5 Frequent Questions on Company Establishment in Japan

Key takeaways:

Understand your visa pathway first. The choice between Business Manager Visa (direct) and Startup Visa (staged) affects your entire timeline, capital needs, and operational strategy.

Plan for ¥30 million or alternative pathways. If you cannot meet the capital requirement, the Startup Visa gives you time to raise funds, find investors, or demonstrate business viability.

Hire strategically. Your mandatory full-time employee must meet specific residency criteria. Consider this requirement when building your team and budget.

Leverage government support. National and local governments offer substantial subsidies, mentoring, and resources for foreign entrepreneurs, particularly in Tokyo, Osaka, Fukuoka, and other startup-focused cities.

Prioritize compliance. Tax and social insurance compliance are now examined at visa renewal. Build proper systems from the start.

Establishing a business in Japan has undergone significant regulatory changes since late 2025, fundamentally altering the pathway for foreign entrepreneurs. If you are asking “How to establish a company in Japan as a foreigner?” or “How to open a business in Japan?”, this guide provides current, accurate answers based on the regulatory landscape as of 2026.

The most critical change you need to understand: the Business Manager Visa requirements transformed dramatically in October 2025, with capital requirements increasing sixfold from ¥5 million to ¥30 million, alongside new mandates for hiring, management experience, and Japanese language proficiency. However, the expanded Startup Visa program now provides a viable two-year pathway for entrepreneurs who cannot immediately meet these requirements.

This guide covers the specifics of funding, operational infrastructure, marketing, and recruitment. If you are in the preliminary stages of your journey, we recommend checking out our article on Setting up a company in Japan for a broader overview, as well as our Guide to Doing Sales in Japan.

What are the Current Market and Business Opportunities in Japan?

Japan, the third-largest economy globally, offers a myriad of business opportunities and growth potential. However, to truly succeed in this vibrant market, understanding its current trends, and consumer preferences, and identifying potential business opportunities is crucial. In this section, we’ll delve into these aspects to equip you with the knowledge needed to make informed decisions about your business venture.

Researching and Identifying Potential Business Opportunities

Before embarking on your business journey in Japan, it is important to conduct thorough research to identify viable business opportunities. Japan is known for its technological advancements, robust manufacturing sector, and strong service industry, which are potential areas for business.

However, it’s essential to go beyond the surface level. Start by analyzing the needs of the Japanese consumer. Keep an eye on industry reports and economic forecasts, and consider seeking advice from business consultancies that specialize in the Japanese market.

For a detailed guide on conducting effective market research in Japan, refer to our comprehensive article on Market Research in Japan. This resource will provide valuable insights into the Japanese market, aiding you in identifying lucrative business opportunities.

Current Market Trends and Consumer Preferences

Understanding prevailing market trends and consumer preferences in Japan is integral to any business endeavor. Let’s examine key areas shaping Japan’s business landscape and offering opportunities for entrepreneurs in 2026.

Health Tech

Japan’s Health Tech industry continues its transformation, driven by an aging population and government commitment to healthcare digitization. Remote patient monitoring, telemedicine, and AI-assisted diagnostics remain high-growth areas. The city of Kobe continues leading in medical and health technology through its Life Tech Kobe initiative.

The Japanese government actively promotes digital transformation in healthcare through its Japan Vision Health Care 2035 initiative. Innovations in robotic nursing care, home medical devices, and integrated health data management platforms present opportunities for both local and foreign startups.

The Japanese government is supporting this shift in preferences by actively promoting a digital transformation in healthcare. The initiatives focus on enhancing patient care and improving medical institutions’ efficiency with Electronic Health Records (EHRs) and integrated health data management platforms. This drive towards digitization is highly evident in Kobe’s robust healthcare technology ecosystem.

Innovations in areas such as robotic nursing care and home medical devices are also gaining traction. Government-led visions, like the Japan Vision Health Care 2035, aim to create an environment conducive to Health Tech growth, making Japan a promising market for both local and foreign startups in this sector. A good example is the multinational pharmaceutical and biopharmaceutical company, AstraZeneca.

Agriculture Tech

Facing challenges including limited arable land and an aging farming population, Japan continues investing in Agriculture Tech solutions. Consumer concerns about food safety and sustainability drive demand for innovative farming technologies. The city of Sapporo remains a thriving startup hub within the agri-food sector.

Vertical farming, drone technology for crop management, and precision agriculture are gaining momentum. The government provides financial incentives for tech investments in agriculture, making this sector attractive for entrepreneurs with relevant expertise.

AI and Semiconductor Focus

Japan has made substantial commitments to AI development and semiconductor manufacturing as part of its economic security strategy. Significant public funding is flowing into these sectors, creating opportunities for startups working in deep tech, AI applications, and semiconductor-adjacent technologies.

Green Transformation (GX)

Japan’s commitment to achieving carbon neutrality by 2050 has accelerated investment in green technologies. Tokyo and other prefectures offer specific subsidies for GX-related startups, particularly those focused on renewable energy, carbon reduction technologies, and sustainable business practices.

Government Support for Startups

The Japanese government recognizes the value startups bring to the economy and continues implementing the Startup Development Five-Year Plan announced in 2022, which aims to increase startups tenfold and grow investment to ¥10 trillion by 2027. Tokyo now ranks in the global top 10 startup ecosystems according to the Global Startup Ecosystem Report 2024.

Key support measures include funding aid, tax breaks, startup hubs, and incubation centers. However, entrepreneurs should note that while support programs have expanded, the Business Manager Visa requirements have simultaneously tightened.

Decreasing Population

Japan’s demographic trend of a shrinking population continues presenting market opportunities. The rise in the elderly population drives demand for services in healthcare, finance, and technology sectors targeting seniors. Potential labor shortages create opportunities for businesses providing automation solutions.

Smart Cities

The concept of Smart Cities in Japan has gained momentum, with corporations and cities competing to create innovative urban environments. Corporations invest in IoT, AI, and Big Data analytics for smart solutions. Cities deploy advanced infrastructure and sustainable practices to enhance citizens’ quality of life, fostering innovation and business opportunities.

Public-private partnerships drive the smart city movement in Japan. Collaborating, corporations and cities integrate technology for efficient urban management. To capitalize on this trend, businesses should understand each city’s needs and tailor solutions accordingly. By leveraging advanced technologies and partnering with local governments, companies contribute to sustainable and connected urban environments, meeting market demand for smart city solutions.

Thriving Industries or Sectors for Foreign Entrepreneurs

Additionally, there is a range of thriving industries and sectors that present unique opportunities for foreign entrepreneurs to establish successful businesses. Here are some sectors particularly favorable for foreign entrepreneurs:

• Technology and innovation: AI, IoT, robotics, cybersecurity
• E-commerce and digital services: Online services, cross-border trade opportunnities
• Healthcare and medical technology: Medical devices, telemedicine, innovative healtare
• Tourism and hospitality: Travel experiences, accommodation services
• International education and language services: Language schools, study abroad programs
• Sustainable and green technologies: renewable energy solutions, eco-friendly products

By leveraging your international background, cultural insights, and expertise, you can bring fresh perspectives and innovative solutions to these thriving industries. With the right approach and a keen understanding of Japan’s business environment, foreign entrepreneurs can thrive in these sectors and make a significant impact in Japan’s economy.

However, understanding these trends and preferences is only one side of the equation. The real challenge lies in effectively entering the market and aligning your products or services to these trends. For more guidance on this aspect, check out our Guide to a Market Entry Specialist in Japan, as well as our podcast episode Intro to Japan Market Entry with Maor Shwartz. These resources provide invaluable strategies to effectively penetrate the Japanese market as a foreign entrepreneur, ensuring that your venture aligns with the preferences and demands of the Japanese consumer.

How Have Immigration Requirements Changed for Foreign Entrepreneurs in 2026?

Before exploring funding and operations, foreign entrepreneurs must understand the dramatically changed immigration landscape. On October 16, 2025, Japan implemented sweeping reforms to the Business Manager Visa that fundamentally altered the pathway for establishing a business in Japan.

The October 2025 Business Manager Visa Reforms

The new requirements represent the most significant tightening of criteria for foreign entrepreneurs in decades:

The full-time employee must be a Japanese national, special permanent resident, permanent resident, spouse or child of a Japanese national or permanent resident, or a long-term resident. This requirement cannot be satisfied by hiring another foreign national on a standard work visa.

Transitional Rules for Existing Visa Holders

If you already hold a Business Manager Visa, a three-year transition period applies until October 16, 2028. During this period, renewals will be evaluated case-by-case based on your business performance and concrete plans to meet the new standards. After October 16, 2028, all renewals must fully comply with the new requirements.

The Startup Visa: Your Recommended Pathway

The Startup Visa (Foreign Entrepreneurial Activity Promotion Project) expanded nationwide in January 2025 and now offers up to two years for foreign entrepreneurs to prepare for the Business Manager Visa. This is now the recommended entry route for most foreign entrepreneurs who cannot immediately meet the ¥30 million capital requirement.

Key benefits of the Startup Visa pathway:

The time spent under a Startup Visa now counts toward the three-year management experience requirement, making this a strategic advantage rather than merely a delay.

You do not need ¥30 million capital, an office, or employees at the time of initial entry. These requirements are deferred during the startup period.

As of 2025, dozens of local governments across Japan are certified to sponsor foreign entrepreneurs, including Tokyo, Osaka, Fukuoka, Yokohama, Nagoya, Kyoto, and many regional cities.

To obtain a Startup Visa, you apply through an approved municipality with a viable business plan. If approved, you receive a Certificate of Confirmation of Startup Activity, which supports your visa application to the Immigration Services Agency.

Verification note: The list of implementing organizations (municipalities and approved private organizations) is updated regularly. Check METI’s official Startup Visa page or contact Business Development Center Tokyo for current participating regions.

Which Pathway Is Right for You?

Choose the Business Manager Visa direct route if:

• You have ¥30 million or more in capital
• You have 3+ years of business management experience or a relevant Master’s degree
• You can hire a qualified full-time employee before applying
• You or your employee has Japanese language proficiency at JLPT N2/CEFR B2 level

Choose the Startup Visa pathway if:

• You have a solid business plan but less than ¥30 million in capital
• You need time to network, find investors, or build traction in Japan
• You want your preparation time to count toward the management experience requirement
• You prefer to validate your business model before committing to full Business Manager requirements

For personalized guidance on navigating these pathways, contact us to discuss your situation.

How do you Secure Funding and Finance to Establish a Company in Japan

Securing funding has become even more critical given the October 2025 visa reforms requiring ¥30 million in capital for the Business Manager Visa. Understanding your funding options is essential whether you’re pursuing the direct Business Manager route or using the Startup Visa pathway to build toward those requirements.

Available Funding and Financing Options

When it comes to funding and financing options for starting a company in Japan, there are several avenues worth exploring. Let’s take a closer look at some of the available funding options:

Bank loans: Banks in Japan offer various loan programs specifically designed for startups and small businesses. Understanding the loan application process, required documentation, and eligibility criteria will help you navigate through the banking system and increase your chances of securing a loan. Our podcast episode on Banking and Loans in Japan with Larry Greenberg will help you navigate through the process of securing loans, from necessary qualifications to repayment terms, providing insights into strategies that can improve one’s chances of loan approval.

Note that bank loans may be challenging to obtain before establishing a track record in Japan. Most banks require the business to have operated for at least two fiscal periods before considering loan applications.

Government programs and subsidies: The Japanese government’s support for new businesses through grants, subsidies, and loan programs serves as a critical launchpad for your venture. Identifying government initiatives specific to your industry can lead you to vital financial aid and support. Listen to our podcast episode on How to Get Japanese Government Money for Your Business with Miho Tanaka to learn more about the complexities of securing government funds in Japan. This Tokyo Startup Subsidy List is an excellent reference for available grants and subsidies.

Private financing and venture capital: Private financing, such as angel investors and venture capital have emerged as robust options for entrepreneurs looking to start a company in Japan. Our Guide To Venture Capital in Japan shows that options offer not only the necessary capital but also strategic mentorship to accelerate your business growth. In Japan’s evolving economic landscape, venture capitalists and angel investors are increasingly interested in supporting foreign founders, signaling an exciting shift towards globalized entrepreneurship. See our Japan Investor List of potential venture capital firms and angel investors.

Crowdfunding: Crowdfunding platforms are carving a niche as a viable funding route for those aiming to start a company in Japan. These platforms allow startups to gain traction by connecting with individual investors who contribute to their financial goals. Beyond fundraising, crowdfunding provides a powerful marketing tool, building a buzz and securing early validation for your venture. To get a grasp of this burgeoning space, tune into our podcast Crowdfunding in Japan with Vincent Nicol and read our article on Crowdfunding Products in Japan: How does it work?

Each funding option has its own requirements, benefits, and considerations. Understanding the specific details, application processes, and potential risks associated with each option will help you determine the most suitable financing approach for your new business venture in Japan.

Here’s a table outlining the advantages and disadvantages of each funding and financing option for your new business in Japan:

How do you Set Up Operational Infrastructure when you Establish a Company in Japan?

Establishing robust operational infrastructure is fundamental when starting a company in Japan. This section guides you through location selection, business registration, and supplier relationships.

Location Selection and Business Infrastructure Setup

Location Selection and Business Infrastructure Setup

Selecting an optimal location for your startup goes beyond physical space. You must consider proximity to potential clients or partners, access to talent, infrastructure availability, and the local business culture. Japan’s diverse regions each offer unique advantages.

For Business Manager Visa applicants under the October 2025 requirements, location selection has additional significance: home offices are no longer permitted. You must secure a physical commercial office space with clear business-use designation. Virtual offices are not accepted. The office must have its own entrance, signage, and be clearly separated from residential use if in a mixed-use building.

For Startup Visa holders, location choice determines which municipality sponsors your application. Many cities now offer dedicated startup support programs with English-language assistance. Tokyo’s Business Development Center, Fukuoka’s Startup Cafe, and Osaka’s Innovation Hub all provide resources for foreign entrepreneurs.

Our Ultimate Guide to Japanese Offices provides comprehensive information on office selection. You can also watch our seminar about Renting An Office In Japan with Corey Nedz of Jump Start Abroad.

*Office requirements for the Business Manager Visa are strictly enforced. Confirm current requirements with an immigration specialist before signing a lease.

Steps for Business Registration and Obtaining Permits

Starting a company in Japan involves a structured process of business registration. Foreign nationals can form either a Kabushiki Kaisha (KK/joint-stock company) or a Godo Kaisha (GK/limited liability company) under the same procedures as Japanese nationals.

The business registration process begins with choosing a company name and structure that aligns with your business goals. Next, you’ll need to prepare the Articles of Incorporation, deposit your capital, and get your business registered with the Legal Affairs Bureau. Following registration, you will need to submit the necessary paperwork to the Tax Office. More details on the steps can be found in our article on Setting up a company in Japan.

Obtaining the required permits and licenses is crucial for operating your business legally. The specifics of these permits will depend on your industry and the nature of your business. Some sectors, such as food services, health care, and manufacturing, may require additional licenses and permits due to regulatory requirements. 

Establishing Relationships with Suppliers and Vendors

Establishing a strong network with suppliers and vendors is a critical step when you’re looking to start a company in Japan. Understanding and aligning with the Japanese business culture can significantly enhance these relationships.

Japanese companies value responsiveness and reliability in their business partners. Therefore, as a new company in Japan, being proactive in communication and consistently delivering on your promises is essential to build trust and long-lasting partnerships with suppliers and vendors.

Further, understanding the supplier’s perspective can foster mutual respect and cooperation, ensuring a smooth business relationship. Being considerate of their business challenges, timelines, and constraints can help establish a collaborative relationship beneficial to both parties.

For a richer understanding of establishing relationships with suppliers and vendors in Japan, tune into our podcast episode Japanese Business Culture with Rochelle Kopp. This provides in-depth insights on how to navigate these unique dynamics, which can significantly aid in building strong, mutually beneficial relationships with your suppliers and vendors.

How can you Effectively Market your Business for Company Establishment in Japan

Effective marketing of your company in Japan is integral to the success of this adventure. This goes beyond having a groundbreaking product or service; it demands a deep comprehension of the cultural, societal, and economic aspects that shape Japanese consumer behaviors. In the next section, we will explore actionable strategies that respond to these complexities. When you are about to initiate the journey to start a company in Japan, this guide is designed to equip you with vital knowledge to enhance your market presence.

Doing Proper Market Research Before you Enter

Before you dive into the waters to start a company in Japan, conducting thorough market research is not just advisable, it’s indispensable. In our detailed article Market Research in Japan, we emphasized that understanding the intricate fabric of the Japanese market could be the difference between a flourishing business and a failing one.

In the early stages of planning to start a company in Japan, you’ll want to have a grasp on consumer preferences, industry trends, and potential competitors. Japanese consumers have unique tastes, driven by cultural nuances that might be very different from what you’re accustomed to. Leveraging detailed market research helps in understanding these nuances and in tailoring your products or services to meet local demands.

Furthermore, comprehending the competitive landscape is crucial as you start a company in Japan. With a comprehensive competitor analysis, you can position your company strategically, differentiating your offerings and highlighting your unique selling points.

Lastly, identifying and understanding regulatory challenges early on can prevent potential hurdles once you start a company in Japan. It’s vital to understand the legal and business requirements, which vary significantly from those in Western countries.

Effective Marketing Strategies to Reach Japanese Customers

Starting a company in Japan involves creating a well-rounded marketing strategy to effectively reach Japanese consumers. Our series of articles offer in-depth insights into various tactics that can help you connect with your target audience.

Based on our Guide to Japanese Branding Agencies, building a strong brand identity is crucial when you start a company in Japan. Japanese branding agencies specialize in creating brands that resonate with local consumers, taking into account cultural nuances and societal values. They can help you position your company in a way that connects with the Japanese audience authentically.

Traditional media in Japan is likewise still relevant. we highlighted the relevance of traditional media in Japan. Despite the rise of digital platforms, newspapers, TV advertisements, and direct mail remain highly influential. Consider these channels in your marketing strategy as you start a company in Japan.

Influencer marketing also plays a big role in marketing nowadays. Influencers have substantial sway in Japanese consumer behavior, and a partnership with the right influencer can significantly boost your brand visibility and credibility.

Our article on SEO Marketing Agency in Japan details the importance of optimizing your digital content for search engines. As internet use continues to grow in Japan, a strong SEO strategy can ensure your brand stands out in the crowded digital landscape when you start a company in Japan.

We further elaborate on digital strategy in Social Media Marketing Agency in Japan. Social media platforms offer a direct and interactive way to engage with consumers. Utilizing these channels effectively can foster a strong brand community when you start a company in Japan.

Having a comprehensive digital marketing strategy is therefore crucial. From SEO to social media, effective digital marketing can help your brand reach a larger audience and convert potential customers when you start a company in Japan.

Building a Strong Brand Presence in the Japanese Market

Leaping to start a company in Japan demands not only an innovative product or service but also the construction of a strong brand presence that resonates with local consumers. Our comprehensive article, Branding in Japan, provides essential insights on this subject.

Creating a successful brand in Japan entails much more than just designing a catchy logo or a memorable tagline. It’s about communicating your company’s values and mission in a way that aligns with Japanese cultural norms and consumer expectations. As you start a company in Japan, this deep understanding of your audience is crucial in crafting a brand that truly connects with them.

Furthermore, consistent brand messaging across all your communication channels is key. Whether it’s your website, social media platforms, or print advertisements, consistency aids in establishing a strong brand recall. This consistency becomes particularly significant as you start a company in Japan, a market known for its brand-loyal consumers.

Additionally, collaborating with local branding agencies can provide an invaluable advantage. Choosing the right partner for your digital marketing needs is vital. A good agency can offer a tailored strategy that considers all facets of digital marketing, helping your brand grow in Japan’s complex digital landscape. These agencies, deeply rooted in the local culture, can help tailor your branding efforts to better resonate with the Japanese audience, an essential step when you start a company in Japan.

Cultural Considerations in Marketing as a Foreign Entrepreneur

In your quest to start a company in Japan, cultural considerations play an integral role in your marketing strategy. Starting a company in Japan implies understanding its cultural fabric and consumer behavior. One significant aspect is the high regard for quality and durability. Japanese consumers appreciate products that promise longevity and reliability, thereby making this a compelling marketing angle.

Additionally, customer service is paramount in Japan. Businesses that provide exceptional customer experiences often thrive in this market. As you start a company in Japan, emphasizing your commitment to top-notch customer service can significantly enhance your brand’s appeal.

Japanese consumers also value tradition and innovation. Brands that can blend these aspects, offering innovative products or services steeped in traditional values, tend to resonate well with this audience. When you start a company in Japan, this fusion can provide a unique selling proposition for your business.

Furthermore, the practice of ‘omotenashi’ or hospitality is deeply ingrained in Japanese culture. It goes beyond just excellent service, focusing on anticipating and fulfilling customer needs even before they arise. Incorporating this concept into your business ethos can help form stronger customer relationships when you start a company in Japan.

Lastly, understanding local trends and preferences is crucial for successful marketing. Whether it’s the popularity of cash transactions or the preference for compact, minimalist design, tailoring your marketing strategy to these trends can yield significant benefits.

Understanding Japanese Sales Culture 

As you plan to start a company in Japan, a deep understanding of the Japanese sales culture is vital. Our articles and podcast episodes provide comprehensive insights into this significant aspect of doing business in Japan. In our article Guide to Doing B2B Sales in Japan and our podcast series Episodes on Sales in Japan, we dive into the subtleties of the Japanese sales landscape.

When you start a company in Japan, it’s important to recognize that sales, particularly in the B2B sector, are relationship-driven. Establishing a robust and long-lasting business relationship is often a prerequisite to making a sale. Trust and mutual respect are the pillars of these relationships, so investing time in nurturing these connections can significantly impact your sales success.

Another notable aspect of Japanese sales culture is the value placed on face-to-face interactions. Although digital platforms have increased in relevance, in-person meetings continue to be a preferred method for conducting business. These meetings, often coupled with social outings, can solidify business relationships and build trust.

Additionally, decision-making in Japanese companies is typically a consensus-driven process. It involves several layers of management and can often be time-consuming. Patience and understanding of this collaborative decision-making process can help navigate sales negotiations when you start a company in Japan.

Japanese businesses also value service and support post-sale. Offering exceptional customer service and follow-up can help build loyalty and lead to repeat business. This focus on after-sales service is an essential consideration for your sales strategy as you start a company in Japan.

Getting Professional Help to Start a Company in Japan

At Scaling Your Company, we provide an end-to-end solution for those contemplating starting a company in Japan. Our strategic advice, bespoke resources, and nuanced understanding of the Japanese business landscape position us uniquely to propel your entrepreneurial aspirations. We promise to navigate you effortlessly through the intricacies of the Japanese market. For those seeking tailored support, our expansive network of local partners stands ready to offer specialized assistance finely attuned to your specific requirements. Unleash your entrepreneurial potential with us, and turn your vision into a thriving Japanese enterprise.

You can reach out to us using the form below. 

How do you Recruit Employees?

Starting a company in Japan without recruiting skilled and dedicated employees. Building a solid team can significantly impact your company’s success in this vibrant market. This section provides key insights into the recruitment process in Japan, offering valuable guidance on finding and attracting the right talent. With these strategies in hand, you’ll be well-equipped to assemble a winning team as you start a company in Japan. Let’s explore the intricacies of Japanese recruitment to help your business thrive.

Understanding the New Employee Requirement

Under the October 2025 Business Manager Visa requirements, hiring is no longer optional. You must employ at least one full-time worker who meets specific residency criteria:

The employee must be a Japanese national, special permanent resident, permanent resident, spouse or child of a Japanese national or permanent resident, or a long-term resident.

You must provide proof of employment including residence registration and salary payment documentation.

Hiring another foreign national on a standard work visa (such as Engineer/Specialist in Humanities/International Services) does not satisfy this requirement.

This requirement applies both at initial application and at each renewal. Plan your hiring strategy accordingly, as finding qualified candidates who meet both the residency criteria and your business needs may take time.

Hiring the Right Country Manager is Key

Choosing the right country manager is a critical decision when you plan to start a company in Japan. This leader’s role can make a significant difference in your company’s trajectory in the new market. Insights from our podcast episode, Strategic Leadership in Japan with Timothy Connor, emphasize the importance of this role.

The country manager is your local captain who will steer your business in the Japanese market, overseeing operations, forming strategic partnerships, and ensuring that business goals align with local customs and expectations. Having a competent and knowledgeable leader is vital as you start a company in Japan.

Timothy Connor emphasizes the necessity for a country manager to have a deep understanding of the Japanese business culture. This expertise enables them to make strategic decisions that resonate with local customers and partners. The country manager should also possess robust leadership skills to guide your local team and drive your business forward.

The country manager should be well-versed in your industry, and capable of interpreting global business strategies in the local context. They should have a proven track record in business growth and be able to navigate the challenges that come with entering a new market.

Hiring the right country manager is a strategic investment in your company’s future in Japan. It’s a vital step that requires careful consideration and due diligence as you plan to start a company in Japan.

Legal Hiring Requirements

Legal Hiring Requirements

Complying with legal hiring requirements is crucial when establishing a company in Japan. Japanese employment law is employee-protective, and understanding the requirements helps prevent legal disputes.

Employment Contracts

Japanese law requires written employment contracts that include working hours, holidays, wages, location of work, job duties, and termination conditions. Contracts should specify whether employment is permanent (seishain) or fixed-term (keiyaku shain), as this affects termination rights significantly.

Working Hours and Overtime

Standard working hours are 8 hours per day and 40 hours per week. Overtime requires a labor-management agreement (36 Agreement/三六協定) filed with the Labor Standards Inspection Office. Overtime premium rates are 25% for standard overtime, 35% for work on holidays, and 50% for late-night work (10 PM to 5 AM).

Paid Leave

Employees are entitled to annual paid leave starting at 10 days after six months of employment with at least 80% attendance, increasing with tenure to a maximum of 20 days per year.

Termination

Japan has strict dismissal regulations. Termination requires “objectively reasonable grounds” and must be “socially appropriate.” Insufficient performance alone is rarely sufficient grounds. Most employers provide severance packages rather than risk dismissal disputes.

To understand Japanese labor law, watch our seminar Japanese Labor Law Q&A with a Japanese Sharoushi. This Q&A session provides valuable insights and practical advice to assist you in navigating the complexities of Japanese employment law.

Using “Hello Work” Agencies

As you make plans to start a company in Japan, one invaluable resource you may want to consider for recruitment is the network of “Hello Work” agencies. 

“Hello Work” is a government-run employment service center spread across Japan. They cater to both job seekers and employers, making them a significant resource when you start a company in Japan. The agencies offer a wide range of services including job placement, vocational guidance, and employment insurance procedures.

For employers, “Hello Work” agencies can be a valuable recruitment partner. They have a substantial database of job seekers from various sectors, enabling you to tap into a diverse pool of potential candidates. This can make your hiring process more efficient and effective, a critical factor as you start a company in Japan.

Additionally, “Hello Work” agencies also provide support and guidance on employment regulations. This can be particularly useful for foreign entrepreneurs unfamiliar with Japanese labor laws and hiring practices. 

Mandatory Insurance Systems

All corporations in Japan must enroll employees in mandatory insurance programs. This is not optional, and compliance is now examined more strictly at Business Manager Visa renewals under the October 2025 requirements.

Four Mandatory Insurance Programs

Long-Term Care Insurance (介護保険): Employees aged 40-64 pay an additional 1.59% on top of health insurance premiums, split between employer and employee.

Enrollment Deadlines

Employers must submit employee social insurance enrollment documents within 5 days of the start of employment to the relevant Japan Pension Service branch.

For labor insurance (Employment Insurance and Workers’ Accident Compensation), submit notifications to the Labor Standards Inspection Office and Public Employment Security Office (Hello Work) within 10 days of hiring.

Compliance at Visa Renewal

Under the October 2025 Business Manager Visa requirements, immigration authorities now strictly examine tax and social insurance compliance at renewal. Ensure all contributions are current and properly documented.

*Insurance premium rates are updated annually. Check the Japan Pension Service website or Kyokai Kenpo (Japan Health Insurance Association) for current rates in your prefecture.

Final Thoughts

Japan offers exciting business opportunities, thanks to its robust economy and significant market trends favoring health and agricultural technology. The nation’s interest in smart cities and strong government subsidies for startups present unique prospects. Financial backing can be secured through government programs and other conventional sources.

Setting up operational infrastructure in Japan demands thorough planning, with special attention on location, business registration, and supplier relationships. Tailoring your marketing strategy to the Japanese audience is crucial, taking into account their culture and consumer behavior. 

Hiring in Japan involves legal and insurance considerations, with the selection of a country manager being a pivotal step. Japan’s market indeed offers great potential, but success requires a deep understanding of its complexities, sound planning, and effective execution.

Stay tuned to Scaling Your Company’s upcoming articles and podcasts for invaluable insights and resources to guide you on this journey. Navigating the exciting yet complex Japanese market can be made significantly easier with the right guidance and resources. 

If you’re looking for tailored guidance on how to start a company in Japan, we’re here to assist you. Connect with us through our Scalingyourcompany contact form to access expert referrals and personalized advice. Starting a successful venture in Japan begins with the right guidance – let us be your partner in this exciting journey.

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