ABOUT JAPAN

 Amongst all the countries in East Asia, Japan is an island nation located in the Pacific Ocean, comprising a stratovolcanic archipelago of 6,852 islands. It is a highly developed country, renowned globally for its advanced technology, precision manufacturing, innovative research, and rich cultural heritage. From its ancient traditions to its futuristic cities, Japan is a land of contrasts and continuous evolution. Tokyo is the capital and largest city, serving as the world’s most populous metropolitan area and a leading global center for finance, business, culture, and innovation. According to the World Bank and IMF, Japan is classified as a High-Income and advanced economy.

The currency of Japan is the Japanese Yen (JPY). As of today’s exchange rates (June 2025), 1 Japanese Yen is approximately 0.53 Indian Rupees. The population of Japan is estimated at approximately 122.9 million in 2024, facing demographic challenges due to an aging and declining population. Japan is surrounded by the Pacific Ocean, the Sea of Japan, the East China Sea, and the Sea of Okhotsk. It shares maritime borders with Russia, North Korea, South Korea, China, and Taiwan. The official language is Japanese. While English proficiency is improving, particularly in business and tourism sectors, it is not as widely spoken in daily life compared to some other developed nations. Shintoism and Buddhism are the dominant religions, often practiced in conjunction, alongside smaller communities of Christians and other faiths. Major international airports include Narita International Airport (NRT) and Haneda Airport (HND) in Tokyo, and Kansai International Airport (KIX) serving the Osaka region. Its key commercial seaports are the Port of Tokyo, Port of Yokohama, Port of Nagoya, Port of Osaka, and Port of Kobe, all crucial for its vast international trade and industrial activities.

The standard effective corporate income tax rate in Japan, including national and local taxes, typically ranges from approximately 29.7% to 30.6% for large companies, with lower rates for small and medium-sized enterprises. Japan offers various investment incentives to attract foreign direct investment, particularly in strategic sectors and for regional revitalization. These incentives are primarily administered by the Japan External Trade Organization (JETRO) and the Ministry of Economy, Trade and Industry (METI). They include:

• Tax Incentives: Special tax depreciation, tax credits for R&D expenses, investment in digital transformation (DX) and green technologies, and regional revitalization efforts.
• Subsidies and Grants: Support for establishing new businesses, R&D projects, job creation, and promoting specific industries.
• Special Economic Zones: Designated zones offer deregulation, tax benefits, and streamlined administrative procedures to attract foreign investment in specific high-growth areas.
• Loan Programs: Access to low-interest loans from government-affiliated financial institutions. Opesh Group of companies will be helping you in completing the Due Diligence process which includes financial planning, registration process, business options, and if required, even helping you find a Rental property for your office.

Establishing a business in Japan is generally straightforward for foreign investors, with a clear legal framework and strong support from government agencies. The most common legal structures include a Stock Company (Kabushiki Kaisha – K.K.) or a Limited Liability Company (Godo Kaisha – G.K.). A Branch Office is also an option. Japan’s foreign investment laws are liberal, generally allowing 100% foreign ownership in most sectors, with exceptions in some sensitive areas (e.g., certain public utilities, national security-related industries). The government actively promotes FDI to stimulate economic growth and innovation.

In case an investor is planning to establish a Kabushiki Kaisha (K.K.) or a corporate business setup in Japan, Opesh Group will be helping you in taking the right decision for setting up your business in Japan and we will also guide you about how to follow the procedure while formulating your company in Japan.

Types of Business which can be started in Japan:

• Advanced Manufacturing: Leading the world in robotics, precision engineering, high-tech materials, industrial machinery, and automotive (including EVs and hydrogen vehicles).
• Digital Transformation (DX): Significant opportunities in AI, IoT, Big Data analytics, cloud computing, cybersecurity, and digital solutions across various industries due to ongoing digitalization efforts.
• Renewable Energy & Green Technology: Strong focus on hydrogen economy, offshore wind, solar, and energy storage solutions as Japan aims for carbon neutrality.
• Healthcare & Life Sciences: Opportunities in pharmaceuticals, medical devices, regenerative medicine, elderly care services, and digital health solutions due to its aging population.
• Tourism & Hospitality: Significant potential in hotels, resorts, unique cultural experiences, and related services, particularly as international travel recovers.
• Fintech: Innovations in digital payments, blockchain, and financial technology.
• Agritech & Food Technology: Solutions for sustainable agriculture, smart farming, and food innovation.

Advantages of Starting Business in Japan:

• Advanced & Stable Economy: A highly developed market with strong purchasing power and political stability.
• Technological Leadership: A global leader in R&D, innovation, and high-tech industries.
• Skilled & Disciplined Workforce: Highly educated, productive, and dedicated labor force.
• World-Class Infrastructure: Excellent transportation, telecommunications, and digital infrastructure.
• Strong Domestic Market: A large and sophisticated consumer base.
• Strategic Location: Gateway to other major East Asian markets.
• Robust IP Protection: Strong legal framework for intellectual property rights.

Imports & Exports: Japan is a major global trading nation, known for its high-value-added manufactured goods and reliance on imported raw materials and energy.

Major items which are exported from Japan:

• Automobiles
• Electronic Integrated Circuits
• Machinery (including power generating and non-electric machinery)
• Iron and Steel Products
• Plastics
• Optical and Medical Instruments
• Automotive Parts

Major items which are imported in Japan:

• Crude Petroleum
• Liquefied Natural Gas (LNG)
• Coal
• Electronic Integrated Circuits
• Petroleum Products
• Foodstuffs (e.g., fish, meat, cereals)
• Machinery and Equipment
• Pharmaceutical Products

Major items traded between Japan and India (as of June 2025): Trade relations between Japan and India are growing, fueled by comprehensive economic partnership agreements and increasing collaboration.

• Exports from Japan to India: Primarily Machinery, Iron and Steel products, Electrical Machinery, Transport Equipment (automobiles, parts), Organic Chemicals, and Plastic Materials.
• Imports in Japan from India: Include Petroleum Products, Iron Ore, Organic Chemicals, Seafood, Ready-made Garments, and Pharmaceutical Products. Indian IT and pharmaceutical companies also have a growing presence in Japan.

Manufacturing: Manufacturing is the bedrock of Japan’s economy, renowned for its technological sophistication, high quality, and innovation. It is highly diversified, focusing on high-value-added products.

• Automotive: Home to global giants like Toyota, Honda, Nissan, producing high-quality vehicles and constantly innovating in EV and hybrid technologies.
• Electronics: Specializing in advanced components (semiconductors, displays), industrial electronics, and robotics rather than mass-market consumer electronics.
• Robotics: A world leader in industrial robots and advanced robotics for various applications.
• Machinery: Production of precision machinery, industrial equipment, and machine tools.
• Steel: Advanced steel production, including high-strength and specialized steel.
• Chemicals: Extensive production of fine chemicals, specialty materials, and basic chemicals.
• Precision Instruments: Cameras, optical instruments, medical devices. Japanese manufacturing is characterized by lean production, continuous improvement (Kaizen), and significant R&D investment.

Mining: Japan is extremely poor in natural mineral resources and is heavily dependent on imports for nearly all raw materials, including fossil fuels and most metallic minerals. The mining sector is negligible in its economic contribution.

• Coal: Very limited domestic coal production remains, primarily for specific industrial uses, with most coal needs met by imports.
• Limestone: The most significant domestic mineral, used extensively in cement production and other construction materials.
• Minor non-metallic minerals: Some aggregates and industrial minerals are extracted. Japan’s economic strength is derived from its advanced manufacturing, technological prowess, and human capital, rather than its natural resource base.
• GDP = $4.4 trillion (nominal, 2024 est. IMF)
• GDP Growth = 0.8% (2024 forecast, IMF); 0.7% (2025 forecast, IMF)
• Ease of doing business rank = The World Bank’s ‘Doing Business’ report has been discontinued. In its last edition (2020), Japan ranked 29th globally out of 190 economies, recognized for its strong performance in areas like dealing with construction permits, getting electricity, and enforcing contracts. While known for its robust regulatory environment, some areas like starting a business can still involve complex procedures.
• GDP per Capita = $36,252 (nominal, 2024 est. IMF)

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