Why Start a Business in Tokyo?
Tokyo, Japan's bustling capital, is one of the most dynamic and influential cities in the world. For entrepreneurs and businesses, Tokyo offers a unique blend of opportunities, resources, and advantages that make it an ideal location to establish a new venture. This article explores the compelling reasons why starting a business in Tokyo can be a strategic and rewarding decision.
The population of Tokyo accounts for slightly more than 10% of the total population of Japan according to Ministry of Internal Affairs and Communications as of 1st of October in 2023 which is round 14mil. The only prefecture to see an increase was Tokyo, and the trend towards further concentration of population in a few areas is accelerating once again. Tokyo also attracts foreigners and 20% of all foreigners in Japan live in Tokyo and it is estimated to increase in the future as well.
1. Economic Powerhouse
1.1. Strong Economy:
Amon the whole of Japan, Tokyo earns approximately 20% of the total Gross domestic product 2022, Japan, followed by Osaka and Aichi which occupy roughly 7% each of the total amount. Tokyo is the economic center of Japan It boasts a GDP comparable to that of many countries, providing a robust and stable economic environment for businesses.
Among the total number of listed companies in Japan, 3,842, roughly 53% of those has headquarter in Tokyo as of end of 2024.
As for foreign-affiliated companies, 75% of them have their headquarters in Tokyo.
1.2. Financial Hub:
As a leading global financial hub, Tokyo offers access to a wide range of financial services, including banking, insurance, investment, and venture capital.
The Tokyo Stock Exchange is 3rd biggest market after NYSE and NASDAQ OMX, providing ample opportunities for capital raising and investment.
Tokyo Metropolitan Government provides subsidy for the establishment of bases by foreign financial companies such as fintech business or asset management business, which includes up to 50% of related cost (up to JPY7,500 thousand).
2. Innovation and Technology
2.1. Technological Advancement:
Tokyo is renowned for its cutting-edge technology and innovation. It is a global leader in fields such as robotics, electronics, and telecommunications. In 2023, the Tokyo Digital 2030 Vision was announced, aiming to further improve the efficiency of administrative services in Tokyo through digitization.
The city hosts numerous research institutions, universities, and tech parks that foster innovation and collaboration.
2.2. Start-up Ecosystem:
Tokyo has a vibrant start-up ecosystem with numerous incubators, accelerators, and co-working spaces. These provide essential support for entrepreneurs, including mentorship, networking, and funding opportunities. Areas like Shibuya and Roppongi are known for their startup incubators and coworking spaces.
The city's commitment to innovation is reflected in government initiatives and policies that encourage start-ups and technological advancements.
In January 2016, the Tokyo Metropolitan Government introduced a new visa system called the Tokyo Startup Visa (officially called the Tokyo Metropolitan Government Foreign Entrepreneurial Talent Acceptance Promotion Project). Under the Tokyo Startup Visa, applicants apply to the Tokyo Metropolitan Government rather than the Immigration Bureau, and the Tokyo Metropolitan Government independently examines the documents submitted by the applicant and decides whether to grant or deny permission for the activity. If permission is granted, exceptionally, a status of residence of “management and administration” for six months is granted.
2.3. Tech Festivals and Events:
The city hosts numerous tech conferences, such as CEATEC and Tokyo Game Show, which attract global attention and showcase the latest innovations.
3. Skilled Workforce
3.1. Highly Educated Talent:
Tokyo boasts a highly educated and skilled workforce, with a strong emphasis on science, technology, engineering, and mathematics (STEM) education.
The presence of top-tier universities and research institutions ensures a steady supply of talented professionals.
3.2. Multilingual Capabilities:
While Japanese is the primary language, Tokyo's international business environment means many professionals are proficient in English and other languages.
This multilingual capability facilitates global business operations and communication.
4. Market Access
4.1. Large Consumer Base:
With a population of over 14million in Tokyo prefecture and 37 million in the Greater Tokyo Area, businesses have access to a large and sophisticated consumer market.
Tokyoites have high purchasing power and a keen interest in new and innovative products and services.
4.2. Gateway to Asia:
Tokyo's strategic location makes it a gateway to other major Asian markets, including China, South Korea, and Southeast Asia.
The city's excellent transportation infrastructure, including airports and ports, facilitates easy access to regional and global markets.
It is possible to access the center of Tokyo in about 25 minutes by car or about 20 minutes by train from Haneda Airport. Haneda Airport has flights to 48 domestic destinations and 32 international destinations in 18 countries and regions, making it extremely convenient for access to destinations both in Japan and overseas.
5. Life
5.1. World-Class Infrastructure:
Tokyo offers world-class infrastructure, including efficient public transportation, advanced telecommunications, and state-of-the-art facilities.
The city's infrastructure supports business operations and enhances the quality of life for residents and expatriates.
5.2. Safety and Stability:
Tokyo is known for its safety, cleanliness, and high standard of living. It consistently ranks as one of the safest cities in the world.
The stable political and economic environment provides a secure foundation for business activities.
5.3. Cultural Richness:
The city's rich cultural heritage, vibrant arts scene, and diverse culinary offerings make it an attractive place to live and work.
Tokyo's blend of traditional and modern culture provides a unique and inspiring environment for entrepreneurs.
6. Government Support
6.1. Business-Friendly Policies:
The Japanese government and Tokyo Metropolitan Government have implemented various policies to support business growth, including tax incentives, grants, and subsidies.
Programs such as the Tokyo One-Stop Business Establishment Center (TOSBEC) provide comprehensive support for foreign entrepreneurs, including assistance with registration, visas, and permits.
6.2. Innovation Initiatives:
Initiatives like "Start-up City Tokyo" aim to transform Tokyo into a leading start-up hub by fostering innovation and entrepreneurship.
Collaboration between government, academia, and industry drives technological advancements and creates a supportive ecosystem for start-ups.
Conclusion
Tokyo offers numerous advantages for starting a business. With a population of approximately 14 million, it accounts for 20% of Japan's GDP and serves as the nation's economic hub, hosting 53% of listed companies and 75% of foreign-affiliated headquarters. As a global financial center, it provides extensive financial services and government incentives, including subsidies and the Tokyo Startup Visa. Known for cutting-edge technology and robust startup support, Tokyo boasts innovation hubs, tech events, and a skilled, multilingual workforce. Its large consumer base, strategic location as a gateway to Asia, world-class infrastructure, safety, and cultural richness create an ideal business environment.
Source:
Cabinet Office Website: https://www.esri.cao.go.jp/jp/sna/sonota/kenmin/kenmin_top.html
Nikkei: https://www.nikkei.com/article/DGXZQOCC126E10S4A410C2000000/
JETRO: https://www.jetro.go.jp/invest/region/data/tokyo.html