Doing Business in Japan: Market Entry, GTM Strategy & Growth Potential

The population of Japan is 122,427,731, and is growing at the rate of -0.56%. The GDP per capita, which represents the potential spending power of the people, is $59,207, measured on a purchasing power parity (PPP) basis to allow comparison with other countries.

92.41% of Japan’s population lives in urban areas. 52.46% of the population is of working age (15-59). 85.54% of the population has internet access and 96.6% has 5G mobile coverage. These factors are important for digital-first businesses to keep in mind.

The Accuracast International Growth Index ranks Japan #1 overall for market attractiveness, no change from last year’s position.

How we can help you grow in Japan:

Accuracast offers a comprehensive range of international digital marketing services to support brands looking to grow their presence in Japan. Whether you need an international SEO agency, an international advertising agency, or an international social media marketing agency specialising in Japan, we’ve got you covered.

How Digitally Mature is the Market in Japan

The digital search demand score for Japan is 64.43.

Japanese consumers have excellent awareness and are very inclined to search online for products and services, which can make it a great market for a digital-first company. The high search volume per 1,000 people also makes it a very lucrative market for international expansion, with an active audience of prospective customers.

Japan ranks #2 globally for digital search demand, behind Taiwan.

Go-To-Market Strategy Considerations for Japan

The purchasing power score for Japan is 63.61, and the country scores 84.58 for digital readiness.

This means Japanese consumers and businesses have the financial means to buy products and services, and are well-connected, making them easy to reach via digital channels. Japan’s GDP per capita (PPP) is $59,207, which places it in the top 20 percent of countries. 

Japan has a large, aging population. Only 52% of the 122 million Japanese are of working age. And the population is in decline, with a growth rate of -0.45%. While the country is a very attractive target market at present, over the coming decades, they might face problems with an aged population presenting challenges for social security and healthcare.

Financial & payment infrastructure

In terms of financial infrastructure, Japan scores 68.99.

While credit cards are widely used for online shopping and larger purchases, especially in major cities, cash remains important for smaller transactions. Cash payments dominated, accounting for over half of transactions till 2024, but this is changing rapidly, as cash now accounts for less than 40% of payments in 2026.

Most Western card providers – Visa, MasterCard, JCB and American Express are widely accepted. Electronic money is also growing in usage, via contactless prepaid cards used for transport and in retail purchases. QR code payments are growing rapidly, with services such as PayPal, Rakuten Pay, d-Barai (d払い) and au PAY.

A number of years of economic stagnation and population decline have contributed to a relatively risk-averse consumer and business environment in Japan. The Bank of Japan has found that firms have reduced active risk-taking, held back on investments, and have a tendency to accumulate cash for future contingencies.

Regulatory & business setup friction

From a business expansion point of view, Japan scores 57.26 for regulatory complexity and legal restrictions. This is reverse-scored, meaning the higher the score, the easier it is to navigate local regulation.

This indicates a moderate regulatory burden compared to a lot of the other countries in the region. Navigating the regulatory landscape in Japan can be particularly challenging for international businesses. Regulatory requirements vary significantly across industries, and companies can get caught-out without a clear understanding of local laws and business practices.

The score of 38.59 indicates the costs and friction associated with setting up a business presence in Japan.

The legal incorporation fee in Japan is not particularly high, but the overall administrative burden and associated friction can be overwhelming for foreign businesses, who often resort to getting local specialist help, which can then become expensive.

It is worth noting that while Japanese company law allows incorporation with just ¥1 of capital, foreign entrepreneurs seeking a ‘Business Manager’ residence permit face a ¥30 million (~£140k) capital or investment requirement.

Japan market attractiveness change

Compared to last year, the overall International Growth Index score for Japan has changed 1.6 points, but this wasn’t sufficient to change its ranking from 2025, so Japan still ranks #1 in 2026.

This makes Japan the most attractive market for business growth and overseas expansion. Scale-ups and large firms that can handle the cultural differences and adapt to the Japanese way of conducting business could reap rich rewards.

Japan is particularly attractive for:

• Digital-first businesses
• Premium products and luxury goods
• B2B products and services
• Company with strong localisation capabilities that are able to invest in long-term market development
• Businesses targeting a large, affluent, and digitally connected population.

Japan is less attractive for:

• Low-margin businesses
• Companies requiring rapid market penetration
• Labour-intensive businesses
• Companies unwilling to localise marketing, product and user experience.

Most Popular Social Media Platforms in Japan:

1. LINE
2. YouTube
3. X
4. Instagram
5. TikTok
6. Facebook
7. Pinterest
8. BeReal

The official national language is Japanese. English is spoken comfortably by only about 10% of the population. Marketing teams should seriously consider localising website content in Japanese for search, and social media and advertising content to engage the local audience effectively.

What Are the Risks of Expanding into Japan

While new market expansion can be exciting, it is important to also consider the risks when entering a market like Japan.

The three biggest risks facing foreign companies wishing to break into Japan are:

1. Language and cultural differences need special attention. Localisation must go beyond just linguistic considerations, and also consider cultural nuance.
2. Difficulty recruiting and retaining talent due to shortage of qualified personnel and high employment costs.
3. High market entry costs and longer sales cycles, which mean companies need to invest in more time – and sustained marketing activity – to penetrate the market.

How Does Japan Compare to Other Top Markets?