Japan has huge potential for Australian businesses as it’s one of the biggest economies in the world with a population of over 126 million. Its industries are diverse, ranging from intricate electronics to steel production, and its tech-savvy population is used to using online retailers and services. 

To help you decide if Japan provides a great opportunity for your business, here are some of the key things to think about before expanding. 

Consider the pros and cons

Japan is a vibrant and varied country so there’s a range of benefits and drawbacks to doing business there. Here are a few pros and cons to think about.

Japan is the third largest economy in the world and the Tokyo stock exchange is the largest in Asia. Add to this the levels of education and disposable income in Japan and you’ve got a very appealing market that offers a vast range of opportunities. 

Japan has a highly developed infrastructure, too with good road and railway links that make it easy for goods or staff to move around the country. If you’re planning on importing or exporting goods there are five major ports – plus hundreds of smaller ones – in Japan as well as five international airports. 

You’ll need to put some time into learning the expected business etiquette in Japan as there’s more formality than in Australia. Politeness is highly valued and you should treat even the most junior business associate with the utmost respect. You’ll be expected to be fully prepared and punctual for any meeting and may need to take your shoes off before entering offices. There’s etiquette around greeting and eating too, so there’s plenty of opportunity for embarrassment if you haven’t done your research.  

Earthquakes are frequent in Japan so if you’re planning on basing your business there or visiting regularly you should prepare and budget for this. Check any structural or other measures you should have in your office, warehouse or factory and make sure all your staff are trained in what to do during an earthquake.

Calculate the costs

To justify expanding somewhere as far away as Japan, the costs involved in set up and operations need to be offset with healthy profits. It’s therefore worth looking in detail at the sort of expenses you’re likely to incur to help you decide if they’ll be sufficiently counteracted by your income.

Japan has a high cost of living, with Tokyo ranking among the most expensive cities in the world. The downside of this is you’ll need to budget for comparatively expensive travel costs and rents as well as wages that will enable your workers to meet this cost of living. The upside is that in Japanese culture there’s an emphasis on high-quality goods and services so as long as your offering is up to a high standard you should be able to charge a premium price. 

To ensure that there is no miscommunication and that you’re adhering to expected etiquette it’s worth investing in translation services for your business in Japan. This means budgeting for the cost of having a translator present at meetings and meals with your Japanese business associates, as well as the cost of having important documents translated. To set up or run a company in Japan you’ll need a visa. Your cost analysis should include the expense of applying for a visa as well as associated outgoings like any required start-up capital or rented office space. 

Check how your sector performs

Japan’s advanced economy is made up of a diverse range of sectors. It’s worth researching how your industry performs to see if there’s an established market for your business or if there’s oversaturation that means you’ll struggle to cut through the competition. To kickstart your research here are some of Japan’s top-performing sectors. 

Japan is known for its high-tech advances, ranging from robotics to e-health. The country’s thriving technology sector includes a booming IT and communications industry as well as digital media and biotechnology.