TT-713 -- Do You Really Need an Office in Japan? E-biz news from Japan.

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, June 9, 2013, Issue No. 713


- What's New -- Do You Really Need an Office in Japan?
- News -- Despite corrections, Soros reckons market will resume
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Seafood in Kanda, Ramen in Sapporo
- News Credits

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One of our related business units, Japan Inc. Holdings, assists foreign companies to set up in Japan. Not just the back office, the company deals with a wide range of situations, challenges, and solutions, so that the client's foreign head office management feel that they are in control. All too often foreign firms delegate their operations to a local CEO, who is tasked to set up the company based on his/her preferences and with little regard to head office best practice, investment timing, or actual cost. In particular, local-hire CEOs like to have a local office fully operational from Day One, making sure that they look committed to their customers, regardless of actual sales and timing of incoming revenues.

And so the question Japan Inc. Holdings most gets asked by smaller companies is, "Do I really need an office to do business in Japan?"

The short answer to this is that it depends. If you are advanced in your negotiations with your partner/distributor/initial customers, where income-earning contracts are already signed, then you don't have much option but to invest to the extent that the new business and its strategic value warrants. Therefore, the simple answer is "yes". But even at this stage, just what that office should look like should be connected to the level of business that you are doing and the certainty in getting more, not the wish of your new management to appear "successful".

If your head office is limited in cash, or if your first Japan order is not backed up with guarantees of repeat business, then a massive upfront investment is inappropriate. Pride is not a valid basis on which to make business decisions, even in Japan. One way to overcome this hurdle is to consider NOT opening an office at all but instead putting your first couple of hires directly into your distributor's office. Let your better established local partner deal with the costs and logistics of setting up office space. Yes, your distributor will want more margin for doing so, but this will considerably reduce your risk and you can always go back and re-negotiate the deal in 3 year's time (make sure you leave room for future re-negotiations in the initial business contract).

If on the other hand you are still in early-sales mode, where you have prospects but no orders yet, then if you're being told by potential partners that you need a Japanese address, your options are several. Firstly, you can consider a serviced office from one of the many vendors in town, or even a virtual office. The difference between the two is that a serviced office vendor lets you work at their premises daily, generally in a fixed room or booth, while a virtual office just gives you a mailing address, at your option (but not always) a telephone receptionist, access to meeting rooms, and limited time in a shared work space or lounge. We did a short survey of what is available in Tokyo in terms of virtual offices, and found one vendor offering a business address service for just JPY7,900/month, while another offers a dedicated downtown work space for just JPY6,000/day. See at the end of this Take for the list and pricing.

Your second option is to outsource your business development. More on this below.

[Continued below...]

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[...Article continues]

Going back to that original question about needing an office, there is also a long answer, which requires a question in return. "Are you being asked for an office or something more?"

When a Japanese distributor or customer tells you that they require you to have an office in Japan, they're not necessarily talking about the physical facility, but rather your commitment to supporting the relationship locally. This is a far deeper question than just desks and meeting rooms, and involves a commitment to human resources both in Japan and back home, local service and support competence, training, local inventory, delivery systems, PR, marketing, etc. Again, if you're confident in the business coming in, then with about JPY100m you can marshall a band of consultants to provide the real estate, furniture and fit-out, office systems, recruiting, marketing campaign, and other start-up services needed to put a 5- to 10-person start-up together. Depending on your luck in recruiting competent managers, setting up will take between 3-6 months. Our guess is that about 20% of incoming foreign companies use this front-loaded approach.

But if you're in the other 80% and your business case is still weak, with first sales yet to come in, then the requirement to have people on the ground in Japan will be an basic conflict with economic reality. The solution is surprisingly not that difficult, and is an advanced version of a virtual office -- whereby you can also "virtualize" (outsource) your workforce and even your entire presence in Japan. Japan Inc. Holdings has done this a number of times, with each solution taking a slightly different format depending on the objectives of the client. Other companies also provide partial and full outsourced representation in Japan -- usually offering an incubator style of support.

The two most common ways to virtualize the operation are: i) hire in your own key staff to look after strategically important activities (sales, marketing, business development, etc.) and use the outsourcing firm to fill in the gaps -- generally accounting, HR, compliance, tax, and technology, or ii), having the outsourcing company run everything and supply their services on your behalf to your clients, all delivered on a performance basis. This second approach requires a lot more faith in your outsourcing partner, but if it works, you can really cut initial costs, since the outsourcing vendor's staff can multi-task between your account and those of other customers.

If you've decided that you want to go whole hog on your Japan commitment, the good news is that office space in Tokyo and other major cities is cheaper than it has been in more than 15 years, with the latest Miki Shoji office occupancy survey showing that the average rental rate in the Tokyo CBD is JPY16,467/tsubo (3.3 sq. m.), the lowest rate we can recall since the end of the 1990's. Now this may well be the bottom of the market, because the May report from Miki Shoji says that the vacancy rate fell for the 3rd month in a row, to 8.33%, and that there are no new major buildings due to come on line for the next couple of years. So if you're thinking of taking a new office, now is probably a good time to do it.

Nonetheless there is no doubt that Japan is still an expensive country to do business in. Therefore, in an effort to point the way to some low-cost options, we thought it would be fun to do a round-up of the virtual office segment. We were surprised. There are some real bargains out there, so long as you don't mind sharing rooms with others. This is not an exhaustive list, nor does it cover the many optional and advanced services that such vendors offer. All the companies listed here appear to have bilingual support.

+++ Tokyo, Virtual Office vendors round-up (monthly JPY rates)

* The Executive Center -- 2 locations. Services: business/mailing address JPY16,500, receptionist JPY18,000, both JPY33,000, virtual office option is JPY45,000 and allows you to use shared workspace for 40 hours/month

* Compass -- 2 locations. Services: business/mailing address JPY7,900, receptionist JPY15,900, both JPY19,900, virtual office option is JPY29,900 and allows you to use shared workspace 5 days/month

* Moboff -- 3 locations. Services: business/mailing address JPY19,800, receptionist (appears to be Japanese only) JPY6,300, virtual office option is JPY500/hour

* Regus -- 21 virtual office locations around Japan. Kamiyacho office pricing: business/mailing address JPY16,900, receptionist JPY22,900, both JPY33,900, virtual office option is JPY37,900 and allows you to use a shared booth 5 days/month

* ServCorp -- 21 locations around Japan. Hibiya office pricing: business/mailing address JPY14,000, receptionist JPY14,000, virtual office plus meeting rooms usage is JPY31,000 and allows you to use the business lounge for up to 3 hours/day

+++ Also, we found the following very low-cost full-time shared office company with very attractively finished offices:
* Agora -- 1 location (Shibuya) -- JPY55,000 for full-time dedicated booth, also includes 10 hours/month meeting room space, no receptionist.

...The information janitors/


----------------- Partial Office for Sub-let --------------

Modern open-plan office used for incubating small international/start-up companies has a recently vacated space for a group of 3-5 people. Located just 200m from Roppongi Hills. JPY275,000 including furniture (desks and chairs), or JPY250,000 if you bring your own. Internet included on common (unsecure) connection. Separate charges for utilities, phones. Minimum 6-month contract. Deposit required. We can also supply bilingual (English-Japanese) back office services, such as HR and accounting, business mentoring, technology outsourcing, and other assistance as required.

For inquiries, contact

+++ NEWS

- Despite corrections, Soros reckons market will resume
- Prosthetic pinkies for ex-Yakuza
- Record low number of babies in 2012
- NTT Data starts Japan sales for Korea Datacenter
- DoCoMo to shake up cell phone pricing in 2014

=> Despite corrections, Soros reckons market will resume

A bit like those that follow the investment moves of the "oracle from Omaha", Warren Buffet, international investors with a currency focus will be looking at the actions of George Soros and his firm, Soros Fund Management. After recently selling up his bets against the yen and Japanese stocks, and making a reported US$1bn in the process, his fund is apparently buying shares again. He is going after global multinationals and medium-cap growth stocks -- a contrarian move if you look at the massive wave of selling by foreign investors over the last couple of weeks. ***Ed: Hmmm, so what does Soros see that the rest of us don't? Yes, Japanese exporters are enjoying windfall profits thanks to the low yen, but isn't that a temporary phenomenon?** (Source: TT commentary from, Jun 07, 2013)

=> Prosthetic pinkies for ex-Yakuza

Interesting little piece from ABC News about the prosthetic finger trade for aging and ex-Yakuza. As is well known, Yakuza who upset their bosses can be ordered to sever their left pinkie to atone for their offenses. Usually at the first joint for the first offense, then the second, then possibly other fingers. For those who want to put their past behind them, there is apparently a prosthetic pinkie specialist in Tokyo who serves the market. A custom-made, custom-colored pinkie sells for about JPY300,000, and the prosthetics company reckons that it has sold 300 so far. ***Ed: Pretty decent business, so long as you don't have an upset customer after botching up an order..." (Source: TT commentary from, Jun 07, 2013)

=> Record low number of babies in 2012

Although the trend is not substantial yet, according to a Health Ministry survey the nation's population fell by 219,153 people last year, the most on record in the post-war period. The biggest reason for the drop was the fact that the number of babies being born is declining, dropping to a new low of 1,037,101 in 2012. This is about 13,705 less kids than 2011 -- not a big difference, but with the increased number of aged, it means that the shrinkage in the population will continue to accelerate. The survey also found that more women are having babies in their 40's, with about 8,700 more babies being born to mothers aged 40-44. (Source: TT commentary from, Jun 07, 2013)

=> NTT Data starts Japan sales for Korea Datacenter

In an interesting move for the Data Center (DC) world, NTT Data has tied up with LG Electronics in South Korea, and is selling South Korean DC services to Japanese clients. Since South Korea has few earthquakes, it is thought that Japanese firms will be interested in the facility for data backup and server redundancy. Line latency is relatively low thanks to Busan's close proximity, and South Korean DC pricing is about 20%-30% cheaper than it is in Japan.
(Source: TT commentary from, Jun 08, 2013)

=> DoCoMo to shake up cell phone pricing in 2014

In a move that is normally expected from cell phone carrier maverick Softbank, NTT DoCoMo is rumored to be planning a flat-rate JPY1,000/month all-you-can-use voice service plan for its subscribers in April 2014. The new plan will dramatically reduce the phone bill of voice users, and is intended to improve subscriber retention and stop them from moving to Softbank or AU. DoCoMo will apparently use its LTE network to provide the VoIP service, which will appear to users as if it is a standard phone call. Currently DoCoMo earns about JPY1,730/month/user for voice, so the new plan is expected to cut deeply into its revenues in the short-term. (Source: TT commentary from, Jun 08, 2013)

NOTE: Broken links
Some online news sources remove their articles after just a few days of posting them, thus breaking our links -- we apologize for the inconvenience.


------ The Robert Grondine Memorial Scholarship Fund ------

In 2011, we lost a great friend and colleague, Bob Grondine. Bob made considerable contributions in Japan to the legal and business community as well as important civic and charitable efforts. Not only was Bob a wonderful friend, family man and mentor, he was also a role model as a leader in US-Japan relations.

Among a number of US-Japan causes, Bob was an important supporter and chair of the Japan Advisory Committee of the United States-Japan Bridging Foundation, an organization established to grow global leaders through a program providing scholarships to American college students to study in Japan. Students designated as Grondine Scholars will be selected for their ability to emulate Bob's intellect and spirit as well as his dedication to the
US-Japan relationship. The fund will keep his mentoring spirit alive and memorialize his great legacy.

Donations of all amounts are welcome. To learn more, visit or click on the link below. Thank you.


=> BiOS, a leading bilingual IT services and resourcing company, is actively marketing the following positions for customers setting up or expanding in Japan, as well as other employers of bilinguals.


BiOS is urgently looking for a Desktop Support Engineer with experience providing end user support both in English and Japanese, at the client’s office in the Tokyo area. The candidate will be responsible for providing 1st level technical support by email and phone (remote support) regards to requests and issues of end users’ PC, desktop, servers, etc., as well as providing 2nd level technical support at users’ desks such as; PC setup, application installation, etc. You will also be responsible for operating and troubleshooting Windows servers including Exchange server.

Due to the technical nature and demanding work environment, this position is suitable for someone with solid experience in IT hardware support with basic understanding of office IT infrastructure. In addition, since this role requires direct communication with end users in English and Japanese, business-level English and fluent Japanese is required.

Remuneration is JPY4m - JPY4.5m, depending on your experience and skill level.


- Helpdesk Engineer, Japanese IT services provider, JPY 3.5M - JPY4M
- Corporate Assistant, BiOS, JPY3M - JPY3.5M
- Bilingual Data Center Engineer, global IT services provider, JPY3M - JPY4M
- Project Manager, global payment services provider, JPY8M - JPY9M
- Junior Account Manager, BiOS, JPY3.5M - JPY4M

Interested individuals may e-mail resumes to: Check out the BiOS web page for other jobs:

** BiOS Job Mail

Every 2 weeks BiOS sends out a regular communication to its job seeking candidates, called BiOS Job Mail. Every edition carries a list of BiOS’s current and most up-to-date vacancies, with featured entries containing a short job description and every job being linked to the main entry on the BiOS home page. Regardless of whether you are unemployed and searching, thinking about a career change, or just curious to know if there is something out there that might suit you better, the BiOS Job Mail newsletter is an easy and convenient way for you to stay informed. If you would like to register for the BiOS Job Mail, or to find out more, please email



------------------ ICA Event - June 20 --------------------
Speaker: Jean-Denis Marx , Lawyer for Baker & McKenzie

Title: "Practical Japanese Labor Law Guide for Employees"
Details: Complete event details at
Date: Thursday, June 20th, 2013
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members)

Open to all. No sign ups at the door!!!!!!!
RSVP: RSVP by 5pm on Friday, June 14th. Venue is The Foreign Correspondents' Club of Japan



In this section we run comments and corrections submitted by readers. We encourage you to spot our mistakes and amplify our points, by email, to

=> No corrections or feedback this week.



=> Isegen Restaurant Akihabara, Kanda
Seafood served traditionally in a heritage listed house

Isegen Japanese Monkfish Restaurant is housed in a historical building in a quiet lane away from Akihabara and Kanda Stations. In a city blessed with so many Michelin quality restaurants, from Araki to Yoshitake, it can be difficult to stand out with a unique dining experience, but Isegen is one I highly recommend.

Isegen harks back to the days where dining is simpler, with local unadorned cuisine in a historic house that looks traditional but not dated. Its link to the past is unbroken for over 100 years, being in the same location that served the neighborhood when bento deliveries on bicycles were more commonplace. In some ways it reminded me of Honke Owariya, the 500 year old noodle house in Kyoto.

=> Ramen in Sapporo at Meijinbou, Hokkaido

Saying you’ve had ramen in Sapporo is like saying you’ve had pizza in New York City. Allegiances are drawn, sides are taken and loyalties are established. The task of choosing a ramen shop for the very first time in Sapporo can be a daunting one, but also an exciting culinary adventure. Of course, I had heard of the famous Susukino Ramen Alley but it was much smaller than I anticipated and many of the shops were rather quiet, with only a few showing signs of life.

Prior to arriving in the alley I had already decided I would eat at a nearby restaurant away from the tourist area: Ramen Meijinbou. The starting point of any bowl of delicious goodness is the broth. In Sapporo, miso ramen is king and the rich, almost creamy broth is so good that you won’t want to leave a single drop. It is ramen, so that slightly chewy texture of the noodles mixes perfectly with the aforementioned broth. Then there is the pork. My Kakuni Ramen cost JPY1,000 and was served in a very large bowl. Sitting atop the mountain of steamy ramen were five, count them, five slices of fatty, rich, melt-in-your-mouth slices of slow roasted pork belly.



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