Japan “Moderately Complex” to Invest in
Those who have battled to understand Japan’s stifling bureaucracy, complex rules, culture and language, and reliance on outdated technologies like fax machines, personal hanko stamps and floppy discs might be bemused to hear that a comprehensive analysis of business complexity in 79 major jurisdictions has placed Japan in a relatively respectable 38th position.
According to the 11th edition of the Global Business Complexity Index (GBCI) produced by TMF Group, Japan’s distinct cultural norms, regulatory frameworks, economic factors, aging workforce and complicated calculations for social security and taxes were found to be among the administrative challenges when doing business there.
However, businesses operating or looking to set up their operations in Japan benefit from online tax and human resource services, with standard monthly payroll processes and the ability to hire from a highly educated population. “These form Japan’s competitive advantages, contributing to its ranking in this year’s GBCI.”
Greg McDonald, TMF Group’s Market Head of Delivery, Japan & South Korea added: “Japan is a moderately complex place to do business because of its language, traditions, and its high-low technological dichotomy. The systems for social insurance and banking differ from other countries, among other administrative processes that contribute to the complexity of the business
landscape here.”
Despite Digital Minister Taro Kono vowing to eliminate old technology, critics complain that Japan has an “anachronistic administration” that is digitalising at a glacial pace. It was not until June 2024, for example, that the government outlawed floppy discs and Japan’s last pager provider closed its service in 2019.
With the support of local knowledge, however, foreign businesses investing in Japan can expect their administration to run efficiently.
TMF Group provides critical administrative services to help clients invest and operate in 87 jurisdictions worldwide, including Japan and some 60% of the Fortune Global 500 and FTSE 100.
Here are their rankings for this year’s top 10 most complex countries to do business in:
- Greece
- France
- Colombia
- Mexico
- Bolivia
- Turkey
- Brazil
- Italy
- Peru
- Kazakhstan
The bottom 10, or least complex are:
- Jamaica
- British Virgin Islands
- Jersey
- United Kingdom
- The Netherlands
- New Zealand
- Hong Kong, SAR
- Denmark
- Curacao
- Cayman Islands