Launching in Japan: Where Foreign Companies Lose Time
The Japan entity is registered. The office is leased, a country manager is in the job description, and HQ wants revenue within a year. Then six months go by with almost nothing to show for it, and nobody can quite say why.
This column is for executives at overseas headquarters and founders who are setting up in Japan. My view, after building teams here from zero several times: the paperwork is rarely what slows a Japan launch. Foreign companies themselves rank hiring and communication near the top of their problems and administrative procedures ninth (JETRO, 2025). The order of your people decisions, from the competitor list to the first hire to the sales channel, decides how fast the entity starts to earn.
Why does Japan feel slow even after the setup is done?
Because the hard part was never the setup. In JETRO's 2025 survey of foreign companies in Japan, the top three challenges were currency, communication and hiring, and paperwork came ninth.
The first decision that quietly goes wrong is usually the competitor list. Most teams copy the famous names from an analyst report. That list tells you who is well known. It does not tell you who will take your candidates, your customers or your channel.
- What foreign companies struggle with most in Japan: the JETRO ranking in full, and why the problems near the top are about people.
- Picking the wrong competitors is worse than having none: the three reasons a company belongs on your list (talent overlap, business threat, access control), so the list can drive decisions.
Who should the first hire be, and what will it cost?
Hire the person who makes your product usable in Japan before you hire someone to sell it. And budget 1.2 to 1.5 times salary: a ¥6 million hire costs about ¥7.1 million a year from year two, and about ¥9.2 million in year one if an agency places them.
The usual pattern is the opposite. HQ hires a salesperson first. The first serious customer asks for Japanese materials, a local contract and a support promise. Nobody in the entity can produce any of them, and the salesperson spends the quarter waiting on HQ.
The article calls the person you need first a translator. That means someone who can turn the business into Japanese materials, a contract a local customer will sign and a support promise they believe. Language is only part of the job.
- Your first hire in Japan should not be a salesperson: what customers ask for in the first meetings, and the kind of person who can answer.
- What one hire in Japan really costs: 1.2x to 1.5x salary. Employer social insurance, commuting pay, bonuses and agency fees, added up line by line for a budget you can defend.
- Why your first-year budget in Japan runs over by half: in one market-entry survey, over half budgeted under ¥50 million and 65% later needed 1.5 times that or more. People cost, start dates and the sales ramp explain the gap.
Selling through agents and distributors
Many products reach Japanese customers through partners, especially when the buyers are shops and small businesses. Finding agents stalls because the information about who sells what, to whom, is scattered. Signing a distributor is the start of the work. Six months later you may still have no orders.
The two articles below cover both ends: how to build the list and approach agents, then what to do when a signed partner goes quiet.
- Building a Sales Agent Network in Japan: Find, Screen, Approach lays out a five-step, channel-first method and the failure patterns to avoid.
- Why your distributor isn't selling your product: your product sits tenth in the reps' heads. A named owner, ride-alongs and staged margin move it up.
Who runs the entity, and what if you have to close it?
Two heads at the top can work, but co-led companies tend to win big or lose big, and a Japan entity split between a local leader and an HQ appointee carries the same risk. At the other end of the life cycle, liquidating a Japanese KK takes about 2.5 months at minimum and under ¥100,000 in filing fees. The expensive part of a closure is people, contracts and getting the cash home.
I put these two together on purpose. The governance you choose at launch is what you will be untangling if the entity ever winds down.
- Two people at the top: when does it actually work? Netflix, SAP and Salesforce, read for what they mean for a Japan entity with two leaders.
- Closing a Japan entity: the paperwork is the easy part: the timeline, the filing costs and where the real cost sits.
If you have one week before the launch plan goes to the board
Start with the cost of one hire and the first-hire article, because they change the budget and the job description at the same time. Then rebuild the competitor list with the reasons set out in that article, and bring the cost table to the board meeting itself. It answers the headcount question before anyone asks. If your route to market runs through partners, read the distributor piece before you sign anything; it is easier to agree on an owner and a margin schedule now than to renegotiate them later.
I am less sure about the co-leadership question. The public cases are large companies, and a ten-person entity behaves differently. Treat that article as a set of questions to ask, more than a verdict.
The terms used here (market map, talent map and others) are defined in the glossary. For the data behind these decisions, see Japan by the Numbers; for designing the team once it grows, see Organizations & Hiring.
Shorter thoughts go on LinkedIn.