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. I've built teams here from zero several times, and 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.
• Product, sales, organization: why this order: product decides what to sell, sales decides which customers and channels, and organization decides who sells and what Japan can decide alone. Run that order backwards and things stall.
• Why Chinese tea brands crowd into Korea and not Japan: Mixue, Chabaidao, HeyTea and Chagee are all in Seoul, while in Japan tea brands open and close and Gong Cha grew from 57 shops to 244. The competitor they missed is a 150-yen bottle of tea.
• BYD built a car only for Japan: three years of global models sold 10,000 cars in Japan. In year four, a kei car built only for Japan took 1,000 orders in two weeks.
• The subsidy wall: the rules are not written for you: Nissan's Sakura gets a ¥580,000 subsidy and BYD's Racco gets ¥150,000, because Japan scores a maker's chargers, technicians and supply. Read the scoring sheet before you set a price.
• Chagee isn't in Japan yet. Osaka already has a shop that looks a lot like it: an Osaka tea shop opened in April 2026 with a logo close to Chagee's, while Chagee still had no store in Japan. Japan is first-to-file, so register the trademark before you enter.
• Why Foreign SaaS Stalls in Japan After Ten Customers: Foreign SaaS wins its first ten Japanese customers easily and stalls at the mainstream. How buying differs on each side of the chasm, and the sales organization each side needs.
• Your Real Competitor Is Wherever the Customer's Budget Goes: A customer's budget can go to spreadsheets, tax accountants, the incumbent integrator or doing nothing. Add those to the competitor list before comparing products.

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.
• What it costs to let someone go in Japan: Japan has no pay-to-dismiss rule, but dismissal disputes still have a going rate. Median settlements by route, and why the money is better spent at hiring.
• Building a Japan entity from zero: the order I use when the entity has nobody yet. Hire someone who can translate HQ for Japanese customers, split the roles, set authority in yen and judge year one by milestones.
• Don't promote your best salesperson to country manager: a top seller wins with the equipment of the old job, and a country manager's job runs on patterns and conditions. The Peter principle explains why the promotion so often disappoints.
• Contractors instead of employees in Japan: does it hold?: Glovo redesigned its app around courier autonomy to avoid Spain's Rider Law and still ended up employing 15,000 couriers. Japan also looks at substance, such as who directs the work and who sets the hours.
• Giving equity to Japan staff? Write the exit terms first: three former employees say their last day fell days before an RSU vesting date, costing them nearly $1 million. Write down, in Japanese, what happens to vesting when someone leaves.
• Rengo Wants 6%. How to Budget Japan Pay for 2027: Rengo's 6% target for the 2027 shunto, set against what large and small companies actually paid in 2026, and how a non-union Japan subsidiary turns it into a budget.
• Japan Hires Fewer Graduates. Mid-Career Talent Gets Pricier: More major Japanese companies now plan to cut graduate hiring than to expand it. How much of that is AI, and why experienced hires will cost more.

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. And signing a distributor is only the start of the work. Six months later you may still have no orders.

The articles below cover both ends: how to build the list and approach agents, what to do when a signed partner goes quiet, and the routes some companies took instead.

• 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.
• Commission-only sales teams in Japan: where the risk is: Japan's regulator linked Prudential Life's misconduct partly to full-commission pay. What that means for foreign firms designing sales pay in Japan.
• BYD's mini stores: another way to build a sales network in Japan: BYD went from 51 sales points in Japan in 2024 to 77 in 2026, and the target of 100 slipped twice. Its micro stores in former convenience stores show one or two cars and bet on density.
• Xiaomi's Japan stores are catching up with Apple's. Why the first one was in Saitama: Apple's 11 Japan stores are all downtown. Xiaomi opened its first in a suburban Saitama mall and had ten by July 2026, nine of them in malls, because it picked its customer first.
• Open the repair center before you scale: Xiaomi opened a service center in Akihabara at five stores, before growing to ten. Japanese buyers ask who will fix it before they buy, so repair belongs in the sales budget.
• A joint venture with a Japanese partner: shortcut or detour?: BYD built its own entity, Chery joined a five-company JV, and UBTech gave a listed firm 36 months of exclusivity. Choose between your own entity, a distributor and a JV by how much control you need.
• Your Price Decides What Kind of Sales Team You Need: Using Cybozu's kintone price change, how your price band decides the sales team you need, and how discount authority and Japan's ringi habits push back on price.
• When Your Direct Team and Resellers Chase One Customer: How to stop your direct team and resellers in Japan from fighting over customers, using deal registration, named account splits and rep pay, without fixing resale prices.

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.

What goes wrong inside the team in the first year?

Mostly the things nobody wrote down: who decides when the boss is away, which rules really apply, what happens when someone complains. The first five people set the baseline for the next fifty, so habits formed in the first months tend to stay.

Several of these start far from Japan, with a baboon troop, an ant colony simulation and a shipwreck in 1629. The two on harassment complaints and on employees who report problems are about Japanese law and court cases.

• The first five people in your Japan entity shape the next fifty: a baboon troop lost its aggressive males, and a decade later, with every male replaced, the calm culture remained. Your first five hires set the baseline in the same way.
• Don't staff the Japan entity to exactly enough: in a simulation, ant colonies that kept some workers idle outlasted colonies running at full tilt. Replacing one person in Japan takes six months, so slack is a buffer you can put a price on.
• Why month three is the hardest for a new team: month three is when HQ expats and local hires first decide things together, and three pressures land in the same month. Gersick followed eight project teams in 1988 and found that none went through Tuckman's stages in order.
• Set the rules in the first ninety days, or don't bother: in a 750-person experiment, seeing a rule-follower changed nothing, while seeing someone on your side break a rule raised rule-breaking from 23% to 40%. Set five rules early.
• Who decides in the Japan entity when the boss is away: after the Batavia wrecked in 1629, a junior merchant filled the vacuum the officers left, and over a hundred people died. A vacuum goes to whoever steps forward, whether or not they fit.
• Before HQ monitors the Japan team through software: a meta-analysis covering 23,000 people found no link between monitoring and performance. Define the output you expect before HQ installs software to watch the team.
• How to investigate a harassment complaint in a Japan entity: Japanese law requires prompt fact-finding and a hearing for both sides. In one pending case the sanction was only oral and the transfer was punitive, and the procedure is what decides cases like it.
• When an employee reports a problem, how the Japan entity should respond: three nurses reported abuse and then faced standby, dismissal and transfer. In 2026 an Osaka court voided all of it without finding retaliation. How you treat the person who reports is part of the culture.
• After you hire foreign staff in Japan, the hard part begins: in a 2025 survey, 55.8% of Japanese firms employing foreign workers said training was a struggle and 55.7% said communication was. Plan for the months after the hire.

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's easier to agree on an owner and a margin schedule now than to renegotiate them later.

I'm less sure about the co-leadership question. The public cases are large companies, and a ten-person entity behaves differently. Read that article as a set of questions to ask. It isn't 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.