Foreign Entrepreneurs: Taking advantage of the ‘Gaijin Factor’

By Dave Mori, President of the Entrepreneur Association of Tokyo

When I first moved to Japan just 6 years ago, I was dismayed to discover that many of my Japanese friends didn’t know what an entrepreneur was. As a student I had heard compelling tales of Japan’s terrific entrepreneurial growth in post-war Japan and I couldn’t understand how entrepreneurship had seemingly disappeared from the Japanese way of life. However, on closer inspection, I discovered that the entrepreneurial spirit was alive and well and varied from neighborhood mom-and-pop shops to high profile movers and shakers like Livedoor’s Takafumi Horie and Rakuten’s Hiroshi Mikitani. Through the process of starting a business of my own, I learned that the Japanese marketplace is abundant with opportunities for foreigners wishing to stake a claim. It may require a little more ingenuity, persistence and time than starting a business in your home country, but becoming an entrepreneur in Japan is well worth the extra effort.

Opportunity landmass
With over 128 million people crowded onto a landmass smaller than California and the second largest economy in the world there is no doubt why Japan makes an attractive location for anyone wishing to start a business. No matter what product or service you are selling, chances are, you will find someone willing to buy it here. Greater Tokyo alone has more than 35 million people— compared with just over 33 million in all of Canada—making it a great entry point for a new business looking for a large audience.

"No matter what product or service you are selling, chances are, you will find someone willing to buy it here"

Opportunity abounds for those who are willing to take the plunge in establishing their business in Japan, but that is not to say that everything will be smooth sailing. The most common hurdle for new foreign entrepreneurs is, of course, the language barrier— very little incorporation, tax, banking or business support information can be found in English. The easiest solution to this is to invest quickly into intensive Japanese language training or find Japanese partners or administrative staff who can assist you with difficult paperwork or communication. If you have enough start-up capital there are also many English-speaking firms to whom you can outsource almost any portion of your start-up or operational tasks.

Being a duck out of water doesn’t necessarily have to be a disadvantage though. Natalia Roschina, Director of For ALL Co Ltd, a Hokkaido-based enterprise which markets honey and natural products in Japan, sees her perceived language-barrier as a plus: “As a foreigner, many people assume I don’t understand Japanese and I often get special help filling out forms at Japanese offices,” she says. “I get to catch up on reading while they fill out the forms!”

Illustration: EntrepreneurIllustration:

Stand out with the ‘gaijin factor’
One unusual benefit for foreign entrepreneurs can be described as the ‘gaijin factor,’ which simply means that your business or service automatically stands-out or receives special attention because you are a foreigner. The Japanese interest in foreigners means that there are many opportunities to publicize your business for free in the form of newspaper and magazine articles and TV programs. This can significantly reduce your advertising and promotional budget, freeing up cash for other aspects of your business or providing exposure you wouldn’t otherwise be able to afford. As the saying goes, if you’ve got it, flaunt it and take as much free exposure as you can get to market your products and services. Entrepreneurs like Salvatore Cuomo and Nicolai Bergmann have successfully leveraged their foreigner status and expertise in food and flower arrangement respectively into celebrity fame and fortune.

Network advantage
Whether you are foreign or Japanese, getting out there and making yourself and your business known is essential to your success. Tokyo is often referred to as the smallest big city in the world. It is not uncommon to bump into the same groups of people several times a month at events around town. With such a tight-knit business environment it really pays not only to show up at the door, but to become an active participant in the networking scene. By getting involved and helping other entrepreneurs through referrals, advice or cross-promotions, you can make important connections and build relationships. Japan is still very much a relationship-based society so a giving spirit goes a long way towards establishing a solid reputation for yourself and your business.

Japan’s increasingly wider gateway
In recent years the Japanese government has began stepping-up its efforts to encourage entrepreneurship. The most significant change was in May of 2006, when there was a major re-write of the commercial code which did away with the cumbersome capital requirements (US$27,000 for Yugen Kaisha and US$90,000 for Kabushiki Gaisha) for incorporating a business. This change allows anyone to incorporate a company with only 1 yen in capital, plus the standard incorporation fees.

The Ministry of Economy, Trade and Industry (METI) also introduced the Dreamgate program which encourages and supports young Japanese entrepreneurs. For non-Japanese entrepreneurs there is the Japan External Trade Organization (JETRO) and a slew of business networking events such as the Entrepreneur Association of Tokyo NPO, International Computer Association, Foreign Executive Women, The Pink Cow Conspiracy and Tokyo2Point0. Concern over Japan’s aging population will most likely increase opportunities for foreign entrepreneurs as well. There will likely be a sharp rise in the number of foreign entrepreneurs in the coming 10-20 years as Japan is forced to loosen immigration policies to help off-set the decreasing population and labor force.

Start small, build up
For those who are considering starting a business in Japan, a few pieces of advice from two Tokyo entrepreneurs could prove useful. Andrew Silberman, president and chief enthusiast of AMT Group says, “Triple your estimate of time and money it will take before you are profitable. Patience is a virtue.” Andrew Shuttleworth, founder and connector of CVP (Customers, Vendors, People) reiterates Silberman’s advice with, “Things take time in Japan so it may take longer than you expect to build a customer base. Start small and build up!” Your road to success in Japan may have a few bumps along the way and may take longer than you plan but it is guaranteed to be challenging, fun and worth the ride. Just remember to keep your hands on the wheel and have a great time! JI

Dave Mori is co-founder and president of the Entrepreneur Association of Tokyo NPO and co-founder and president of English OK Co, Ltd.



About 3 years ago, my company sent me to Tokyo to start up business in Japan. This article contains everything I tried to teach the mgt about starting a business in Japan, but they wouldn't believe me. Perhaps if I had this article as ammunition they would have believed me.
By the way, JETRO is indispensable when it comes to starting a company in Japan.