Setting up a company in Japan as a foreigner isn’t as difficult as you might guess. Of course, it helped that I knew some things about Japan, and starting off—before I started off.
Of course, speaking, reading and writing Japanese is key, when doing business in Japan. But, unless your Japanese is perfect, don’t even think about doing business with Japanese. Hire Japanese staff, if you want to go that way. Until you are ready to do so, stick with the gaijin market. It’s small but very welcoming, if you have something to offer.
Work ethics in Japan are substantially different. Japanese are expected to work endlessly without proper remuneration. The Japanese kanji for company is composed of two signs meaning meet and shrine. The boss is literally “the oldest of the shrine”. Business in Japan is a form of religion. Of course things change, but in essence work is still a form of religion here. It has its goal in itself. It can’t be questioned. Japanese work long hours, but because being at the company is a mean in itself, they are often not very efficient in doing so. Beware: Japanese are not lazy, and hanging out by the water cooler until midnight and then get slammed with the colleagues at some bar until 6am is not enough to be a good employee. Japanese are really devoted to their company.
A westerner can compete with Japanese work ethics only if he maximizes his strengths, which are: Efficiency and freshness. Japanese simply cannot be as fresh and thus as efficient as we are, because they work too much. Like a sportsman that trains 12 hours a day, a typical Japanese is too religiously working to stay fresh. As I said, things are changing, but in its essence that’s about it. Foreigners have the right to be fresh and the duty to be efficient. In terms of long hours we just simply cannot compete. (And I say so as a former workaholic). But we can think out of the box.
A common prejudice about Japanese is, that they are uncreative. We create, they imitate. From my experience, Japanese are highly creative. Creation is more of a collective achievement that in the West. If you look at Japan as a whole, you’ll find more creativity than in most other countries. Think about Japanese food for example. Japanese are highly creative, but they are too religious about their work to be able to live their creativity. Imitation though is one of the main strengths of Japanese. This makes us “creative Westerners” frown, but think about it: Imitation is the first step of creation. Learning is imitation, writing is imitating, playing music is imitation, cooking is imitation, drawing is imitating. There is nothing to frown about. The fact that we value (and often ridiculously overestimate our own) originality so much has more to do with our proper cultural understanding than with human values in general. However, given all this: The ability and the right to be original should be a major parameter of your business plan, if you set up a company as a foreigner in Japan.
There are many papers you need to get ready and a couple of mysterious actions and transactions and stamps you don’t want to be bothered with. There are many companies that will do that for you. Ask your Japanese friends to find you one of those over the net, and, from there on let the pro handle it. Same thing for the accountant.
Make sure you have enough start capital (about 30,000 USD if you are alone), because it takes a long time until money starts coming in.
Have a business plan but don’t plan yourself to a stand still. Starting small, to get things off the ground, and then shaping from the results, figures and feedback is far superior than getting bogged down with overcomplicated revenue and cost forecasts.