A Story Of Starting A Business In Japan | Hacker News Reader

A Story Of Starting A Business In Japan

behere.asia

202 pointscmod62 comments

From my understanding, lawyers working with non-Japanese-speaking clients charge a premium.

This is true for essentially all professional services in Japan (and, relatedly, can be true for renting depending on how one goes about that), and it is not driven entirely by costs. Partly, this is simply "You require something which is much harder to deliver than standard services; this restricts your labor pool by > 98% here; deal with the increased price." Partly there exists a bit of rent-seeking behavior that might be politely termed "the English tax."

You will occasionally find service providers who quote the English tax rate even when the assumption is services will not actually be provided in English. I'm generally polite when asking for the literate professional rate precisely once. (It is sometimes called out on an obvious line item on the invoice; it is often more subtle.)

I'm generally polite when asking for the literate professional rate precisely once.

What do you do when you need to ask more than once?

Isn't it the same for any foreigner in any country? The US tries to be multicultural in some respects but not being able to speak English hampers you quite a bit too.

Suppose you are in the United States and your last name is Tanaka. You interview an accountant and ask for a proposal for bookkeeping and accounting for your software company. Suppose the accountant comes back with a proposal which quotes you including a line item for Japanese translation. (This is quite unlikely, but roll with it.)

You tell the accountant "Uh, thanks, but: we'll be working together in English." "Oh yes, that's good, we don't really speak Japanese." "Why are you quoting for Japanese translation then?" "To cover our increase costs of dealing with you." "So you... expected to hire an external translator?" "Well, no, more of an aggravational cost sort of issue rather than a direct cost sort of issue."

This would be cause for an absolutely nuclear reaction from the client in the US. In Japan, it's Tuesday.

Fortunately not my Tuesdays in Japan. I've been here seven years and never seen behavior like that. Sorry you've had such bad experiences.

Yes. You can get some things done in Tokyo using only English. You can get nothing done in NYC using only Japanese.

Yes, exactly. The increased cost can also let Japanese lawyers avoid doing the work - by pricing the client out - without saying no. Providing services in English is a lot of work for a Japanese lawyer. Can't easily use off-the-shelf memos or leverage past work, etc. Not many are eager to do it.

There are non-Japanese lawyers in Tokyo (I'm one) but they're not allowed - or usually competent - to advise on Japanese legal matters. And the supply of Japanese lawyers itself is limited, so unfortunately there aren't many options. Lawyer-to-population ratio in Japan is close to 1:3000 as opposed to 1:300 or so in the US.

If you're reading this and are in Tokyo already you should come out to the Hacker News Tokyo reader meetup. It's a great place to find cofounders, talk shop and discuss these kinds of issues. We hold them once a month.

You can sign up here and you'll get notified about the next one when it gets scheduled:

https://hntokyo.doorkeeper.jp/

edit If you're not in Tokyo I know there's one in kansai too: http://hnkansai.org

I hope there's one in Fukuoka too, really miss the Tokyo meetup scene here.

There's no Hacker News meetups but there are a few general programmer meetups that might be of interest to you.

If you are interested come to the meetup on Wednesday nights in AIP Cafe, Daimyo.

Wow, thank you so much for this; didn' t know it existed!

Thanks for posting this, had no idea there was a meetup like this.

It's a very friendly, engaging event and well worth your time. Jay and Paul are great hosts, and there's usually a nice mix of new people and regulars.

A few tips:

- You'll probably want to eat dinner before you go. (Drinks and light snacks are served but they're not substantial)

- Wear comfortable shoes since you'll be standing on concrete most of the time

- Most conversation is in English (in case you're worried it will all be Japanese)

- The entry of "Super Deluxe" looks sketchy and you might feel like you're heading downstairs to some kind of creepy strip club. Don't worry! It's not.

I haven't read the whole article, but it looks interesting. A couple of pointers/tips, though: The way expenses and depreciation are handled between godo kaisha and kabushiki gaisha are different. Make sure you understand those differences before you choose your path. There are advantages and disadvantages. The absolute first thing to do before you even see a lawyer is to find a good tax accountant.

If you are American (or if you are a citizen of a country with similar tax laws), it is very important to talk to someone who understands the intricacies of how the IRS works. I'm Canadian, so I don't know the details, but ownership of a foreign company can incur significant responsibilities with the IRS. The easiest way around this if you have a Japanese spouse is to have your spouse own the company. Again, see a tax accountant.

Finally, if you have a Japanese spouse who is dependent on you for income, then it is incredibly useful to have them be the CEO and president of the company. Income splitting in Japan is not legal. If you hire your spouse, they have to work for the company exclusively and get paid an amount representative of their position. It turns out, though, that the president of the company has no defined salary range and no defined duties. This is exceptionally useful.

In my company, my wife is both CEO and president. She has to work exclusively for the company, but I didn't really imagine that she would be very busy. As it turned out, though, even though I am fairly good at Japanese, having my wife handle all the business affairs has been incredibly useful. She can do everything twice as fast as me. Also, people we need to talk to are much more comfortable knowing that there is a Japanese person there would can navigate any language/cultural issues that might crop up. Dealing with the bank, government officials, etc, etc is just hugely easier and more efficient.

The downside is that if your relationship goes sour, your wife owns your company.

No. She's an employee (just like me). The share holders own the company.

Edit: Sorry. I think I misinterpreted what you were referring to. Yes, in the case that your spouse owns the company, they will own the company if you split. However, Japanese family law is pretty liberal when it comes to splitting assets anyway (Not entirely sure how it works for foreigners because they will get ousted from the family registry and family law will not apply to them). Basically, splitting up in Japan is tricky no matter what you do, so it is reasonable to exercise caution.

As a solo founder that's currently living in japan, wanted to let everyone know that this post is long, accurate, and a good representation of what it takes to start a business in Japan.

There's a lot that could be said about Japanese culture that was left out (probably for the best, brevity wise), and my path was slightly different, but this was a great read.

For those here looking for good consultation as far as lawyers in japan, check out:

http://www.juridique.jp/profile_en.html

They personally helped me incorporate, prices are reasonable in my experience, and their advice has been outstanding.

Once thing not mentioned here is that starting a business is usually a major commitment to staying somewhere, and you may not want to be prepared to make that kind of years-long commitment to a particular place. Sure, it's all exciting at first, but you may not like it long-term. I ran a successful publishing business in Japan, which kept me interested and happy, but it was a huge challenge to get the company to the stage where we could sell and leave. Problems multiply if your business does not do well. You may be stuck with tons of debt, in a foreign country, with very little support. Start small, make sure you have customers, and grow safely.

Japan's population is expected to collapse over the next few deacades, and that population will be increasingly past retirement age.

http://www.economist.com/blogs/banyan/2014/03/japans-demogra...

So you're gonna need to give serious thought to where you're planning to get employees from.

Or you could start a robotics or elder-care business...

You'd probably want to combine them and run an elder-care business staffed by robots to get around the labor supply problem.

Or still yet, a robot-care business staffed by ever more populous and longer living Japanese. Because Japan!

Or just cut out the care part and start robotically enhancing Japanese seniors.

Or making robots act as Japanese seniors. The sky is the limit.

There's some evidence that much of the reason the Japanese are so "long lived" is just pension fraud by surviving relatives: http://www.nytimes.com/2010/08/15/world/asia/15japan.html

Hahahaha. Awesome. I'd never heard of that, but based upon observations of the same elsewhere I'd lend it credence. I certainly didn't see loads of super old people in Japan on my (month long) trip, even in places they might traditionally be found (high ranking Buddhist monasteries) but perhaps that was just the places I was hanging out (rural north of Kansai, Kansai).

> So you're gonna need to give serious thought to where you're planning to get employees from.

As well as the tax burden for supporting the aging portion of the population (similar to considerations of basing a company in Florida, Maine, Vermont, Pennsylvania, or other high-percentage elderly population US state).

That won't happen in Florida. Florida is very right-wing and low-tax. Any older people unable to support themselves there will be left out in the cold (by the state government at least).

Maybe Japan will become more open to people from other countries living in Japan; I'm probably moving there soon and if you have contracts with Japanese businesses you can self sponsor a visa. Seems fairly progressive to me.

That's the price of freedom. Banning birth control and abortions would probably keep the population growing or at least stagnant.

I'm currently going through the same process for a business investor visa. However, my lawyer claims that immigation office changed the requirements this december to also require at least one (can be part-time) employee (other than yourself). Apparently this is something not stated anywhere, but a whim of the immigration office... Can anyone confirm?

Individual regional immigration offices and the individual clerks at them have pretty substantial latitude with regards to how they interpret the regulations. Another similar issue is how much salary you need to have to "self-sponsor" one of the professional visas (which is a thing which isn't really anticipated in the written regulations per se but can be finangled out of Immigration). The amount can, depending on the whims of the examining clerk, be "3 million yen", "300k yen per month", "at least as much as a Japanese person in your line of work", "enough to not be a burden on the public purse", "at or above the average income in this prefecture", etc.

(I will pause to say that if you'd trust an HN comment over the advice of your lawyer it is time to get a new lawyer.)

My lawyer... is very japanese-esque inflexible. No other lawyer (or friends that recently acquired the same visa) mentioned this new requirement; but the lawyer refuses to check with the immigration office.

Sounds like you need a new lawyer.

This flexibility can be a blessing or a curse. Usually it's the latter.

A good immigration lawyer should know the ins and outs of your local immigration office and be able to tell you fairly confidently (not 100%) what will and won't work.

patio11's reply is correct as far as I know, but I'll pitch in a little more. When I was researching setting up my business in Japan, I was told I would need to hire a resident to be a business manager in the case that I wanted to sponsor my visa through the company. So this may be what you are running into. In my case I was getting a spousal visa, and incorporating after immigrating, so I could be the resident if I wanted.

I'm here on a study visa, arrived last year, so I do have a temporary residency status.

But the problem is that you can't change your study visa to a working visa (BTW, this is not legal advice! Make sure to check what I'm saying with a lawyer). So you will lose residency when you change visas.

Potentially the easier way to go (assuming you are doing some high tech thing and you are getting an equivalent to an "engineering" degree -- CS should be fine) is to get a job and have the company sponsor your visa. At that point you can start your your company no problem and hire yourself. This is one way to avoid having to sponsor your own visa (which will have capitalisation requirements).

I was in a similar situation before I got married. I was teaching English and I wanted to set up an IT consulting company. My visa was as an instructor and there was no way to switch it to an engineering or business person's visa. So I would have had to sponsor my own visa. As it turned out, I got married, moved to the UK for a few years and then set up my company when I returned.

Edit: Even easier approach (though time consuming) is to get a job and stay long enough to get permanent residency. Then you have no issues at all. Minimum time frame is 5 years IIRC. Normally being married helps a lot, but I suspect if you have gone to school in Japan it will help equivalently.

> But the problem is that you can't change your study visa to a working visa (BTW, this is not legal advice! Make sure to check what I'm saying with a lawyer).

Sure you can, I have done it and I know tons of people who have too. Usually no lawyer required; assuming you have a degree (or is going to graduate soon) and you have a job offer, just apply at Immigration.

http://www.immi-moj.go.jp/english/tetuduki/kanri/shyorui/02....

Note that technically you don't "change visas" -- visa is something that's required in order to enter the country -- you change "status of residence". Usually people use the terms interchangeably, though.

But this is exactly the problem. In the scenario you describe, the company is sponsoring you. In the situation that the OP is describing, they want to start a new company. But they can't do that without having an employee who is a resident. And they can't work for the company without having the company sponsor them. It's a catch 22. Like I said, I would check with a lawyer, but I'm 99% sure it can't be done. If you are already have a working status in the correct field, then it is no problem. But you can't change from one to the other without sponsorship. That was exactly the problem I faced trying to change my status from instructor to engineer and also trying to work for my own company without sponsoring myself.

Edit: I should also point out that hiring a part time Japanese resident fixes all the problems. But that was what the question was all about.

Ah, got it. If you're a student you can apply for a permit that allows you to work part-time. But I don't know if a part-timer would count as an employee of the new company.

Hmm... Actually, it might... Good point!

I've always been interesting in doing this in Japan, this is without a doubt the best resource I've ever seen on the matter. Well done to the author, thanks for writing this up.

I'm based in Tokyo now. It took me a while to find a good immigration firm. All I can say: I moved here from SF and it has worked out quite well for me. I run an enterprise company though. Part of what got me to move here was JETRO. If you are looking to start a startup in japan, they've been very helpful for us: http://jetro.go.jp/usa/topics/companies-chosen-global-innova...

One caveat is we're enterprise though. Consumer will be harder.

We broke in to japan by hiring someone and having them help us start a subsidary. I moved here using that subsidary. It should be possible to do something similar for others.

I ran a Wordpress shop several years ago and tried to use the subsidiary route with advice from JETRO too. While the lady was very friendly and helpful, I kept getting a 'you don't make enough money, this is a waste of time' vibe from her.

If you're large enough and raking in enough money, they'd probably be more helpful.

Something similar, with focus on exchange students:

http://marui-plugin.blogspot.jp/2016/11/starting-company-as-...

I'm not sure if the author submitted this, but she should consider changing the favicon to something other than the default SquareSpace one. It can be done in the site settings.

This is gold

Visa cost: ¥5M Y

Isn't "5M JPY investment" (45k USD) the requirement for the visa, not the cost?

Yes, I don't think this is an official number though. It is almost sufficient (according to specialized lawyers) on its own but not absolutely necessary depending on the person degree, skills and plenty of other things.

edit: After checking a relevant Japan ministry of justice webpage [1], 5m yen is given as an indicator, which is why I suppose it is the value given by most lawyers.

[1]: http://www.moj.go.jp/nyuukokukanri/kouhou/nyukan_nyukan20.ht...

There is a minimum capitilisation requirement of 5M JPY to sponsor a visa. For people starting a company and coming in on a business visa (forget the actual name), you will need at least 5M JPY in your company. This is to ensure that your company has enough money to support you for a year. This amount is very much dependent upon a variety of factors, so it may be more than 5M JPY, as far as I know.

The money is still held by your company and you can own the stock, so it's not like you are "spending" it.

What? Why would anyone migrate to Japan then? You'd think that they'd have started relaxing the requirements, given the low birthrates and shrinking labor pool.

They kinda don't give a shit about that birthrate and declining population thing. Instead they aim for post-labour era with robots and not much manual labour.

In addition to that, they already have lots of young people who can't find solid jobs. For the last 20-ish years they economy doesn't grow. Big companies usually keep their old employees for a really long time, but don't grow. Thus youth don't have positions to fill. Importing population wouldn't help much, most of their companies are export based.

As someone with close friends in Japanese government (Ministries), I can tell you they do care VERY much about about their declining birthrate and stagnant economy.

...they're just unwilling to actually do anything about it. Allow immigration? Make it possible for women to have careers after childbirth? Stop funding increasingly ridiculous infrastructure boondoggles and give tax cuts to consumers instead of zaibatsu? Hire and promote based on talent, not seniority and what school you graduated from? Nope nope, it's all too muzukashii.

I've been visiting Japan regularly for 20 years now. To a first approximation, nothing about the fundamentals above has changed.

What do you mean by "allow immigration"? If you have a degree and a job you can come work and live in Japan. Japanese immigration is not that restrictive. My native country, the UK, has far more hoops to jump through to get permission to work.

The social changes are a much bigger challenge. If your family sees you as a bad mother for working while raising children then financial incentives and back to work schemes will only get you so far.

I guess he mean poor immigrants vs rich expats. The only relatively poor immigration they welcome is ESL teachers. Aside from that.. If you can make it in Japan, you can live well anywhere else.

There's very little of euro/us style poor 3rd world kind of immigration. Even if one would get a visa, they'd have a really really hard time finding a job. Strip club bouncers is very limited market.

Germany, Italy, Spain have similar low birthrates than Japan you know. They probably have less labor pool issues though.

For Germany, it is easily solved by getting a lot of good labour from Spain and Italy. That equation works out less favourably for Italy and Spain, though...

Business Visa applicants are a minority in any country. For a typical work visa, it's actually unusually simply to immigrate to Japan (all you need is a degree and a job offer). See how easy it is to immigrate to your country with just a degree and a job offer.

Japan just doesn't have a road for unskilled immigration (compared to the US with the green card lottery and all the illegal immigration, EU with all the refugee immigration). They had a program for nurse internship but apparently botched/sabotaged it.

lol i have to like natto to start a business there?

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