Investing in Japan

Initial Cost Estimation

Model Case

Basic Premises of Model Case

• The model case is based on the most common type of new business operation established by foreign firms entering the Japan market with an initial staff of two: one person from the foreign firm (who typically serves as managing director) and a Japanese national (manager-level person).
• The company makes use of a temporary office to complete incorporation procedures to set up joint-stock company or branch office, and then moves into a permanent office (rented).
• The foreign national (managing director) lives in an extended-stay apartment or hotel, then moves to permanent housing in a residential area after completing incorporation procedures.
• The company engages licensed professionals with publicly administered qualifications for a kind of procedures.

Initial Costs (in Tokyo)

(All figures shown in $US; 1 $US=JPY90)

	Subsidiary Company (Kabushiki Kaisha)	Branch	Criteria/Remarks

Preparation	Pertinent information
Rent (3 months) for temporary office (includes security deposit)	0 - 11,110	Rental fees and required deposits vary among the private companies and public organizations that offer such facilities. JETRO IBSCs provide free temporary office space (for up to 50 business days).
Rent (3 months) for temporary housing (in extended-stay apartment)	5,560	20 to 30 sq.m
Subtotal	5,560 - 16,670

Obtaining visas	Pertinent information
Temporary visitor visa	0		Not required for citizens of countries with which Japan has visa exemption agreements; View list of 61 countries (as of April 2010) on Ministry of Foreign Affairs website.
Certificate of eligibility (through proxy)	2,220	1,670	Commission to professional (proxy) varies depending on type of visa.
Re-entry permit (through proxy)	280
Subtotal	2,500	1,950

Company establishment and tax notices	Pertinent information
Costs to register company	2,780	1,000	Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc.
Paid-in capital	55,560	-	Although establishment with capital of 1 yen is possible under the Companies Act of Japan, you need to invest 5 million yen or more if you are in receipt of an "Investor/Business Manager" visa status.
Name seals for company and personal use	560		Price for standard kit (4 company seals and 2 personal ones) at major seal chain store in Japan.
Company registration and notifications (through proxy)	2,780	2,220	Includes fees to prepare affidavit(s).
Notification of stock acquisition to the Bank of Japan (through proxy)	330	-
Tax and social insurance notices (through proxy)	2,330
Subtotal	64,340	6,110

Hiring local personnel	Pertinent information
Fee paid to recruiting agency for hiring a manager	33,330	Equivalent to 30% of expected first year salary (JPY 10 million)
Subtotal	33,330

Setting up a permanent office	Pertinent information
Monthly rent (includes maintenance fee)	2,560	Based on rates for a 50 sq.m office in one of Tokyo's five major districts (Source: "2009 Real Estate White Book," CB Richard Ellis). Security deposit is equivalent to ten months' rent. Cost for rental serviced offices start at approximately USD 1,050 (for a 10sq.m unit); initial fee and security deposits generally required in addition.
Security deposit	25,600
Real estate brokerage fee (equivalent to one month's rent)	2,560
Basic office furnishings (desks, chairs, etc.)	1,440	New items bought at major office equipment stores.	Cost-savings is possible through leasing equipment or buying items second hand. Rental serviced offices are generally furnished with desks, chairs and equipment such as telephones.
Basic office equipment (computers, printers, phones, etc.)	6,560	New items bought at major electronics retail stores.
Communication costs (basic monthly fee for Internet and telephone)	110	Same provider for fixed telephone, cell phone and Internet service. Subscription fee for fixed telephone is not included.
Fire and accident insurance (one-year policy)	440	Covers costs for damage to building/office equipment due to fire, lighting/flood and theft.
Subtotal	39,270

Setting up permanent housing (for foreign national)	Pertinent information
Monthly rent (includes maintenance fee)	2,780	Based on average rent for 60 to 65 sq.m apartment in Tokyo's Minato district.
Deposit and "key money" (equivalent to two month's rent)	5,560	There has been an increasing trend towards properties that reduce the deposit and key money amounts or do not require them at all.
Real estate brokerage fee (equivalent to one month's rent)	2,780
Subtotal	11,120

Grand total

156,120 - 167,230

97,340 - 108,450

<Comparison of initial start-up costs for subsidiary company in major business areas>

* Comparison chart of initial start-up costs in Japan's major business areas.(134KB)
* For more information on the business environments of Japan's regions.

This model case is meant to be only a "guide". The actual costs of setting up a business in Japan vary from company to company (and depend on current economic and business conditions).

(as of August, 2010)