Top 5 Reasons To Invest In Japan Amid Economic Growth in 2024

After a long period of stagnation, Japan is finally back on the map as an attractive business investment destination in Asia, as a result of corporate governance reform, ultra-loose monetary policy and the combination of strong economic data. In a report from The Economist, Larry Fink, CEO of asset-management firm BlackRock said “Japan is undergoing a series of extraordinary economic transformations.” 1 . Will this expected economic growth in Japan in 2024 be the golden opportunity for businesses in Asia and around the world to set up new company branches and invest in Japan?

As of Jan 2024, Japan is the world’s forth-largest economy, and is also home to many multinational companies like Sony, Toyota and Softbank. The country has developed into one of the most prosperous places in the world, with a curious consumer base who are receptive to foreign investment and ideas. Even though Japan had previously struggled to attract investors, the improving business environment offers increasingly more opportunities for foreign corporations to start a company and invest in Japan. The Japanese economic growth projection is reported to be higher in than the previous estimate of 1.2% in the fiscal year of 2024. Cabinet Office official announced that domestic demand is expected to rebound with the help of planned income tax cuts 2 . Is it time to invest in Japan? The more important question is, should you? We have gathered the top 5 reasons why companies should invest and start a company in Japan.

5 Reasons to Invest and Start a Company in Japan:

1. Large Stable Economy with Projected Economic Growth

With a GDP of around 5 Trillion USD and one of the world’s highest per capita incomes, the strength of the Japanese economy is exceptional. A strong economy coupled with a low-fluctuating currency will provide potential investors with stability and confidence. The excellent infrastructure and developed industry means that all the necessary framework is already available for businesses who may be newcomers to investing and starting a company in Japan.

2. Attracting Foreign Businesses & Foreign Direct Investment (FDI)

The country is implementing various measures to make the business environment more attractive to foreign companies to invest in Japan

  • Five Promises for Attracting Foreign Businesses to Japan
    • Remove language barriers at local retailers and restaurants
    • Installation of free public Wi-Fi around cities
    • Regional airports receive business jets with short advance notices
    • Enrich the educational environment for children from overseas
    • Strengthen consultation services for foreign businesses
  • FDI Attraction Methods
    • Simplifying regulations for foreign companies
    • Improving the living environment for foreigners
    • Reduce the period of residence required for Highly Skilled Professionals to apply for permanent residency

3. Innovative People

Housing some of the world’s most recognisable companies like Nintendo and Canon, Japan has long been a country full of people with imagination and innovation. A smart and hard-working population will offer companies abundant productivity and will be a breath of fresh air for foreign investors who have just started investing in Asia.

4. The Rise Investment of Asia

Being the first country in Asia to industrialise, Japan had a head start in development. With other Asian countries developing at an astronomical pace, growing emphasis will be placed on the region as it grows in importance. The rise of China this decade has already shifted the importance east, and Japan is likely to become one of the beneficiaries of this swing.    

5. Abenomics

With the recent economic and corporate reform in Japan, we can expect private enterprises to benefit greatly. The emphasis placed on economic growth and more components to encourage investment in Japan, including easing of hiring foreign staff, either through an Employer of Record provider, or through on-demand recruitment. Additionally, corporate governance reforms will propel opportunities for businesses.

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Pro Tip: Partner with Local Experts When Investing in Japan

Before expanding your business and starting a company in Japan, there are still a few considerations you should keep note of. The cultural differences, language barrier and business protocols can differ from what foreign companies are accustomed to. Many also lack the cultural expertise to hire fitting talents in Japan. However, these reasons should not cause you to shy away from setting foot in the country, as they can be easily resolved.

Outsourcing your payroll is an excellent way to negate any potential issues you could encounter. Partnering with a trusted payroll vendor will help you save time on HR tasks and relieve some of the financial burdens that come with expanding overseas. Professional payroll experts also have excellent local knowledge on labour laws and regulations when forming a company in Japan ensuring your business is always compliant with local protocols. Save time, money and focus your efforts on your expansion with the right payroll management!

Links International has expanded its presence in Japan! Partner with us now to save time on navigating regulations and money from payroll outsourcing. Streamline your operations with Links, then focus all your efforts on your expansion and growing your business. Contact us to learn how we can speed up your HR, Payroll, Visa Application, PEO/EOR services in Japan.

1 Source: The Economist – Is Japan’s economy at a turning point?

2 Source: Reuters – Japan government lifts economic growth estimates

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