The Japan External Trade Organization (JETRO) is faithful to its three objectives: to assist foreign companies entering Japan, to support the export of products and services produced by small- and medium-sized Japanese enterprises, and to contribute to the enhancement of global economic partnership through policy studies and research.
In recent decades, Japan has been working aggressively to attract foreign direct investment (FDI) into its economy, which has faced some challenges for the past two decades. Despite those difficulties, the country remains the world’s third-largest economy, maintaining its position as an investment hub.
In the past, the country has faced severe competition with newly emerging Asian economies as an investment destination. Japan was exposed to the growing presence of these economies with rapidly improving business infrastructure, such as Singapore, China and Hong Kong. Cost effects, an aging society and a language barrier also led to a weaker view of Japan as a business destination.
However, the inauguration of the Abe administration and his new economic policy package in 2012 have changed this.
“These negative perceptions are old concepts. The government took the initiative to conduct regulatory reforms in pharmaceutical, medical equipment, power and energy and other sectors. Other measures were taken as well, including corporate tax reduction and the strengthening of corporate governance. These changes are expanding business opportunities in Japan,” says JETRO Chairman Hiroyuki Ishige.
As for business costs, average office rent in Tokyo is lower than that of Singapore or Hong Kong. The salary level of managers is lower than that in Singapore and the same level as that in Hong Kong. And according to an OECD survey, labor costs in Tokyo are actually lower than that of major developed countries.
Japan’s stable economy, unique business culture, affluent population and advanced capabilities in technological innovation are still factors that keep the country a major economic power.
The government appointed JETRO as the main agency to promote inward FDI in order to strengthen international collaboration and drive economic growth.
To increase FDI, JETRO works in coordination with the government to improve the business environment by helping to simplify regulations and establishing rules for corporate governance. JETRO also conducts seminars in many of its 74 overseas offices spread out across 55 countries to help foreign companies understand the investment climate and business conditions in Japan.
“Prime Minister Abe has played an important role in showing the government’s support in attracting FDI. The Prime Minister has appeared six times in FDI-focused seminars, a task that no Prime Minister has done before,” says Chairman Ishige.
To make the environment friendlier and more livable for all expatriates, the government appointed state ministers as advisers and consultants, started a program of Japanese language support for children of expats, and increased English signage in public places, among other endeavors.
“Japan is still often mentioned as a high-cost country, but we want to dispel this old perception. According to Monocle in 2016, of the world’s top 25 most livable cities, Tokyo ranked top, Fukuoka is seventh and Kyoto is ninth. Only Japan had three cities in the top 10. We are aiming to make it even more livable to expatriates and investors,” Ishige says.
One unique step that goes beyond the usual support given by governmental agencies is access to a free working space. For 50 working days, foreign investors or business incubators are provided an office space that allows them to fully prepare their launch and incorporation into Japan’s business environment. To achieve continuity, JETRO also works with local prefectural governments and municipalities to provide further assistance if needed.
The influx of international investors has gradually changed the mindset of Japanese businesses, which are now thinking of ways to compete. Today, Japanese companies understand the importance of thinking globally, going beyond their borders and learning to market their products abroad.
“We want to give a unified message that Japan has changed and is open for business,” Ishige stresses.