Setting up in Japan
Japan is a major opportunity — but entry takes planning.
This guide helps life science and healthcare startups understand what it really takes to set up in Japan, before you commit.
Part 1: Before You Move — Think Carefully
Japan is one of the world's largest life science and healthcare markets, and for many foreign startups it represents a compelling opportunity. However, entering Japan requires more preparation than most founders expect. Before committing to establishing a legal entity, you should honestly evaluate whether formal incorporation is truly necessary at this stage of your business.
The following factors are commonly underestimated by overseas founders and should be carefully weighed.
Cost and Expected Return The direct and indirect costs of maintaining a Japanese subsidiary are significant. Company registration fees, mandatory auditing, local accounting and legal compliance, office rental, and HR administration add up quickly — often reaching several million yen per year even for a lean operation. Before incorporating, map out a realistic Japan revenue timeline. If meaningful returns are not expected within 12–24 months, a lighter-touch market entry vehicle may serve you better.
Language Japanese is the language of business in Japan. Contracts, regulatory filings, government correspondence, and most partner negotiations are conducted in Japanese. This means you will depend heavily on bilingual staff or external translators, and miscommunication risk is real. Building a team with strong Japanese-language capability takes time and budget.
Local Business Culture Japanese business culture places high value on trust-building, consensus decision-making (nemawashi and ringi), and long-term relationships. Deal cycles are typically much longer than in Western markets. New foreign entrants with no local track record may find doors slow to open. A local partner who can vouch for you accelerates this process considerably.
Difficult Termination Japanese labor law strongly protects employees, making it legally complex and costly to downsize or exit the market once you have hired local staff. A company with even a handful of Japanese employees can face a process spanning 12 to 24 months if it needs to wind down operations. This is not a reason to avoid Japan, but it underscores the importance of starting carefully and scaling deliberately.
Decision-Making Speed Enterprise sales cycles in Japan can run 12 to 18 months or longer. Hospital and government procurement processes are particularly lengthy. Factor this into your cash planning and do not assume that signing a partnership MOU translates quickly into revenue.
Fundraising Challenges for Foreign Firms Foreign-affiliated companies often find it harder to raise capital from Japanese domestic VCs, which tend to prefer locally-headquartered entities with established local teams. Public grants and subsidies — including from AMED and regional governments — may also be more accessible to companies with a stronger local presence. If fundraising in Japan is part of your strategy, build your local credibility early.
Part 2: Our Recommendation
Start with Local Partners, Not a Subsidiary It would be wise to utilize local partners at least in the early stage, without incorporating. A trusted Japanese partner — a distributor, CRO, CMO, licensing partner, or business development agent — can serve as your market entry vehicle. This approach lets you validate your product-market fit, build relationships, and learn the regulatory landscape without bearing the full cost and legal obligations of a subsidiary.
If You Only Need an Office If you simply need a base of operations in Japan — for business meetings, regulatory activities, or occasional team visits — we recommend utilizing a shared office within one of Japan's life science hubs rather than signing an independent office lease.
Life science hubs offer more than just desk space. Co-location with peer companies, access to specialized infrastructure, and built-in networking opportunities make these environments uniquely valuable for startups in pharma, medical devices, and digital health. Establishing a presence within a hub, even informally, signals seriousness to Japanese partners and investors.
If You Really Need to Incorporate If, after careful consideration, you have determined that establishing a Japanese legal entity is necessary, the following resources are your starting points.
JETRO (Japan External Trade Organization) is the Japanese government's official investment promotion agency, and your most important first contact. JETRO offers free consultation services, bilingual guides, and hands-on support for foreign companies setting up in Japan.
In addition to these resources, always consult your country's embassy trade or commercial section in Tokyo. Both JETRO and embassies offer free consultations and can connect you with vetted service providers.
Part 3: Key Points for Incorporation
Securing a Registered Address Company registration in Japan requires a registered address (honten). This must be a real physical address — P.O. boxes are not accepted by the Legal Affairs Bureau. However, this does not mean you need to commit to a full office lease from day one.
In the early stages, using a virtual office (バーチャルオフィス) is the most cost-effective and time-efficient approach. A virtual office provides a legitimate registered address — often in a prestigious business district such as Marunouchi or Minami-Aoyama in Tokyo — without the overhead of a dedicated lease.
Choosing a Life Science Ecosystem For startups developing pharmaceuticals, medical devices, diagnostics, or digital health products, we strongly recommend establishing your registered office within or adjacent to a recognized life science ecosystem. Life science is a specialized field, and a general startup accelerator or shared office will not give you the same industry-specific access.
The benefits of ecosystem location include co-location with pharma, biotech, CRO, and CMO companies; access to specialized lab and office infrastructure; built-in business networking and matchmaking events; and stronger credibility with Japanese industry partners and investors who know the ecosystem.
If you are unable to establish your registered office within a life science hub, consider at minimum becoming a member or affiliate of a relevant ecosystem. Membership typically provides access to industry information and regulatory updates, networking events and educational programs, introductions to potential partners and customers, and visibility within the Japanese life science community.
Choosing Your Entity Type Japan offers several types of legal entities for foreign companies. The two most common choices for foreign life science startups are the Kabushiki Kaisha (KK) and the Godo Kaisha (GK).
This guide helps life science and healthcare startups understand what it really takes to set up in Japan, before you commit.
Part 1: Before You Move — Think Carefully
Japan is one of the world's largest life science and healthcare markets, and for many foreign startups it represents a compelling opportunity. However, entering Japan requires more preparation than most founders expect. Before committing to establishing a legal entity, you should honestly evaluate whether formal incorporation is truly necessary at this stage of your business.
The following factors are commonly underestimated by overseas founders and should be carefully weighed.
Cost and Expected Return The direct and indirect costs of maintaining a Japanese subsidiary are significant. Company registration fees, mandatory auditing, local accounting and legal compliance, office rental, and HR administration add up quickly — often reaching several million yen per year even for a lean operation. Before incorporating, map out a realistic Japan revenue timeline. If meaningful returns are not expected within 12–24 months, a lighter-touch market entry vehicle may serve you better.
Language Japanese is the language of business in Japan. Contracts, regulatory filings, government correspondence, and most partner negotiations are conducted in Japanese. This means you will depend heavily on bilingual staff or external translators, and miscommunication risk is real. Building a team with strong Japanese-language capability takes time and budget.
Local Business Culture Japanese business culture places high value on trust-building, consensus decision-making (nemawashi and ringi), and long-term relationships. Deal cycles are typically much longer than in Western markets. New foreign entrants with no local track record may find doors slow to open. A local partner who can vouch for you accelerates this process considerably.
Difficult Termination Japanese labor law strongly protects employees, making it legally complex and costly to downsize or exit the market once you have hired local staff. A company with even a handful of Japanese employees can face a process spanning 12 to 24 months if it needs to wind down operations. This is not a reason to avoid Japan, but it underscores the importance of starting carefully and scaling deliberately.
Decision-Making Speed Enterprise sales cycles in Japan can run 12 to 18 months or longer. Hospital and government procurement processes are particularly lengthy. Factor this into your cash planning and do not assume that signing a partnership MOU translates quickly into revenue.
Fundraising Challenges for Foreign Firms Foreign-affiliated companies often find it harder to raise capital from Japanese domestic VCs, which tend to prefer locally-headquartered entities with established local teams. Public grants and subsidies — including from AMED and regional governments — may also be more accessible to companies with a stronger local presence. If fundraising in Japan is part of your strategy, build your local credibility early.
Part 2: Our Recommendation
Start with Local Partners, Not a Subsidiary It would be wise to utilize local partners at least in the early stage, without incorporating. A trusted Japanese partner — a distributor, CRO, CMO, licensing partner, or business development agent — can serve as your market entry vehicle. This approach lets you validate your product-market fit, build relationships, and learn the regulatory landscape without bearing the full cost and legal obligations of a subsidiary.
If You Only Need an Office If you simply need a base of operations in Japan — for business meetings, regulatory activities, or occasional team visits — we recommend utilizing a shared office within one of Japan's life science hubs rather than signing an independent office lease.
Life science hubs offer more than just desk space. Co-location with peer companies, access to specialized infrastructure, and built-in networking opportunities make these environments uniquely valuable for startups in pharma, medical devices, and digital health. Establishing a presence within a hub, even informally, signals seriousness to Japanese partners and investors.
If You Really Need to Incorporate If, after careful consideration, you have determined that establishing a Japanese legal entity is necessary, the following resources are your starting points.
JETRO (Japan External Trade Organization) is the Japanese government's official investment promotion agency, and your most important first contact. JETRO offers free consultation services, bilingual guides, and hands-on support for foreign companies setting up in Japan.
- Setting Up Business guide (covers entity types, company registration, visa, taxation, and HR, with video walkthroughs): https://www.jetro.go.jp/en/invest/setting_up/
- Initiatives for attracting foreign companies to regional ecosystems: https://www.jetro.go.jp/en/invest/jetros_support/localgovernments.html
- Navigation system for investing in Japan's local regions: https://www.jetro.go.jp/en/invest/region/
In addition to these resources, always consult your country's embassy trade or commercial section in Tokyo. Both JETRO and embassies offer free consultations and can connect you with vetted service providers.
Part 3: Key Points for Incorporation
Securing a Registered Address Company registration in Japan requires a registered address (honten). This must be a real physical address — P.O. boxes are not accepted by the Legal Affairs Bureau. However, this does not mean you need to commit to a full office lease from day one.
In the early stages, using a virtual office (バーチャルオフィス) is the most cost-effective and time-efficient approach. A virtual office provides a legitimate registered address — often in a prestigious business district such as Marunouchi or Minami-Aoyama in Tokyo — without the overhead of a dedicated lease.
Choosing a Life Science Ecosystem For startups developing pharmaceuticals, medical devices, diagnostics, or digital health products, we strongly recommend establishing your registered office within or adjacent to a recognized life science ecosystem. Life science is a specialized field, and a general startup accelerator or shared office will not give you the same industry-specific access.
The benefits of ecosystem location include co-location with pharma, biotech, CRO, and CMO companies; access to specialized lab and office infrastructure; built-in business networking and matchmaking events; and stronger credibility with Japanese industry partners and investors who know the ecosystem.
If you are unable to establish your registered office within a life science hub, consider at minimum becoming a member or affiliate of a relevant ecosystem. Membership typically provides access to industry information and regulatory updates, networking events and educational programs, introductions to potential partners and customers, and visibility within the Japanese life science community.
Choosing Your Entity Type Japan offers several types of legal entities for foreign companies. The two most common choices for foreign life science startups are the Kabushiki Kaisha (KK) and the Godo Kaisha (GK).
- Kabushiki Kaisha (KK) is the joint-stock company form and the most recognized corporate structure in Japan. It is preferred by Japanese pharmaceutical and medical device companies, hospitals, and government agencies as a partnership counterpart. KK registration involves higher setup costs (approximately 240,000 yen or more in fees) and requires notarization of the Articles of Incorporation, but it carries significantly higher credibility. Setup typically takes two to four weeks. A KK is the recommended choice for companies planning fundraising, regulatory approvals, or formal partnerships with Japanese enterprises.
- Godo Kaisha (GK) is the Japanese equivalent of a limited liability company (LLC). It has a simpler governance structure, lower setup costs (approximately 60,000 yen or more in fees), and faster registration (typically one to two weeks). However, it is less familiar to many Japanese partners and may be viewed as a less serious commitment. A GK can be a practical starting point for companies testing the market with minimal overhead, with the option to convert to a KK later.
