Doing business in Japan




Doing business in Japan

Before starting business in Japan each company has to face the problem of choosing the right form of performing a business activity.

Foreign companies generally establish a business in Japan in one of three forms:

  • The Representative Office
  • The Branch Office
  • The Subsidiary Company

The answer which type of business form is the best for certain economic activity can be found in interviews and experts opinions provided here, but let’s look at the legal possibilities regarding setting up a company.

In general, the representative office provides overall information about the business, advertises the activity and does market research. The representative office could be effectively used to make preparations for future direct investments. Therefore the scope of this  kind of business activity is very limited.

The Japan branch office, in contrast to representative office, could  constitute a business’ place in profit marketing purposes and can undertake business activity. There are requirements that the representative of the branch officemay not be Japanese but must be a resident in Japan. Therefore this option is not available for each foreigner starting business in Japan.

The third option is the subsidiary company incorporated under Japanese law.

The form that is chosen by most foreign companies in Japan is: Kabushiki-Kaisha (K.K) joint-stock corporation. Other possibilities are: the limited liability company (Godo-Kaisha), or similar entity stipulated by Japan’s Companies Act. Both unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) are not chosen often because of unlimited  liability of the participants.

Let me tell you a little more about the most common business in Japan:
Kabushiki- Kaisha – the Japanese equivalent of the joint stock corporation of the limited liability public corporation.  Any business entity, smaller or larger, is free to incorporate as a K.K. It is also possible to use Kabushiki Kaisha form for one-person company. Such a solution is often used by an individual who intends to take advantage of the limitation of liability or by a foreign company that establishes a subsidiary instead of branch in Japan.
The management of the company is divided between the general meeting, the board of directors and the auditors.

Other methods in which a foreign company may invest in Japan using a Japanese corporation but without establishing a subsidiary are establishing a joint venture with a Japanese enterprise or investment company, and by performing equity participation in a Japanese enterprise.



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