Why is Japan called the land of the rising sun?
In Japanese, the country is called Nihon or Nippon (日本). Both names, like “Japan”, come from characters meaning “origin of the sun” or “where the sun rises”, a reference to Japan lying east of the Asian mainland.
Japan’s economy and foreign investment in 2026
Japan is the world’s fourth-largest economy in 2026, according to the IMF’s October 2026 outlook, although a weak yen means India and the UK are projected to pass it in dollar terms in 2027. For foreign companies, a weaker yen also makes Japanese assets, talent and operations cheaper.
Foreign investment is rising. Japan’s inward foreign direct investment stock reached a record ¥53.3 trillion at the end of 2024, and the government has raised its target to ¥120 trillion by 2030. Manufacturing, wholesale and retail, and information and communication have long attracted the most foreign investment.
The benefits of doing business in Japan
A large, wealthy economy. One of the world’s biggest economies, with deep markets across industries.
Technological innovation. Consumers and companies adopt new technology, from robotics to AI-powered products.
High purchasing power. Japanese buyers pay for quality, making it ideal for premium products and services.
A stable environment. Strong rule of law, protection for investors and active government support for foreign investment.
Challenges in Japan and how to overcome them
| Challenge | How to overcome it |
|---|---|
| Language barrier | Hire bilingual staff, invest in language training, and use professional or AI translation for content and video. |
| Strict regulation | Work with local experts and legal counsel who know Japan’s detailed rules and standards. |
| High operating costs | Consider cities beyond Tokyo, such as Osaka or Fukuoka, and flexible workspace options. |
| Hard market entry | Build a market entry strategy with research, local partners and market entry specialists. |
| Cultural differences | Respect hierarchy, consensus and detail. Japan blends cutting-edge technology with traditional business practices. |
Setting up a company in Japan as a foreigner
Most foreign companies choose either a Kabushiki Kaisha (KK), Japan’s joint-stock company, or a Godo Kaisha (GK), a simpler limited liability company. Both protect owners from personal liability.
| Factor | Kabushiki Kaisha (KK) | Godo Kaisha (GK) |
|---|---|---|
| Owner liability | Limited to shares | Limited to investment |
| Registration licence tax | 0.7% of capital, minimum ¥150,000 | 0.7% of capital, minimum ¥60,000 |
| Articles of incorporation | Must be notarized | No notarization needed |
| Best for | Companies selling to large Japanese enterprises or planning to raise capital | Lean market entry and subsidiaries focused on cost |
New Business Manager visa rules
Foreign founders who want to run their Japanese company on the ground usually need a Business Manager visa. Rules revised in October 2025 raised the bar significantly:
- Capital of at least ¥30 million, up from ¥5 million.
- At least one full-time local employee, such as a Japanese national or permanent resident.
- Japanese language ability evidenced by the applicant or an employee.
- Experience or education: three or more years in management, or a relevant master’s or doctoral degree.
Requirements summarized from Baker McKenzie’s February 2026 briefing. Check the latest rules with an immigration specialist before applying.
Understanding Japanese business culture
Japanese companies can be innovative and disruptive while keeping traditional hierarchies, a careful approach to risk and an eye for detail. These practices matter most.
Nemawashi (根回し): building consensus before the meeting
Nemawashi literally means “root binding”, the farming practice of preparing a tree for transplanting. In business, it is the informal, behind-the-scenes process of securing agreement from everyone involved before a formal meeting. Decisions are effectively made in advance, so meetings confirm rather than debate. Taking the time to build consensus this way leads to smoother decisions and stronger relationships with Japanese partners.
Meishi
Business cards are exchanged with both hands and treated with respect, as an extension of the person.
Punctuality
Arriving on time, prepared and with clear materials signals reliability and respect.
Learn more in our guide to Japanese business etiquette and our insights on Japanese consumers.
Frequently asked questions
Why is Japan called the land of the rising sun?
Japan’s name in Japanese, Nihon or Nippon, is written with characters meaning “origin of the sun”. Seen from the Asian mainland, Japan lies to the east, where the sun rises.
Is Japan a good place to do business?
Yes, for companies prepared to adapt. Japan is the world’s fourth-largest economy in 2026, with high purchasing power, strong technology adoption and a stable legal system. The main challenges are language, regulation, costs and a consensus-driven business culture.
Can a foreigner set up a company in Japan?
Yes. Foreigners can fully own a Japanese company, usually a Kabushiki Kaisha (KK) or Godo Kaisha (GK). To manage it from Japan, founders typically need a Business Manager visa, which since October 2025 requires at least ¥30 million in capital and a local employee.
What is the difference between a KK and a GK in Japan?
A KK is a joint-stock company with notarized articles and a minimum registration licence tax of ¥150,000, preferred by large Japanese clients and investors. A GK is simpler and cheaper to set up, with a minimum registration licence tax of ¥60,000 and no notarization.
What are the Business Manager visa requirements in 2026?
Under rules revised in October 2025, applicants need capital of at least ¥30 million, at least one full-time local employee, evidence of Japanese language ability, and three or more years of management experience or a relevant master’s or doctoral degree.
What is nemawashi in Japanese business?
Nemawashi is the informal process of building consensus with all stakeholders before a formal meeting, so decisions are agreed in advance and meetings confirm them. It reflects the value Japanese business places on harmony and avoiding conflict.
Timothy Sze is co-founder of ToAsia.biz, with over 15 years of enterprise IT project experience with global companies, especially in Japan. Connect on LinkedIn
Sources: IMF World Economic Outlook (October 2026), JETRO Invest Japan Report 2025, Baker McKenzie (February 2026).
