Executive Guide to Doing Business in Japan

Overview of Japan
Major cities
Population growth
Age structure
Life expectancy
Gross Domestic Product
Income per capita
Biggest imports/exports
Major trading partners
Health expenditures per capita
Government expenditure on healthcare
Private expenditure on healthcare
Out-of-pocket expenditures
Medical device market size
Physicians & hospital beds per 1,000 people
Doing business with Japan
Documents needed to import
Time to import into the Japan
Burden of customs procedure
Logistics performance index
Enforcement of contracts
Exchange rate history
Total tax rate

Overview of Japan

Capital: Tokyo
Language: Japanese
Currency: Japanese Yen
Population: 126 million (2012 est.)

Japan’s technologically advanced economy started its growth after the Second World War, led by a strong work ethic, its use of high technology and the cooperation between the industry and government. Japan achieved impressive economic growth following the war, with an average of 10% in the 1960s, a 5% average in the 1970s and a 4% average in 1980s which slowed down at 1.7% in the 1990s due to inefficient investments. Growth continued after 2000 until the global recession caused Japan’s economy to contract three times. Government stimulus spending helped the economy overcome recession, but in 2011 the economy contracted again after a 9.0 magnitude earthquake and a tsunami hit the country. In 2012, Japan was the fourth-largest economy worldwide measured on purchasing power parity (PPP) and third-largest economy by nominal GDP.

Major cities in Japan

Tokyo - 8.9
Yokohama - 3.6
Osaka – 2.6
Nagoya – 2.2
Sapporo - 1.9

Around 78% of Japan’s population lives in urban areas with 12 cities that have a population of more than one million. Tokyo is by far the largest Japanese city, with a population greater than the combined population of the next three biggest cities. Yokohama is the country’s largest port and ship building center while Osaka is home to many Japanese manufacturers.

Population growth in Japan

Japan is one of the fastest ageing nations in the developed world, mainly due to almost no net immigration and falling birth rates. According to data from the Health and Welfare ministry, Japan’s population will continue to decline by one million every year for the next decade, being projected to reach 87 million in 2060. Measures that include birth incentives and immigration are discussed by Japan’s government to fight the rapid decline in population.

Japan population growth

Age 0-14 - 13%
Age 15-64 - 62%
Age 65+ - 24%
Median age - 45

Age structure in Japan

With one of the highest life expectancy at birth, Japan’s population is rapidly aging following a baby boom following the Second World War. As of 2012, 24% of Japan’s population was over the age of 65, a percentage close to that of Germany’s (21%) but lower than France’s (17%) or that of the US (14%). It is estimated than by 2050, almost 40% of the population will be 65 years or over. [1]

Japan age structure

Male/female: 79/86
Globally: 68/71

Life expectancy in Japan

Japan has the highest life expectancy in the world, a rise of 5 years for men and 7 years for women from the expected lifespan in 1980. This growth started in the 1950s and 1960s when the government invested heavily in the healthcare system, introducing universal health insurance in 1961. A healthy lifestyle and regular systematic check-ups are also important factors that contribute to this increased longevity.

Japan life expectancy

GDP: US$ 5.96 trillion (ranked 3rd)

Japan's Gross Domestic Product

Japan is the third largest economy worldwide in terms of nominal GDP, above the US and Chinese economies. There is ongoing effort to tackle Japan’s huge government debt, the largest of any nation, estimated at 214.30% in 2012. Japan’s GDP exceeds that of Germany or France but is lower than that of the US, China or the European Union. [2]

Japan GDP

Income per capita in Japan

US$ 46,720 (ranked 16th)

Japan ranks 17th in terms of GDP per capita, above nations such as France, Germany or Brazil but with a lower GDP than that of the United States, Switzerland or Norway. This reflects an increase of almost 50% from 2002. The IMF estimates Japan’s nominal GDP will decrease with around 10% in 2017, being overtaken by countries such as Germany, Canada or the United Kingdom.

Japan GDP per capita

Biggest imports/exports in Japan

Exports of medical devices in 2011 stood at US$ 4.8 billion, up 6.1% from the previous year. The most exported medical devices were diagnostic imaging systems (25.4%), in vitro clinical test equipment (20.5%) and operating equipment and supplies (19.2%). Japan exported US$ 10.7 billion in 2011, up 0.3% from 2010, with the most imported categories being artificial internal organ apparatus (29.3%), operating equipment and supplies (22.2%) and ophthalmic goods (15.1%). [3]

Imports come from:
China - 21.3%
United States – 8.8%
Australia – 6.4%
Exports go to:
China – 18%
United States – 17.7%
South Korea - 7.7%

Major trading partners for Japan

Currently, Japan has signed agreements with ASEAN (Indonesia, Malaysia, the Philippines, Singapore and Thailand), as well as Chine, Brunei, Mexico, Switzerland, Viet Nam, India & Peru. Japan is also discussing trade agreements with Australia, Mongolia, Canada, Colombia, South Korea & China, the EU, the Regional Comprehensive Economic Partnership (RCEP), Trans-Pacific Partnership (TPP) and the Gulf Cooperation Council (GCC). [4]

Japan trading partners

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Healthcare in Japan

Japan has provided universal healthcare to its citizens since 1961 thus all Japanese citizens are required by law to have health insurance. Private companies usually offer health insurance for their citizens while those without it can opt for a national health insurance program that is administered by the local government. 10% of citizens choose however not to opt in for health insurance. There are 8 health insurance systems that can be either Employees' Health Insurance or National Health Insurance, the latter being designed for students and self-employed individuals.

Hospitals are operated on a non-profit basis while medical fees are strictly regulated by the government so that patients will pay up to 30% of it, with the rest being covered by the government. In a report put together by Bloomberg, Japan’s healthcare system was named world 3rd most efficient, after Hong Kong and Singapore, taking into account life expectancy, per capita healthcare expenditure and health cost as percentage of GDP. [5][6]

US$ 518 billion (2010)
Health spending per person:
US$ 3,958
Growth from 2005 to 2010: +35%
Total health expenditure on health as % of GDP: 9.3%

Health expenditure per capita

In 2010, Japan spent US$ 3,958 on health, ranking 16th out of all nations studied by the World Bank. Japan spends less than the US (US$ 8,608), France (US$ 4,952) or Germany (US$ 4,875) yet has the highest life expectancy out of all countries, worldwide. This expenditure grew by 6% from 2009 and 39% from 2000 to 2010.

health expenditure capita Japan

Government expenditure on healthcare

Japan’s government covers 80% health expenditure, one of the highest percentages of developed countries. This percentage far exceeds that of the US and Brazil with 46% or China with 56%, but is similar to countries such as France (77%), Germany (76%) or the United Kingdom with 83%. [7]

general expenditure health Japan

Private expenditure on healthcare

Japan’s private expenditure on healthcare (20%) is particularly low compared to the world average (39%) or to what other developed countries pay. 54% of healthcare expenses are private in the US and Brazil, while France pays 23%, Germany 24% and the UK – 17%.

private expenditure health japan

Out-of-pocket expenditures

82% out of private healthcare costs are out-of-pocket expenditures. By contracts, in the US out-of-pockets expenses amount to 21%, in Brazil – 58% and in France 32%.

out of pocket expenditure health japan

US$ 29.2 billion (2011, revenue)
Number of hospitals: 8500
Growth Potential: 2 (1 - low; 5 - high)

The size of the Japanese medical device market

Japan ranks as the third biggest medical device market after the United States and the European Union, on track to expand even more with the percentage of seniors (65+ years) going from 24% in 2012 to 40% in 2050. Manufacturers that would like to sell their medical devices in Japan will have through the Japanese Pharmaceutical Affairs Law, which also applies to pharmaceuticals and cosmetics. Under the PAL law, a marketing approval, a license for Marketing Authorization Holder and a manufacturer license are given by the Minister of Health, Labor and Welfare (MHLW). [8]

Physicians & hospital beds per 1,000 people

With 2.1 physicians and 4.1 nurses per 1,000 people, Japan’s numbers of physicians are below that of the US (2.4 physicians and 8.2 nurses per 1,000 people) or the EU average (3.3 physicians and 8 nurses), but higher than the world average (1.3 physicians and 3 nurses). Out of all OECD countries, Japan has the highest number of hospital beds (13) available for every 1,000 people. This number is far higher than the world average (3 per 1,000 people), the EU average (5.4) or the US with 3 hospital beds. [9]

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Doing business in Japan

Doing business in Japan

According to The Global Competitiveness Report, Japan is ranked 9th in the Global Competitiveness Index for 2013-2014, behind countries such as the US, Singapore, Finland and Germany. Up 1 position from the previous years, the Japanese economy is getting back on track after two recent recessions and the negative effects the 2011 earthquake had. Japan’s new government is pursuing an agenda to revitalize the economy with fiscal stimulus and a regulatory reform to loosen the monetary policy imposed by the Bank of Japan. [10] In terms of starting a business, Doing Business ranks the US 24th among 185 world economies, being outranked by the US, Hong Kong, Singapore, South Korea and several Western European countries.

ease of doing business Japan

Documents Needed to Import

There are 5 documents required to import into Japan, the same number as China and close to the average for 31 OECD high income countries. Japan also requires fewer documents than other countries such as Brazil, Australia and Russia but more than South Korea. [11]

  • Bill of Lading
  • Cargo dispatch document
  • Commercial invoice
  • Customs import declaration
  • Packing list

documents to import USA

Time to import into Japan

It takes an average of 11 days to import into Japan, 1 day more than the average for OECD high income countries. This timeframe falls behind Australia (8 days), South Korea (7 days) or the United States (5 days), but is outperforms Brazil (17 days) or China (24 days). [12]

time to import Japan

Burden of customs procedure

For the full list of applicable tariffs when importing medical devices into Japan, please consult the official list on the website of the Japanese Customs agency.

Logistics Performance Index – 3.93

The Logistics Performance Index (LPI) is the average score for a country reflected by the efficiency of custom procedures, trade and transport related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments and timeliness of shipments in reaching their destination. In this ranking, Japan outperforms countries such as France, Switzerland or South Korea but ranks lower than Singapore, Hong Kong or Germany or Japan. [13]
1 = Low; 5 = High

Enforcement of Contracts

It takes 360 days, costs 32.2% of the value of that contract and requires 30 procedures. This puts the US on the 6th position (a decrease from 4th position in 2012) out of 185 countries studied, before France, Japan. In terms of the ease of enforcing contracts, Japan ranks 3th, being outranked by Germany, The US, France and China. [14]

japan enforcement contracts

Exchange rate history

For a detailed overview on how the the Japanese Yen (JPY) moved in recent years, please see the graphic below.[15]

Total tax rate (% of commercial profits)

Companies based in Japan will have to make 14 tax payments per year, with a number of 330 hours needed to fill and prepare taxes. Taxes amount to 50% of a company’s profit, placing Japan on the 127th position out of 185 countries studied. This ranking is far below economies such as South Korea, Australia, China or the US, but higher than Brazil.

Japan tax rate

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Data compiled October 2013. Updated yearly

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