Reasons to Invest

1.An Ever-growing Economy

Japan’s investment environment is improving due to government efforts. The Japanese economy is growing. Japanese economy steadily recovering from deflation GDP is steadily headed toward 600 trillion yen.

2.Five Promises for Attracting Foreign Businesses to Japan (March 2015)

• Improving business and living environment for foreign companies and expats
• Removing language barriers (Display of information in foreign languages at shops and public spaces)
• Improvement of Internet access (Instalment of free public wireless LAN [Wi-Fi])
• Acceptance of business jets at local airports
• Enhancement of educational environment for expatriate children (international schools))
• Strengthening consultation services to support foreign businesses (Investment Advisor Assignment System)

3.Government actively promoting inward FDI

Designation of the National Strategic Special Zones

To promote a wide range of international business and leading-edge industries, 10 National Strategic Special Zones have been designated to bring significant deregulation and reform.

4.A huge and sophisticated market exists in Japan. 

• World’s 3rd ranking GDP 
• Tokyo was first and Osaka seventh place in the 2016 survey. Tokyo will likely maintain first place in 2030. 
• Japan’s regional economies have GDPs equal to those of entire countries
• Attractive market for foreign companies: About 70% of 258 foreign companies cited the “Japanese market” as the “biggest reason” why they do business in Japan. About 70% of 258 foreign companies have answered
• The Japanese market is highly regarded as a source of world standards.
• More and more foreign companies have attempted to eliminate the labor shortage and to improve productivity by leveraging digital technologies such as IoT and cloud computing

5.An Innovation Hub

Japan’s intellectual accumulation generates innovation. 

• World-class research funding and number of researchers
• Japan is very active in R&D and innovation, and has filed a large number of patents, many of which have high universal validity.
• Improving the environment to develop new drugs and medical devices
• Many Nobel Prize winners produced: Physics 11, Chemistry 7, Physiology or Medicine 5, Literature 2, Peace Prize 1

6.Business-Friendly Infrastructure

• Supporting business with well-developed social infrastructure 
• Japan’s workforce infrastructure highly praised globally
• Foreign companies validate Japan’s infrastructure
• Low infrastructure fees
• Japan’s convenient transportation infrastructure

8.A Comfortable Living

• Most livable Japanese cities chosen by the world
• A safe and peaceful country
• Japan having excellent educational systems
• Japan having excellent healthcare systems
• Convenient and livable country

Incentive Programs

To facilitate investment in Japan, the government offers appealing incentives, as well as operating single contact points in relevant ministries and agencies for inquires/support regarding doing business in Japan. Local governments also offer various incentives and support exclusively for foreign-affiliated companies and foreign companies that are planning to open an office in their region.

More information

https://www.jetro.go.jp/en/invest/incentive_programs/ 

Attractive Sectors

1.Business Opportunities related to the Olympics and the Paralympics

Number of inbound tourists crossed the highest ever figure of 28 million in 2017. Many business opportunities are emerging in a diverse range of services including tourism, security and language learning as a preparation due to the upcoming Tokyo Olympics and Paralympic Games in 2020.

In this report, we have introduced the trend of Japanese market, leading players and examples of entry of foreign companies in below mentioned fields that are grabbing attention as new businesses.

(Target Fields)

(1)Cruise, (2)Minpaku(the use of vacant houses as tourist accommodation), (3)Sports and Entertainment Related Business, (4)Cybersecurity, (5)Language Education)

2.Smart Robots

Robots can be broadly divided into either industrial robots (handling welding, painting, assembly, transport, etc., at manufacturing sites), and service robots (used for mobility (transportation), medical/nursing/welfare/healthcare, security, cleaning, infrastructure, and so on).

When it comes to demand for industrial robots, the Japanese market ranks 1st globally by number of robots in operation. Production-wise, around 50% of global robot shipments are manufactured in Japan.

Demand for service robots in Japan is expected to grow significantly at a CAGR (Compound Annual Growth Rate) of 13.9% over the 20 year period leading up to 2035. Japan also has a strong global presence as a production market, ranking 4th in the world by number of service robot manufacturers.

3.Biopharmaceuticals and Biosimilars

Japan’s pharmaceuticals market ranks 3rd globally, and is growing at a compound annual growth rate (CAGR) of 3.4%.

The Japanese government has positioned healthcare as a growth industry, and has made the creation of technologies and services, and development of the supporting infrastructure as part of its growth strategies. To achieve these goals, the necessary regulations are also being developed.

While biopharmaceuticals account for around 30% of overall global drug sales, the products only make up 10% of sales in Japan. As such, rapid growth is projected for the Japanese biopharmaceutical market.

The biosimilars market is also a rapidly growing one, with a variety of products currently under development.

4.Smart agriculture

Size of the domestic market for smart agriculture was approximately 9.72 billion yen in FY 2015, and it will expand to 33.19 billion yen in FY2022. Further, until FY2017 it was primarily cantered on cultivation support solutions such as production control of farm products but after FY2018, it is expected that sales and operational support solutions will increase. In addition, precision farming is expected to expand from around FY 2018, as the systems that realize interworking between manned and unmanned agricultural machineries and systems that realize unmanned operation will get popularized.

5.VR / AR

Up until now, VR/AR has largely been used in Japan for entertainment purposes. However, in the coming years, it is expected that the technologies will be applied in a wide variety of industries, such as medicine, tourism, retail, and manufacturing.

6.Renewable Energy

Keeping in mind the goals of increasing the energy self-sufficiency rate and creating a low carbon society, implementing renewable energy has continued to be important for the Japanese government. Since the introduction of the feed-in tariff (FIT) scheme, the installed capacity of renewable energy has grown by 2.5 times, with solar energy in particular taking center stage.

7Tourism-related business

The Japanese government has been proactively attracting tourists from abroad since the establishment of its “Visit Japan” program in 2003. According the Japan National Tourism Organization (JNTO), 2017 saw 28.69 million inbound tourists who collectively spent a record of 4.4 trillion yen (chart 1). The government had set a goal of “20 million tourists a year by Tokyo Olympics and Paralympics 2020”, but in March 2016 it revised its target significantly to “40 million by 2020” and “60 million by 2030.” 

8.Electricity and Renewable Energy

The Great East Japan Earthquake in 2011 has brought about various influences on the energy environment in Japan. Japan’s energy self-sufficiency has fallen from 58.1% in 1960 to 19.9% in 2010, reflecting advanced fuel conversion from coal to petroleum as energy demand grew during the high economic growth period. The Great East Japan Earthquake caused a series of power plants to shut down one after the other, leading to a further decline in energy self-sufficiency, which fell to 6% in 2013. Imports of fossil fuels were sharply increased to make up for that shortage. During that time, along with the soaring of crude oil prices internationally up until the summer of 2014, increased imports of fossil fuels also became a factor in the significant deterioration of the balance in trade. That situation lead to a rise in electricity prices and produced a significant impact on industrial sectors, including SMEs and small businesses, as well as households. (Updated July 2016)

9.Life Science

Japan, with a share of around 10 percent in both the global pharmaceutical product and medical equipment markets, boasts the world’s number two market next to the US. A number of foreign companies have entered the Japanese market and are operating in various fields as major players. 

10.ICT

The ICT industry has been rapidly growing and changing worldwide with the expansion of smartphones and cloud services. The changes range widely from content platforms or upper layer industry, the ICT service industry including B2B solutions or data center businesses, the integrator industry responsible for system construction, telecommunications carriers establishing mobile and fixed communications, and telecommunications equipment vendors providing telecommunications equipment, to terminal makers manufacturing smart phones or liquid crystal televisions. 

Successful stories

https://www.jetro.go.jp/en/invest/success_stories/

Japan External Trade Organization

Tel: 03-3582-5511

sfc-marketing2@jetro.go.jp