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  • Writer's pictureMarcel Rasinger

Starting a business in Japan as a foreigner - setting up a company bank account

One thing which is a major challenge in starting a business in a foreign country is language. But beside language there are many invisible hurdles which occurs from culture and history. In this blog I want to focus on the unique invisible barriers you will definitely face and experience when entering the Japanese market. With these insights it does not make life much easier but you can avoid loosing a lot of time and energy by knowing these facts and focus on the essential things.

When you have successfully registered your "godo kaisha" (合同会社、GK in short, known as the Japanese LLC) or "kabushiki kaisha" (株式会社、KK in short, translates to share company) the next thing you will need to start your business is a bank account.

In Japan having a bank account at one of three major banks (Mitsubishi UFJ, Mizuho, Sumitomo Mitsui) is not only a status but also a sign of trustworthiness. Once you start setting up your account at one of these banks you will realise why. The screening process is quite time-consuming and a lot of paper work. Generally it takes about two weeks to get an appointment and another one month to finish the screening process. They check you, your company and business with great care. After the screening process it is still not assured that you will get an account. There is a possibility that the bank refuses to set up a bank account for your company without explaining the reason. So if you are able to get a bank account the Japanese companies trust in the banks' screening process and your company to do business with.

Other difficulties may occur with signing a contract. Since Japan is a country with a long history and tradition of stamps ("hanko"). This means that you will need to order a company stamp 法人印鑑 ("hojin inkan"). Actually it is a set of three stamps.

  • 実印 ("jitsuin"): the "registered stamp" which the managing director has is used for contracts

  • 銀行印 ("ginko-in"): the "bank stamp" is used for bank affairs

  • 認印 ("mitome-in"): the "recognition stamp" which is used as the company's signature for general documents like quotations, proposals or invoices

Changes are happening slowly but more and more companies accept hand-written signatures of consumers for contracts. Hopefully these changes will also find their way to the corporate world soon. There is realistic hope because the pandemic caused by SARS-CoV-2 raised the importance of making remote work from home possible for corporate employees. An immanent issue is to change the current hanko system and accept digital "hanko" and signatures especially for administrative procedures so the employees do not need to go to the office to pick up their physical hanko to stamp on documents. It is also urgently needed that administrative procedures can be done digitally.

I just recently had a funny experience when I filled out an official application form online and was pointed out that by the official in charge by ohne that I did not fill in my name correctly in roman letter. I politely told this person that the system did not accept roman letter so I had no choice but to fill out the form in "katakana" (カタカナ). Katakana is the Japanese alphabet used to write foreign words. It is phonetical so my name can be written as ラージンガー マルセル "ra-jinga- maruseru" (in Japan you write the family name first and than the given name).

To avoid this there is a faster option by setting up an internet bank account. This will generally take two to four weeks. There are more and more players already providing their services. Here are the major ones listed:

As you may have recognised there is no bank providing service in English for foreign clients.

You can quite well do business with such an internet bank account. The only situation when an internet bank account is not enough anymore is when you get into the situation to receive funding from the Japan Financial Corporation. They only accept standard banks. My assumption is that when setting up an account at an internet bank you actually never need to meet any bank official face to face. Unfortunately this leaves a potential risk for fraud. At conventional banks where you have to show up in person at one of the bank's branch offices it becomes more difficult for criminals. And the careful screening process is another security.

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