Japan Market Entry

Japan Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

Despite its reputation as a protected or closed market, Japan offers a number of export opportunities. In recent years, there has been significant liberalization of the market and simplification of import procedures, which also contributed to the conclusion of the Economic Partnership Agreement between the EU and Japan.

Relevant links:

  • Current export procedures to Japan
  • Japanese Customs Tariff
  • Japan’s trade barriers – EU-Japan Center for Industrial Cooperation website

According to cheeroutdoor.com, the Japanese distribution system is unusually complex, and goods usually travel to customers through a multi-tiered system of suppliers that cannot be avoided. It is therefore advantageous for small and medium-sized companies from the Czech Republic to use the services of intermediary companies. Companies with up to four employees make up more than 60% of all registered companies, while more than half of them are privately held by one owner.

Forms and conditions of operation on the market

In Japan, there are a large number of intermediary companies in foreign trade – from large trading companies (sogo shosha), through medium and small specialized trading companies (senmon shosha) to individual private individuals working as intermediaries. The use of local importers-representatives is a necessary way of applying to the market in Japan. Due to the large number of entities, the possibilities of representation are very wide, it is more difficult to find a suitable partner with an adequate connection to a wide distribution network. The interest in representing a foreign manufacturer increases with the attractiveness of the products that are offered for the Japanese market. In most cases, exclusivity of representation is required. An agency contract is the simplest form of agency for Japan, which can be terminated with a two-month notice period.

For Czech companies that do not have direct connections to global multinationals with their own distribution on the Japanese market, one of the few options for exporting to Japan remains a suitable business connection with a local importer that has good connections to local distribution. Unlike in the past, a wider range of companies, including some manufacturers, wholesalers and retailers, are involved in imports, which on the one hand offers a more direct route to the customer, on the other hand complicates the choice of a partner. In recent years, there has been an increase in the number of companies that want to import, for example, raw materials, semi-finished products, components or machinery directly from foreign manufacturers. Department stores are also interested in direct imports of consumer goods.

Due to the high demands for warranty and post-warranty service of durable goods, the need to obtain certification for some commodities and due to other specifics of the Japanese market, the Japanese customer prefers purchases from a Japanese intermediary instead of direct purchases from an overseas manufacturer. Japanese companies sometimes offer representation for some countries in Southeast Asia, or even for other countries. This offer appears mainly at trading companies. Due to the high current costs of operating a representative office, the most advantageous form of connection is with an import company working on its own account.

The start of exporting to Japan usually takes at least 6-12 months from the start of initial negotiations, but in the vast majority of cases even longer. Establishing your own representative office in Japan is a complicated and expensive matter. Foreign companies have the opportunity to do business in various forms. The legal form of a foreign company or representative office is regulated by the Commercial Code.

Marketing and communication

In Japan, available forms of promotion focusing on finding importers and wholesalers are:

  • participation in specialized international exhibitions and fairs
  • placement of product samples in some permanent exhibition spaces (MIPRO, IBO Osaka, etc.)
  • company presentations, professional seminars
  • publication in the professional press ยท targeted PR events, press conferences
  • use of advertising, incl. free advertising in the “newsletters” of industry import associations
  • acquisition-oriented business stays

The actual promotional activity and marketing, aimed at the final customer, must then be left to the Japanese representatives – importers. The Czech Republic does not have the necessary world brands in its export offer, and Japan is precisely the market for world brands. The only widely known brand, at least among the older generation of Japanese, is Bohemia Crystal. In general, Japanese distributors of quality Czech goods usually do not achieve such a turnover that they can finance an extensive promotional campaign aimed at the final consumer. The use of local PR agencies can be extremely expensive for Czech companies.

Issues of intellectual property protection

Japan is a country where intellectual property protection is strictly enforced and is among the strongest in the world. Since 2005, there has been a specialized “High Court for Intellectual Property” to adjudicate intellectual property disputes.

The basic legal regulation in the field of intellectual property protection is the “Intellectual Property Act No. 122/2002”, which is followed by other laws focused on specific areas of regulation. These include, for example: patent law, utility model law, design law, unfair competition law and copyright law. Detailed information on industrial property law in Japan can be found on the website of the Japan Patent Office.

The Embassy of the Czech Republic in Tokyo has not yet recorded any cases of infringement of intellectual property rights by Japanese companies or individuals against Czech entities.

Public procurement market

Public contracts in Japan are awarded through public tenders, in which pre-qualified suppliers can participate. Qualified supplier status can be obtained by submitting an application and meeting the conditions at government institutions that award public contracts (ministries and government agencies, public television network NHK, etc.). On the basis of pre-qualification, the contractor gets the opportunity to participate in public tenders within the department that grants him the status.

Even after the status of a qualified supplier has been granted, there are a number of other conditions that the tenderer must meet. Businesses that manufacture or sell certain goods must obtain approval and a license to do so in accordance with Japanese law. For example, medical technology suppliers must submit a notification under the Pharmacy Act. Potential suppliers should also familiarize themselves with optional technical specifications such as Japanese Industrial Standards (JIS). Detailed information on individual standards can be found on the Japanese Standards Association (JSA) website.

In general, the rules for government tenders are set by the WTO in the Government Procurement Agreement (GPA). The issue of public procurement for companies from EU countries was then significantly simplified by the negotiation of the Economic Partnership Agreement (EPA), in which an entire chapter is devoted to public procurement (Chapter 10). Despite the above-mentioned agreements, however, the participation of foreign entities in tenders for state contracts is still relatively complex. The participation of foreign companies, including large global engineering companies, is also very problematic due to the language barrier (the official language is Japanese), the interconnectedness of personal relationships between officials and company representatives, mistrust of foreign partners, etc. For Czech companies, direct participation in public procurement in Japan is very difficult.

The Japanese government agency JETRO has created an online database in the English language, in which the contracts of the government, government agencies, national universities and independent government institutions are published. The database contains notices and invitations to participate that are published in the “Official Gazette” (Official Gazette is in Japanese language only). Each year, 13,000-15,000 job announcements and other information are registered in the database. The database also contains selected local government contracts in Japan. Each government institution has its own point of contact for public tenders.

The procedure, including contact points, is given in the publication “Q&A on Government Procurement Contracts – Guide to the Government Procurement Market of Japan” published by the Ministry of Foreign Affairs of Japan. Information is available in the Tokyo branch of the PaulTrade agency or on the website of the Japanese Ministry of Foreign Affairs.

Payment terms, payment ethics and resolution of commercial disputes

Japanese businessmen are generally very solid partners, respect contracts and fulfill their obligations. The opposite and very serious problem is the non-fulfillment of obligations of Czech companies in terms of quality and timeliness of deliveries. In Japan, delivery and quality conditions are viewed quite uncompromisingly and are precisely enshrined in most contracts, including penalty clauses. In case of non-fulfillment of qualitative and quantitative conditions, delivery dates, etc., a penalty for non-fulfilment is the least penalty. The result is a loss of trust, and Japanese companies no longer renew the contract with such a partner in the vast majority of cases.

Payment terms depend to a large extent on the extent to which business partners know and trust each other. With large traditional Japanese business firms, due to their high creditworthiness, it is not necessary to insist on payment terms that give high assurance to the seller, such as advance payments or documentary letters of credit. The Czech exporter’s insistence on these conditions at any cost could even be counterproductive, as the Japanese partner could perceive it as an expression of distrust, which would endanger the building of a long-term business relationship.

The resolution of commercial disputes is very difficult in Japan, not only because of the language barrier, but mainly because of the length and complexity of the procedures, the high costs of legal representation, etc. In addition, the result of a court decision is usually a decision on the necessity of fulfilling a contractual obligation. The most common solution to a business dispute is a mutual informal agreement. The Japanese often prefer their own loss and prefer to cut off business with the company with which they should have a dispute.

Visas, fees, specific conditions for traveling to the territory

Important note: the information below in this chapter does not take into account the current travel and visa restrictions imposed in Japan due to the COVID-19 coronavirus pandemic. It is assumed that once these restrictions are lifted, the situation will return to its original state. In any case, we recommend that you check the current status on the websites of the Embassy of Japan in Prague or the Embassy of the Czech Republic in Tokyo before planning a trip to Japan, and consult any individual questions by phone.

Japan and the Czech Republic have been practicing visa-free tourist relations since 1998. A Czech tourist can stay in Japan for up to 90 days. The condition is that the citizen of the Czech Republic will not perform a gainful activity on the territory of Japan. Citizens of the Czech Republic can travel to Japan with a biometric passport of the Czech Republic. The minimum period of validity of the passport is not specified. Japan requires mandatory biometric capture as part of the immigration procedure. At the airport, every visitor is asked to provide fingerprints of both index fingers and take a photo of their face. The data obtained is then compared to a database of persons deemed undesirable by Japan. A passenger who decides not to provide biometric data will not be allowed into the territory and will be returned to the country of departure by the nearest connection at his own expense. Children under the age of 16 are exempt from the obligation to submit biometric data.

A separate category consists of investors and managers who, after meeting the relevant requirements, are granted permission to stay for a period of 6 months, one or three years. The application is submitted in advance at the Japanese embassy in the country of residence and must be supported by a number of documents about the applicant’s person, about securing his stay in Japan, about the company in which the applicant will work (or represent it), including a detailed business plan. It takes about 2-3 months to process the application. Japanese immigration regulations grant officials a range of powers when assessing and deciding on applications for short-term residence (visa) or long-term residence, and allow them to require additional written documents or guarantees from the applicant. The above information can therefore only be considered basic, with

It is recommended to arrive in Japan with cash to cover your needs for the first few days, or exchange cash immediately upon arrival in Japan at the airport. The operating hours of Japanese banks are shorter than in Europe. Some ATMs are only in Japanese and most do not accept foreign cards. The most advantageous from the point of view of withdrawing cash to a foreign payment card is the network of ATMs of 7-Eleven stores (7 Bank) and ATMs of the Japanese Post Bank (JP Bank).

The driving license of the Czech Republic is not accepted by the Japanese authorities. However, an exception is granted to citizens of the Czech Republic with a long-term residence permit who can obtain a Japanese residence permit based on the presentation of a certified translation of the residence permit issued in the Czech Republic. Other citizens of the Czech Republic should have an international driver’s license, but it is only valid for one year. In Japan, you drive on the left. There are heavy fines for driving under the influence of alcohol.

Japan is an extremely safe country, foreigners can move anywhere and at any time of the day without putting themselves at risk.

Employment of citizens from the Czech Republic

Working stays of foreigners in Japanese companies are becoming more and more common today. Japan issues a number of different types of employment visas, specified by the type of activity carried out. Work visas are mostly intended for teachers, professionals and managers. A basic overview of the conditions for granting visas can be found on the website of the Japanese Ministry of Foreign Affairs.

The immigration policy for working stays is strict and the current conditions must be consulted in each specific case with the Embassy of Japan in Prague or with representatives of the Prague office of the Japanese government agency JETRO. As of 1 November 2018, the Working Holidays Visa Agreement between the Czech Republic and Japan entered into force. Young people between the ages of 18 and 30 are thus given the opportunity to stay in the territory of another country for a maximum of one year with the advantage that they will be able to work and thus obtain financial resources to cover the costs of their stay. The granted visa is both a residence permit and a work permit for the participants of this program. Detailed information on the application of Czech citizens for Japanese visas for working holidays is available on the website of the Embassy of Japan in Prague.

Illegal work is severely punished in Japan. Therefore, as soon as the immigration police suspect that the purpose of a citizen’s trip is not tourism, but illegal employment or other activities that contradict the declared purpose of the trip, they will not let him into the country. The citizen then has to wait at the airport for the next flight to the Czech Republic. If there is no free seat on the plane that day, he is forced to sleep in an airport hotel, where he pays all his own expenses, including police supervision, until his departure. These costs are around 300-400 USD/night. The risk of not being allowed into the country is particularly high for those travelers who have already stayed in Japan several times in a short period of time as part of visa-free tourism.

Due to the relatively high costs of health care, it is recommended to take out travel health insurance covering the costs of repatriation or transportation of remains before traveling to Japan.

A normal visit to a general practitioner with a prescription costs around 10,000 JPY (ie approx. 2,000 CZK). Dental treatment is expensive, where an initial consultation without treatment can cost around JPY 7,000. In the case of hospitalization, the costs range from hundreds of thousands to millions of yen, while the patient separately pays for the costs of food, bed, services, etc. The level of health services corresponds to the common standard of EU countries. The problem is the language barrier, as doctors often (as well as most of the population of Japan) do not speak English. When ordering, it is therefore recommended to check whether it is possible to speak English with the doctor.

In case of urgent need, the Japan Helpline (advice for foreigners in English) can be contacted 24 hours a day at the toll-free number: 0120-461 997 or the emergency service at the telephone number 119. Health problems can also be consulted with the Asian Medical Association AMDA at the telephone number: 03-5285 8088 or with the Free Medical Information Services on the phone number: 03-5285 8181. Help with handling formalities in the event of a traffic accident is offered by the Information Service for Foreigners on the phone number: 03-5320 7744.

Fairs and events

Participation in exhibitions and fairs in Japan is a relatively expensive matter for Czech companies, especially from the point of view of travel and accommodation costs, however, this participation is a very suitable way of entering the market. The main exhibition events have a high professional attendance, which guarantees reaching a wide range of potential partners. More than 150 general and professional trade fairs and exhibitions are held in Japan every year. To decide on active participation in the fair, it is recommended to consult with the organizer about the exact focus of the fair, the profile of exhibitors and visitors, international participation, etc.

Selected international fairs:

Field of study: Nanotechnology

Nano tech

Venue and date: Tokyo (Tokyo Big Sight), early February

Usual attendance: number of exhibitors: 510, number of visitors: 45,000

website: http://www.nanotechexpo.jp

Field of study: Food and food equipment

FOODEX JAPAN: International Food and Beverage Exhibition

Venue and date: Tokyo (Tokyo Big Sight), March

Usual attendance: number of exhibitors: 2,400 from 72 countries/regions, number of professional visitors: 74,000

website: http://www3.jma.or.jp/foodex/en/

Field of study: Aviation and space

JAPAN AEROSPACE

Place and date of event: Tokyo (Tokyo Big Sight),

website: http://www.japanaerospace.jp/en/index.html

Field of study: Biotechnology

BIO JAPAN

Venue and date: Yokohama (Pacifico Yokohama), held annually in October

website: https://www.ics-expo.jp/biojapan/en/

Field of study: General

Tokyo International Gift Show

Venue and date: Tokyo (Tokyo Big Sight), always February and October

Usual attendance: number of exhibitors: 2,500, number of visitors: 200,000

website: http://www.giftshow.co.jp/english/index.htm

Field of study: Packaging and packaging machines

Tokyo International Packaging Exhibition

Venue and date: Tokyo (Tokyo Big Sight), October

Usual attendance: number of exhibitors: 500, number of visitors: 70,000

website: http://www.tokyo-pack.jp/en/index.html

Field of study: Retail and related fields

Japan Shop

Venue and date: Tokyo (Tokyo Big Sight), March

Usual participation: number of exhibitors 1,300, number of visitors 236,000

website: https://messe.nikkei.co.jp/en/js/

Japan Market Entry