives sales to a level well beyond what is achievable from abroad.
Your business model for the Japanese market also plays a large role in the decision to open an office here. If demand for your product or service is growing in Japan or has the potential to grow, you may want to put your own sales organization in place. This will reduce dependency on intermediate distribution channels and help your company capture more margin.
A local presence allows you to have more impact in the market by adapting your business in response to important customer feedback which will help you stay ahead of the competition.
Regardless of the benefits described above, the costs and the additional administrative complexity that come along with the establishment of an office in Japan should be considered carefully. The following points summarize some of the more important issues.
Starting an office in Japan involves legal and administrative costs which vary depending on the legal structure chosen. J-Seed's extensive experience helps to keep such costs at a minimum and efficiently manage the process. For detailed information on start-up costs please Click Here. Prices quoted by J-Seed include all legal and administrative costs which arise in the process of setting up a branch or subsidiary.
Operating costs in Japan are driven by your business model for Japan. J-Seed's advice and network of dependable suppliers can help you minimize costs and obtain an accurate estimation before you decide on whether or not setting up an office in Japan is in your best interest. For example, we can recommend office space providers, accounting and law firms as well as other kinds of professional service firms offering competitive prices. All the firms we recommend are ones that we ourselves have successfully worked with in the past. Please do not hesitate to contact us for a rough estimate of first-year operating costs. To provide you with comprehensive information, we can easily compare different scenarios, from an outsourced contact office to a full captive sales operation.
The setup of an office in Japan will inevitably increase the tax, legal and accounting complexity of your company’s operations. In this regard, the differences between a branch office and a subsidiary are significant. Please Click Here to obtain a detailed overview on the differences regarding taxes and accounting requirements. In the course of setting up your business we will personally discuss different scenarios with you in addition to providing business advice on the optimal way to structure your entity’s tax and legal structures to fit your business strategy.
With limited or no overlap in standard business hours and large cultural differences, gaps in communication can strain relations between the home office and the local office in Japan. Take a look at our tips for managing an office in Japan and at the information about our dependable recruiting partner that can help you find people who know how to work effectively with headquarters located outside of Japan.