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Japan: A paradise for entrepreneurs

49 Comments
By Jon Sparks

I have worked around Asia and the experience has been fantastic. On the business front, it has provided markets many times (or orders of magnitude) those I could access from my native Australia. In addition to shear size, these markets come with a population density that offers great opportunities around economies of scale and low distribution costs.

Beyond the generic, having had operations in China, Japan, Malaysia, Singapore, Hong Kong & Taiwan has allowed for some fairly pragmatic comparisons of commercial codes, employment practices, access to funding and the like. Even better has been the opportunity to see the “softer” areas of business such as the work-ethic of the labour force, the amount of red tape encountered when doing business and to get a feeling for how level is the playing field in a society where you operate as a outsider.

Read more in Insight from Jon Sparks, a business builder with more than 20 years of experience including pan-Asia Board and C-level positions.

© Japan Today

©2020 GPlusMedia Inc.

49 Comments
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For 20yrs of experience -you really don't say much.

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Hmmm. Not a good article really... And my tuppence worth is. Japanese is a hell for free, forward thinking people. The system will destroy the successful just look at horiemon, mikitani and others who dare.

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Well. Optimistic is the only positive word I can apply to this article.

Ten years in Japan and moving in circles with some of the few successful entrepreneurs, I think almost none of them would agree that Japan is pardise of any kind at all. Especially when it comes to business.

Why?

Set Menu Thinking: If your idea is not a part of the set menu, then it will fail.

Market Domination: Everything from the creative markets to many product markets are dominated by one or two big companies who own their market. Look at Densu's control over design in the corporate sector for an example. The only thing small companies can do is pick up scraps. Captive vendors and designated providers mean that a lot of markets are closed to new or outside companies.

Trendy: If you are working on something small, if you do gain ground it probably won't last. Japan is terribly trendy. Your new restaurant, product or service is just as likely to flash in and out of existence as it is fail to get up and running in the first place.

In the Box: In the west we admire out of the box thinking. In Japan the same thinking is highly suppressed. You do not gain points here for pioneering in most industries. Investors and consumers are hardly visionary in Japan and are more in fact highly conservative. So your great new ideas are likely to meet with orchestrated teeth sucking rather than provisions of funding.

Labor: You must not have lived in Japan for very long to make such a statement. Japan has legions of essentially slave laborers. I work in one of the most fast paced industries in Japan and am often shocked by the inability of workers here to be efficient or to solve problems without top down guideance. Yes people work hard and long here, but not effectively.

No world for Lean/6-Sigma: We have spent the last couple decades working to streamline and make our businesses more efficient, cost effective and customer centered in the west. Lean/6-Sigma has been a big part of that effort. In Japan, we have see uptake of this thinking in manufacturing, but business here still refuse to remove outdated and often cryptic structures to replace them with efficient measures. Just visit any neighborhood bank during operating hours to see this failure at work.

I see great potential in Japan, if, and only if, Japan has a radical shift in thinking. Until then, the smart entrepreneurs will look elsewhere.

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Japan is only a paradise for the types of businesses that have the word "pyramid" in it's description.

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I'd agree to tkoind2 more.

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Author misses the obvious down-side of his first point. Since only 3.5% of businesses here are start-ups, it is nearly impossible to attract bright people to come work for you. They all want the security of the big companies, and the built-in raises/bonuses every year. Things like stock-options and/or ESOPS or 401k's mean nothing to them. And, once they have worked for a few years for one of the big firms, they are so brain-washed into that company's way of thinking, that they are of no value to a start-up.

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The system will destroy the successful just look at horiemon, mikitani and others who dare.

They all had been Japanese; the author focuses on foreign entrepreneurs.

To a certain level I agree with the author as my business is doing well and my overall experiance of doing business in Japan is positive. But the issues raised by tkoind2 about the Japanese employees are sadly in line with my experiance.

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I have never seen a restaurant owned by a foreigner here close down in my 26 years of living here. Guess who is going to open one?

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I am sure this guy has more experience than his article indicates, from reading it I wud have guessed he was a frequent visitor to Jpn but not lived here as a lot seems to scratch the surface, lots of tatemae but lacking in the honne part.

That said its pretty much impossible to cover much in any detail in a short article

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Just a tiny success here can make you a millionaire.

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horiemon, mikitani, and "others who dare" weren't destroyed because they were successful, they failed because they got greedy.

I've been involved in several venture companies here over the years, and have friends who own and run many others. There are hurdles (funding is hard to come by), but they are all moving ahead successfully under their own steam.

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Start up costs like renting space is very high. Cost of capital is cheap but hard to get. Lots of opportunities in Japan though.

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Tainted article. Sounds like a pitch to certain types of start-ups to call upon the services off....

In this day and age its difficult to make an honest living.

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a paradise ? only if you're comparing it to north korea and somalia...singapore, bangkok, HK, KL, shanghai are ALL better places for entrepreneurs, and i've worked in all 5 places, as well as in tokyo...but hey, never let facts get in the way of a story, huh ?

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According to METI: 99.7% of Enterprises in Japan are classified as SMEs

yes, some are ma & pa shops, but it shows even amongst Japanese, that many are entrepreneurs, and not just big company e'ees. (albeit this data a touch old now:) http://www.chusho.meti.go.jp/sme_english/index.html i personally know & have worked with many of the foreign "entrepreneurs" here in Japan, including the author, and can say that once you know how to deal with the regulatory side, company set-up, taxes etc, this is a great market in which to be a forward thinker, and for all the reasons he briefly lists (in this what was possibly just an intro article as part of a series?)... some foreign multi-million dollar (exit-value) success stories include sales of: Fusion Systems, Japan Market Intelligence, ValueCommerce, Oak Lawn Marketing, just to name but several... if you've got an idea - and you are here - go for it! sure there are obstacles, but that's why others will potentially give up... suggest any would be entrepreneurs also check JETRO website as a good starting point
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Entrepreneurs, mmm, the word itself brings images of greed and ruthless business practises. it usually means charging high prices and paying low wages.

Woyuld be nice to see some eco friendly and/or profit sharing business stories on this site.

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stevecpfc - thanks for the input and idea - we will actually be featuring in INSIGHT a series of interviews with some of the most successful business-leaders in Japan & asking them why/how they give back to society or charities etc (this will be under the new "NGOs & Social Entrepreneurship - Empowering Lives Through Giving" Lens). The intro piece to the series is already live for you to read, and the first interview (up next week) will be with Harry Hill (actually of Oak Lawn Marketing..., which recently entered into an agreement with docomo who will acquire 51% of OLM for 31 billion yen (approx US$310 Million)), the second will be with Bill Werlin (currently Japan Country Manager of Burton (snowboards), and formerly Japan Country Manager at Patagonia). Another of the contributors on Insight is Jeremy Prepscius, who is Asia Director of BSR (Business for Social Responsibility), currently based in HK, but who resided in Japan previously, and whose organization consults on this very area you identify (his story is under the SUSTAINABILITY lens) - we hope there are some eco-friendly and profit sharing stories you will enjoy amongst these and those still to come... thanks for being a reader of JT...

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Well, duh, Asia with 2.5 billion plus people provides more markets than Australia with 19 million. What entrepreneurs we are producing in Australia. What a genius.

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It is true. But don't tell anyone.

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If Japan's a paradise for entrepeneuers, the U.S. is a utopia.

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what is this guy talking about? japan hates entrepreneurs. does everything it can to destroy them. ever try to get a visa on your own small, non english teaching company? I did. guess what? bend over my friend. then you want a loan? haaaahaha. and guess what? we should have told you before but as you don't have a license now, you cannot get one now as you have a company that is already running (1 day old) and has no profits. so no license. if you would have applied before the company was founded. well then ok, it would have been ok. all these things happened to me. i love japan. but as an entrepreneur i had to leave. now im in china and its pretty easy. none of the crazy stuff i went through in japan. i still love japan. want to go back but being an entrepreneur is the loneliest thing you can ever do there. if you just do as you're told and teach english, everything is easy.

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Yes, Japan is a paradise for entrepreneurs in Asia. There is no electricity shortage. Water quality is good. Transportation is very good. Japan is ideal place to run a factory. Only problem is high rent, high-wages and high land prices. Japan is very costly. But there is one plus point for Japan, if we compare it to other Asian countries, Japan is the most peaceful Asian country. Japan and Singapore both are my favorite’s places for business and work.

There is no future stability in China, India and Thailand. There is only corruption, fraud, terrorism, and bad attitude of bureaucrats (including local businessmen). It is difficult to find a right business partner in these 3 countries. Clients from India or China never send payments on time and never pay 100% amount against invoices. If we remind them for the payments, they behave like a gangster. After many bitter experiences, I’ve decided not to do any business with India.

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azzassa, it seems what you did not do (or pay a decent consultant for) is research and advice... license & correct visa requirements are just part of the process, no different from getting a drivers licence, or setting the legal business activities your company will be permitted to undertake as per listed in the articles of incorporation, or how to act as the sponsor of the initial incorporation of the entity and then to get the visa sponsorship etc... its not really that different here as to any other company around the globe, and you don't need to bribe anyone... you just need to combine a bit of street smartness and research and that is half the initial battle... never be afraid to keep asking is that all, is that all, is that all...you have to just learn what questions you need to be asked, and keep asking and then ask again... jetro & other institutions bend over backward to attract entrepreneurs, as do some of the regional business parks, likewise the trade arms of the embassies... there are a swag of small bi-lingual consultancies that you can outsource this to also... that said, and what i agree with you is that being an entrepreneur can be lonely, aside the financial isolation, the family stress and the potential social risk you may expose yourself to, you as the head of the company, can't put on anything but a brave face infront of any employees you have, even if you don't know what you are doing or have no cash to pay the bills...you have to seek outside mentors to get you through the doubts or to bounce ideas off... before you quit the high-paying job, ask the bank for an increase in your credit card limit... when you play football, you just have to know how and when to pass the ball, and when to concede a free kick or lay a tackle... well, China - sounds cool... i just hope the legal framework is as stable and easy to work under as it really is here in J-land... researching the regulatory landscape prior is important, just as per you research the potential need for the product or service you will offer and the competitors already in your target market segment... having worked both as an entrepreneur here myself and at a consultancy that assisted over 50 start-ups with their needs, perhaps it is just from experience and a few initial mis-understandings, that i say Japan isn't that difficult at all... scars are good... fail earlier to be successful sooner etc... best of it for your China business venture

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Look, I appreciate the advice from this Sparks bloke, he is a good businessman - but the trick here as a gaijin is simple : start-up an enterprise and fly it under the radar of the taxman and authorities. No red-tape, no taxes...sweet! Under the table payments to staff eliminates the need for insurance and payroll taxes too.

Furthermore, being a gaijin also generally enables you to fly under the radar of the yaks and their "requests" for "gift money" for "services performed" and other such rackets the Japanese accept as part of business. I'm sure this is what all the smart gaijin entrepreneurs are doing - I know of a few, and the fellas are fairly rolling in yen, let me tell you!

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I think it depends on your industry. In the states, you can start a telecom company in your garage, but starting a sandwich shop with out joining a national franchise is a daunting task. Japan is kind of the reverse of this.

I run a start-up in industrial instrumentation. I have a joint venture with a large Japanese corporation. They have no access to small, independent job shops for prototypes. They have to do everything internally or farm it out to us. However, I love all the small retailers and restaurants that seem to have disappeared here.

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Before we start falling all over ourselves out there;

Under the heading:"Best Countries for Entrepreneurs"

The World Bank Group has published their annual "Doing Business" report ranking 181 countries on how friendly their "regulatory climate" is to entrepreneurs. Economies here have been ranked on their "ease of doing business" which means that the regulatory environment is "conducive to the operation of business"... simple enough, so here we go-

Singapore

New Zealand

United States

Hong Kong

Denmark

United Kingdom

Ireland

Canada

Australia

Norway

Seems if you are interested in doing business around here Singapore and Hong Kong remain your best bet. Japan simply has to try harder !

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Japan is good for entrepreneurship for those who have lots of idle money to take a risk in this costliest country.

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The World Bank Group has published their annual "Doing Business" report ranking 181 countries on how friendly their "regulatory climate" is to entrepreneurs. Economies here have been ranked on their "ease of doing business" which means that the regulatory environment is "conducive to the operation of business"... simple enough, so here we go-

Bias against Anglosphere + Scandanavia where everyone speaks English. I'm afraid the common entreprenue who doesn't speak Japanese must try harder and learn the language.

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A good entrepreneur works for himself and has only himself to blame if he isn't doing too well. I can go anyplace and I can make a dollar as I offer my face and tell only the truth --I never try to fool anyone and I am not afraid to share.

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Thanks for the response Japan Today.

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First of all, the title is ridiculous. It definitely is not a paradise here. newsninja, you seem to say "Follow the rules and do your homework and things will work." Well, you forgot to mention, "Speak Japanese perfectly, but not enough to intimidate the Japanese, have friends you grew up with in high places, don't get into any business that the Japanese are already engaging in or one they can take away later, have a lot of cash and patience, if your business doesn't take off right away, be patient and make sure you have a permanent or spousal visa, etc." Yes, paradise. Oh, I forgot, "And stay entrepreneurial!"

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i think people read between the lines quite a bit. i had two businesses in japan. one reasonably successful. profit approximately 1M yen month. but the environment was no where near paradise. silicon valley is the closest thing i know of.

Japan is a lovely country with very nice people but they don't trust or even understand entrepreneurs. Guys like Akio Morita and Shoichiro Honda were the reason I moved to Japan in the first place. But no one seems to understand that they were what made Japan great. They think the salaryman did it: risk, entrepreneurship, brazen attitude, no fear, the walkman, and world class manufacturing made Japan. I hope Japan goes back to its roots.

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I'd never open a business in China, not with the government breathing down your necks and scrutinizing everything you do. You've got to admire Google for telling the commie govt to shove it.

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ironchef, google kicks ass. im with you there. but the reason they told the gov to take a hike was because they were hacked and part of their algorithm was stolen and youtube was blocked to youku could make money. if that happened to me, i would do the same. it wasn't because the breathing down the neck thing so much. what they went through was tough. and their reaction was perfect. i hope the world knows that there are companies out there who care. google forever

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Japan is run by business groups, local groups, neighborhood groups, city hall bureaucrats, police and yaks.

They dont want anything different, and they refuse to accept competition that in any way is a threat to their own business. Do something big in Japan and become a big target, subject to attacks from everywhere, and any authority. That is the sad reality of Japan, everything is controlled and if you dont believe it ask Horrie-mon. Japanese do not play around when it comes to business and competition, you must join the group and follow the rules, or they will make your life hell. Ask the guy who started the 1000 yen haircut places, he couldn't get any suppliers, was harassed from everyone, and even to this day they are trying to stop him. It sounds crazy, but they are still attacking his business model, the government has just made a new regulation requiring running water at every haircut station, even if the hair cutters dont offer as service to wash your hair. this is one example but there is many. Dont believe the hype.

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It depends on the business and location. As long as its in a business that most people don't understand then you're out of the limelight.

For me, Technical Support was an easy business because it was needed and not everyone is good at it. Never had a problem in Nagoya. If you don't have results there's little anyone can complain to you about.

But for your bank account, don't bother with Japanese banks. No interest, and the feeling is mutual ;)

As for other businesses, I didn't get any sense of real competition, just games. It's a wonder Japan is in any entrepreneurial list at all.

Most of the countries listed above from another poster means that more than 50% of business are from entrepreneurs, AKA, not big business groups or cabals.

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Ask the guy who started the 1000 yen haircut places, he couldn't get any suppliers, was harassed from everyone, and even to this day they are trying to stop him. It sounds crazy, but they are still attacking his business model

Whoever he is, I love that guy - love my el-cheapo 1000 yen haircuts! I am sure there must be many jealous business-types out to attack this bloke - but all power to him - and I recommend all you gaijins to go to the 1000 yen shops!

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Yeah the 1000yen haircut shops are a perfect example of what is wrong with Jpn, I hope they dont force them to close, I like going to my local guy, costs a bit but is relaxing, but since I basically get my lid shaved like a sheep I will sometimes drop in on the 1000yesn shop a hot day when I want my lid lightened up some!! I am usually done in about 5min!

Its a great idea but that idea is a NAIL & we all know what happens to them.

Me I have been working on my own for almost 15yrs now, I work inside a J-company but at not employed by them so I piggy back onto their accounting system & just bill them my profit share in what we do so it keeps me under the radar, although I was audited(and threatened) by the tax office, they made it perfectly clear they cud confiscate any/all of my possessions & auction them to pay tax bills & I have never been in arrears, seriously scary stuff!

One thing to me is clear in Jpn if one of any authority wants to shut you down they can & will. I know people that import & export stuff & its scary when you have the tax office & customs office both fighting you & each other for a share of yr business, THERE ARE NO RULES HERE, NONE!!!

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Does anyone know what happened to the American guy who started bagels in Japan back in the 80s, Fox Bagels, and then sold out for a couple million (I heard) to a Japanese company? One of the few foreign entrepreneur success stories.

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Although the article focuses too much on the quality of physical infrastructure in Japan, it glosses over the (relative) lack of a VC infrastructure. Businesses that capitalize on the physical inrastructure (like IT or consulting) will do much better than those that don't - those I know who have succeeded most as entrepreneurs in Japan have found and exploited a niche in a knowledge industry.

And as someone else said, JETRO and some local governments (like Yokohama) will bend over backward to help businesses get started in Japan and provide office space, as long as you have a good business case. Anyone can say that they're an entrepreneur, but that doesn't mean that they have good business sense.

And yes, speaking the local language will go a long way, but that ought to be a no-brainer.

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And yes, speaking the local language will go a long way, but that ought to be a no-brainer.

You'd be surprised.

On the flip side, there's a lot of people I know are making a killing from those people who can't including this site and its advertisers.

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Japan's entrepenuerial spirit went out the window with "baby Horiemon" years ago- and they haven't recovered yet !

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newsninja I paid 300,000 yen for a Japanese lawyer near Tokyo Tower to set up my company even though I could have easily done it myself. After discovering the situation, I got the feeling that all the people in the chain, lawyer, license office, wanted to help but there seems to be no way to fix the obvious in Japan. All this being said, Japan is still the best and I would definitely like to buy an apartment in Roppongi and a beach house in Shimoda and spend half the year there. Prices are right and Japan is paradise in other ways. Coolest place to live.

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a japanese lawyer (likely a judicial or administrative scrivener), will just execute on what you tell them (and if you don't know what you need, then this is a challenge!), and will in almost every case without fail - never offer any pro-active advice or explain alternate A or B etc to you, nor tell you the obstacles you will face in just a week out etc... go to a small bi-lingual consultancy that have a foreign national resident as the interface and a J-scrivener & team behind them... that way you will know (by way of example of many) to file the "initial tax return" within the first 3 months of incorporation (allows you to carry forward a loss for 7 years, to file a simplified consumption tax return etc), that shibuya tax office is probably not as quick to audit as the minato-ku tax office, that it will likely take at least 3 months to get a recruitment licence and the details of the processes to get that (including the online registration to attend the licensing seminar), and the floor space and separate area for a mtg room needed etc, the work rules, the implications down the track of an investor/business manager visa (yes, you can get one extended even if the company is just 1 year old and has made a loss)... the reason that people give up is part of why it is a paradise (believe that is part of what the author was saying)... & this is why a number of small bi-lingual consultancies headed up by foreigners are doing so well here in J-land (i can name at least 7 - many of whom are my close friends)... if you are dealing with J-scriveners / lawyers etc... NEVER ASSUME THEY HAVE GOT YOU COVERED - ASK and KEEPING ASKING, AND THEN ASK AGAIN... what if this, what if that... they will almost never be forthcoming... and this can have huge broadsides down the track...

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newsninja, please name the 7 who specialize in Japan entry. I know a lot of ones that failed. And if it is an entrepreneur's paradise, why do you even need them? Also, please name a business that was started by a foreigner that did not directly compete with a Japanese business. I mean one that did not specialize in targeting foreigners or foreign businesses.

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of course you can do it all by yourself... but when time is money and you have many things to get done and need to get to market asap, to have an expert save you time & hassle, and so you to concentrate on your real strengths and do the marketing, product development & sales etc etc your business needs, these guys are a great source of headache relief, and most of them know and communicate the "value-add" tips... *** here are 10 (in no particular order), and I do know the presidents of all these companies:

proworks consulting 2. solid japan 3. ascendant business solutions 4. j-seed 5. htm 6. linc media 7. roundupkk 8. foreya partners 9. jmc consulting 10. QCIC consulting ***a couple of examples of businesses started by non-Japanese that targeted Japanese: FXOnline (& subsequently sold for $100s of MM of $s) 2. Oak Lawn Marketing (ditto to a $300MM sale of 51% to an NTT group) 3. ValueCommerce (ditto the huge IPO & part yahoo acquisition)...
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OK. I know Robert at Oak Lawn, which industry were dominated by foreigners, which was TV shopping. ValueCommerce? You gotta be kidding. Tell me the price at IPO and now. Brian and the gang. Linc Media, who owns this, I will not even mention. J-Seed, the only one that is successful, run by Jeff, but that is again not competing against the Japanese. I am glad you mentioned these. If you do know them, then I am sure I have met you. But how well do you know the owners of these companies? None of these really targeted the Japanese, except Oak Lawn, which filled a niche at that time. Linc Media and J-Seed targeting Japanese at the beginning? That is nonsense. I wonder if Linc even owns BIOS anymore.

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tokkim: are you not remixing & confusing your own Qs from above? - the Qs, i believe as written were 1. name 7 foreign run companies providing market-entry services 2. name a company owned by non-Japanese targeting the Japanese... times come & go, just as companies do, but I would confidently say that the guy(s) who started each of those of FXO, VC & OLM have a bunch of cash as a result... yeah - Tokyo is a hugely concentrated market, but the foreign community is really quite small, so the 6-degrees of separation "rule" is more like 2 or 3 here ! i've been here for quite a few years so would say we have met around the traps... trust your current venture is tracking well and the entrepreneurial spirit alive and kicking... or at least youre having fun plotting the next next thing... which is also half the fun of it...

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newsninja, you answered my questions, but have you run your own company? I think many of the guys you mentioned would agree with Japan being a tough place to do new biz. My opinion.

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