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TPP and new business opportunities in Japan

The broad agreement reached on Trans-Pacific Partnership offers unprecedented opportunities for business and property investment in Japan. A wave of new business startups from member countries will defy the pessimism claiming that Abenomics is losing steam and that the depreciation of the yen has stalled.

Indeed, the obvious beneficiary of the TPP is the United States as the top exporter of services in the world (30% of the country’s export). But it is only a matter of time before investors and entrepreneurs from Asia and Europe will find a new business frontier in Japan, as well.

As a matter of fact, the EU is now in a hurry to reach agreement on the Economic Partnership Agreement this year, lest it lose the Japanese market to TPP members that amount to 36% of global GDP. This strikes a contrast with the EU’s earlier indifference when the TPP negotiations were deadlocked.

If the negotiation on the Regional Comprehensive Economic Partnership can be concluded this year with China, India, and the ASEAN nations, the TPP will be followed by two mega free-trade agreements which respectively account for 30% of the world’s GDP.

The TPP abolishes tariffs on telecommunication, software, entertainment, and other digital contents. According to the TPP cross-border service obligations, online and other services will be guaranteed equal treatment with those provided by Japanese companies. E-commerce now can access the Japanese market even without placing computer infrastructure in Japan.

Subject to certain conditions, relaxed restrictions and a more open qualification system in Japan will enable foreign professionals to provide, e.g., legal, accounting, engineering, architecture, and research and development services. Full mutual recognition of qualification is yet to take place, but there is no doubt that professionals who know the systems of respective member countries will join forces to further open up the Japanese market to the world. Spouses of certain business persons will also benefit from the right to work in Japan and stay there for the same period.

Until recently, foreign investors have been scared away from the Japanese real estate market by unclear Japanese business practice and regulations, as well as insufficient information. These barriers are about to start disappearing. As a matter of fact, depopulation in Japan is translating into a surplus of properties. Unless owners welcome foreigners, their offices, hotels, and many other spaces will remain vacant. As such, matter have gone beyond lifting the ban on the use of private housing as guest houses;. Indeed, private lodging is being encouraged in the run up to the Tokyo Olympics as a way to effectively using vacant space.

Express delivery service will be encouraged by faster custom procedures, which in return will underpin both a more international supply chain and vibrant e-commerce. Efficient logistics will drive the advance of foreign retailers into Japan. Franchisers targeting the Japanese market are also under full sail thanks to protection of their concepts and trademarks.

How to set up a business in Japan?

The necessary steps involving foreign startups are, in sequence: 1) foreign resident registration, 2) seal registration, 3) office rental, 4) establishment of a Japanese branch or company, 5) filing tax documents, 6) visa application for the representative and employees, 7) recruitment of Japanese employees, 8) subscription to public insurance, 9) payroll calculation, 10) licensing, 11) account booking, and 12) tax filing . The entire procedure will take at least 30 days. When you enter Japan with a short-term stay visa (granted on arrival for most nationalities), make sure to act swiftly to complete all the steps within 90 days.

Some contents business can operate from a home country without renting an office in Japan. In other businesses, however, foreigners must secure a “place of business” in order to prove their continued business presence in Japan. This is necessary both for the application for an investor/business visa and establishment of a company.

Be careful to avoid rental agreements for properties designated for residential purpose, or you will need to go through additional paper work and hassles. Because of the visa application requirement, you may be surprised to rent an office first as a private person then later on your company name.

Therefore, the key is to find a flexible owner of a rental office. TSO perfectly understands the challenges encountered by foreign businesspersons. You can register your business at our rental office even with a short-term stay visa (equivalent of a tourist visa). Our group partner offers free accounting consultation and special discounts for you to have a head-start in Japan.

Based on our rich experience, the TSO team will be glad to help you with any questions related to rental offices and real estate in general.

(The article was first published on the TSO blog)

Why Bother to Invest in Japan Now? – A Nuanced Approach to the Asian Market

“We are in the Asian century, and the era of Africa is dawning. Why bother with hassles and the peculiar language and business practices in ageing Japan? Learn Mandarin or Swahili and don’t miss out on the next gold rush!”

Naturally, many business startups are racing to growing continental markets, with India and ASEAN being expected to overtake Japan in GDP. Some enthusiasts even foresee the emergence of an Asian market 20 to 30 times the size of Japan. But does jumping on the bandwagon and rushing off to Singapore or Hong Kong promise any success?

Please don’t take us wrong. It is indeed wonderful to see Asians and Africans escape poverty and strive toward prosperity through business. Entrepreneurs really should visit those countries and get a personal feel for the dynamic energy there. As a matter of fact, aspiring Japanese companies themselves are flocking into Asian markets and some have already begun M&A and investment in startups with deep local roots.

Following Confucius, in Asia they say: “If you are planning for a year, sow rice. If you are planning for a decade, plant trees. If you are planning for a lifetime, educate people”. So the question is whether you just want to sow rice or accomplish something greater.

Japan as a strategic base for eyeing the global market
Careful observers will notice the new business potential of Japan today in a very different way than back in the go-go 1980s during the run-up to the asset bubble. In fact, Japan is one of the best vantage points for global business operations in Asia’s emerging markets.

Surprisingly or not, Tokyo is home to the third largest number of companies listed on the Fortune Global 500, after the United States and China. Moreover, Japanese manufacturers like Panasonic, Honda, Toyota, and Nissan are accelerating the reshoring of their production back to Japan, convinced that this move actually reinforces their competitive advantage. In defiance of the protracted TPP negotiation, foreign manufacturers are also building up their manufacturing bases in Japan.

The reasons are not simply the rising labor costs in China or the weakening of the yen that had lasted until the recent reversal. Until recently, attention had been confined to the limitations of the Japanese economy. Fortunately, deregulation of retail markets, corporate tax cuts, and other genuine reforms are making a lasting impact in rising real wages and the steady recovery of the Japanese economy from its deflationary spiral.

Refined markets for bolstering your brand
Top brands in the world acknowledge the fact that they cannot lead the global market without succeeding in Japan. To put it bluntly, a blessing from the demanding and refined consumers in Japan promises acceptance from most consumers in the world. Naturally, international brands compete to open shops along the streets of Omotesando, Aoyama-dori, and Meiji-dori. The wealthy individuals and investors around the world are on a buying spree with real estate in Ginza as a home for leading Japanese brands and Roppongi as a favorite district of foreigners. Considering the low return of some of these properties, they are clearly investing in Japan as the launch-pad for their brands.

Many foreign companies are also striving to incorporate the fashion and taste of Japanese into their products, because they become also popular in Thailand, Indonesia, and so forth. The power of Japanese taste is not limited to fashion. Dollar-shops called hyakuen-shops are all-time favorite spots for Asians, Westerners, and other foreign guests alike. In barely restrained excitement, they say: “How wonderful to be able to enjoy that quality and practicality for that price!”

The attractiveness of Japanese quality often causes surprising trouble. Chinese tourists are snapping up so many nappies and rice cookers that shops end up limiting the purchase by each client and flights are delayed because of the trouble loading all the items purchased. With their newly acquired wealth, Asians head straight to Japan, the world’s shopping mall, where they can safely enjoy shopping without worrying about dishonest sellers or a foreigner price.

Despite the weakness in the overprotected agriculture sector in general, some aspiring agribusinesses are actually targeting the international market by exploiting the Japanese brand of safe and tasty food. The trend will accelerate as companies from different sectors freely compete to exploit consolidated and larger pieces of land.

Exploiting Japan’s innovation potential
China is expected to move up the supply chain in Asia from simple assembly to design and other advanced processes. But this tide is not necessarily pushing Japan to the margin of Asia. In absolute terms, Japan’s innovative capacity is intact. In fact, Lamborghini, L’Oreal, Bosch, 3M and other leading companies chose to establish their research centers in Japan, perhaps considering that the country maintains the top rank in the R&D budget per GDP, the highest ratio of researchers among the population, and in the number of Triadic patent applications (i.e., US, EU, and Japan). Japan is likely to underpin global strategies as a mature and reliable innovation base.

Staying a step ahead of market needs based in the leading ageing society
Japan faces an unprecedented challenge as the world’s fastest ageing country. But business is thriving in its efforts to provide solutions to the relevant problems. Many useful medical and health products that are unknown to the world can be found here in Japan where over a quarter of the population is aged 65 or more and more diapers are sold for adults than those for infants. Perhaps the ageing of the African continent may be long years ahead, but the rest of the world is bound to gray. Traditional business models that used to cater to young customers will become obsolete. Friendly competition with products and services enjoyed by Japan’s elderly will hone your leadership in the ageing global market.

Attractive business hub
The United Nations predicts that Tokyo will remain the world’s largest megalopolis, followed by Delhi and Shanghai. Information technologies have supposedly freed humans from the restraints of distance. On second look, however, clusters of creative people are proving ever more important. Perhaps that is why many world-class creators and artists have their bases in Tokyo.

Contrary to the stereotype as an expensive place, Tokyo offers office space for a third the price in Hong Kong and half that found in Singapore. Renting in Tokyo stands at 2/3 that of Shanghai and Seoul. In popular residential areas for foreigners, a rent is lower than in Hong Kong and Singapore and on a par with Shanghai.

The Japanese logistic system is more cost-efficient than that of Germany, France, the UK, and any other major countries of similar size. Likewise, the cost of the Internet is the least per unit of data. The Shinkansen bullet-trains that connect all corners of Japan have an average delay as little as 36 seconds per day in total. Foreign guests are impressed when there is an announcement to apologize for a minute of delay. Over the past 50 years, the Shinkansen never caused a fatal accident – although there has been an unfortunate suicide on the train.

In defiance of Japan’s stereotype as a reclusive nation, the inward FDI ratio is rising sharply and about to take over China’s top position – a clear proof of the incentives and investment environment that go beyond empty slogans.

Deep-rooted business investment as an important part of your life
Business investment is an important part of your life. And so it is only natural to decide your destination by taking the environment into account, as well. Investors in other destinations must ever breath contaminated air, hire chauffeurs or catch taxis to go anywhere, and must ever worry about kidnapping. These Asian cities are often flooded because of the underdeveloped drainage system. Many families dare not walk on the street alone and lead a stressful and confined life with fellow expats. Both foreigners and Japanese appreciate the safe, comfortable, and enjoyable environment that Japan provides for both the elderly and children. In 2015, Tokyo topped the MONOCLE’s most livable city ranking. For instance, you can simply walk to enjoy a tasty meal just around the corner. Tap water is potable. Roads are clean. There are wide choices of international schools and art galleries. If you want to enjoy your life with a long-standing business, rather than chasing after quick profits, Tokyo is a highly recommended destination.

A strategic hub that stands out in the era of Asia and Africa
Asia and Africa no doubt have great potential. As a matter of course, the growing market is so huge and diverse that the various regions warmly welcome entrepreneurs seeking success in Myanmar, Nigeria, China, India, Singapore, and Japan alike. At the same time, those who blindly follow the herd in deciding their destinations are doomed to fail. Only a few companies can cover the entire regions and they still need strategic focuses.

Japan, in particular Tokyo, is one of the promising strategic hubs for many business operations eyeing the extensive markets in Asia. Far from disappearing in a booming Asia, Japan will continue to play an important role as your reliable business partner.

Be Thrifty and Enjoy Japan Even More – Tips for Tourists and Business People

Photo Credits: Sakuyahime Project – http://sakuyahime.jp

“I dream of visiting Japan, but it must be expensive there…”

Such a stereotype may be true in certain circumstances – and indeed, some places can be more enjoyable with greater budget allowance. But fear not! It would be an absolute mistake to give up your trip to Japan. For the truth is that Japan today offers an unimaginable bargain both for foreign tourists and business people.

The TSO team is often asked by foreign entrepreneurs how to start business. We also advise our friends on how to enjoy trips in Japan on a shoestring. Here we share these tips to help you save on food, transportation, accommodation, sightseeing, and souvenirs. To make it simple, let’s assume an exchange rate of $1 = 120 yen, though the yen is getting weaker.

Japan: a country with great bargains

The reason for the surprising affordability of Japan is not just the weaker yen. Not only foreigners, but also many Japanese are discovering new ways to enjoy everyday life on the cheap. Although Abenomics has brought a respite from the prolonged deflationary recession, many services compete with one another to cater to Japanese who can afford less than before. As the domestic market is shrinking in line with demographic decline combined with rapid aging, companies are not only venturing outward, but also catering their services to foreigners in Japan. Indeed, the whole of Japan welcomes foreign guests with open arms.

Tokyo is particularly bustling with foreign visitors on treasure-hunting missions – including Asian group-shoppers in Ginza or Akihabra, as well as investors not only from the West, but also from the Middle East and Asia who are on shopping sprees for prime real estate.

Food

Food and transportation expenses tend to be the heaviest burden. But with our tips it is possible to enjoy tasty Japanese meals and spend no more than 1,500 yen ($12.5) per day – sometimes even 1,000 ($8.33) is enough. Always follow Japanese students and young professionals who know where to find decent, affordable franchised restaurants and local restaurants.

In Hanamaru Udon, the simplest small bowl of noodle udon costs as little as 130 yen ($1.08) – and the big serving costs 330 yen ($2.75). It may not satisfy a huge appetite, but a combination meal for 600 yen ($5) would definitely drive anyone’s hunger away. If you want to try slurping up soba noodle standing in a restaurant like the locals, Fujisoba offers the simplest soba noodle for 270 yen ($2.25) and the larger meat and noodle soba for 470 yen ($3.92), along with various topping options. A bowl of Gyudon beef with a salad come as a set for 400 yen ($3.33) in Yoshinoya. Try ramen noodle at Hidakaya for 390 yen ($3.25). And don’t miss gyoza dumplings for 220 yen ($1.83) and chahan/yakimeshi (fried rice) for 450 yen ($3.75).

The famed conveyor-belt sushi of Sushiro and other franchise bars charge you 100 yen ($0.83) for a pair of nigiri unless you go for luxurious toppings. A good choice for mingling with locals. Make sure to pile up your empty dishes on your own table, not on the piles of your neighbors. They will end up paying for you!

A very Japanese salaryman-style experience can be enjoyed in the evening in the street pubs of Omoide-Yokocho in Shinjuku or franchised pub like Watami.

Local treats, snacks, and soft drinks can be bought in supermarkets. Though slightly pricier, convenience stores are excellent places to kill your hunger by taking a bit on onigiri rice ball or rolls stuffed with unique Japanese tastes . At the moment, an 8% consumption tax (VAT) is added. But even so, this can be even cheaper than eating out the whole day in your country.

Transportation

Luckily, flights to Japan are getting cheaper. Narita Airport opened a third terminal completely dedicated to low-cost carriers mainly for Asian visitors. If you choose the off-peak seasons like New Year’s and summer vacation seasons, many cheap tickets are available from e.g., Turkish Airlines (from Europe) and Singapore Airlines (from the US West Coast).

Never get into a taxi just because you are so curious to see its automatic doors. Narita Airport is actually quite far from Tokyo, so take the Express train of Keisei Line that costs 1,280 yen ($10.7) to reach downtown Tokyo. Sure, Narita Express and Airport Limousine bus for around 3,000 yen ($25) are slightly more comfortable, but it takes about the same travel time.

From Haneda Airport, travel is shorter and cheaper – costing you 400-490 yen. If you can’t wait to start sightseeing, buy a one-day combination ticket for 1,310 yen, which will take you anywhere with the elaborate Tokyo Metro network after you take the Keikyu Line from the airport to Sengakuji Station.

For sightseeing in Tokyo over your next days, make the most of the Tokyo Metro’s 1-day open ticket for 600 yen.

There are two ways to cheaply travel around Japan. The first option is the budget overnight bus. With the Shinkansen, the trip from Tokyo to Kyoto or Osaka would normally cost you around 13,600 yen ($113). But the same trip can be made for 2,700 yen ($22.5) on an overnight bus with a restroom. Comfortably sleep on the bus and save accommodation cost. If you plan a long stay, Japan Railway Pass lets you ride most of the Shinkansen lines and all the trains of Japan Railways – and that covers all parts of Japan. The pass costing 29,110 yen ($243) for 7 days and 46,390 yen ($387) for 14 days must be bought in advance of your arrival to Japan.

Good news for families. Kids travel for half-fare on most public transportations.

Accommodation

Japanese capsule hotels are now famous, but they are still considered cramped and uncomfortable. Actually, a stay for a night or two is fun and comfortable, worth trying for 2,000-4,000 yen. Reservations are much cheaper through Japanese websites (example).

It is not very difficult to find business hotels offering Wi-Fi connections for 2,500 yen if you know a bit of Japanese. Foreigner-friendly business hotels are also affordable, like 3,600 yen per night at Kangaroo Hotel.

For families, a private apartment room is a way to save accommodation costs. Roomorama and other similar sites offer rooms for $20-50 per night. Crazy as it may seem, some travelers rent one base like this and enjoy day trips to different parts of Japan using their Japan Railway Pass and the Shinkansen.

Trusting young travelers participate in home exchange or enjoy Japanese country life as Whoofers.

Sightseeing

The best thing is to have a local friend who will gladly show you around. But there are similarly hospitable groups of volunteer tour guides throughout Japan. They find joy in communicating and making friends with foreigners. They will tell you about special spots usually visited only by locals, allowing you to experience Japan more deeply. Of course, let’s remember to reciprocate their kindness by covering their entrance fees and inviting them for lunch and dinner.

Shinto Wedding

Independent-minded travelers can also enjoy many spots for free. In Tokyo one of the best places is definitely Meiji-jingumae Station on the Tokyo Metro. In the Meiji Shrine you will see a Shinto-style wedding almost every 15 minutes during weekends. Interestingly, the shrine right nearby the youth-culture pilgrimage site called Harajuku and the fancy shopping street of Omotesando. The young also flock in the nearby Yoyogi Park, a fun place to have a picnic with a Japanese obento lunch box.

(Photo Credits: Goro Kuroita)

Trying out a multi-functional massage chair in Shinjuku or playing with a high-tech toilet in Akihabara are definitely fun. But, we recommend you visit Tsukiji’s fish market in the early morning. Though paid it is, if you need to take a shower after an overnight trip on a bus, try a Japanese public bath called sento, which is definitely a cultural experience you want to share with your friends.

Souvenirs

Traditional souvenirs from Kyoto, Asakusa, or the Oriental Bazaar in Omotesando are all-time favorites. But connoisseurs also remember to buy sharp ceramic knives, vacuum flasks, Heat-Tech (heat-generating underwear by UNIQLO), as well as high-tech lavatory seats called Washlet and rice cookers designed for use back in your home country.

Never miss 100-yen shops either. You may associate your local dollar shop with poor quality. But, please believe us, many foreign fans ask us to buy souvenirs from these Japanese dollar shops locally called hyakkin. Some even have three or four storeys, like the sort of Daiso on Takeshita Street of Harajuku. These neatly designed practical products, from kitchenware, food, and cloth, to electronic products like watches and mobile phone chargers, are mostly tagged at 100 yen ($0.83). These items are in fact made in China or other parts of Asia, yet they satisfy demanding customers both from abroad and Japan alike. In fact, it is not rare to note that more than half the customers on the same floor are foreigners. Buying one special gift for a special person is a lovely choice. Buying 100 neat gifts to 100 friends is also a nice way to share your memories of Japan.

Don’t miss out on a bargain!

I hope we have convinced you that being thrifty never means being petty and having no fun in Japan. The secret is to know where to save money wisely and where to make the most of it. Even on a limited budget, you’ll be able to have great fun and discover Japanese beauty off the beaten trail.

Through our rental offices TSO supports mainly foreign entrepreneurs in starting up their businesses in Japan. We will regularly post useful information, hoping that as many people as possible will discover the charm and potential of Japan. See you again on this blog – or better yet, here in Japan!