When expanding into Japan, foreign companies have three main options for establishing a presence:
1. Representative Office
2. Branch Office, and
3. Corporation (KK or GK)
Each option has different legal requirements, business limitations, and financial implications.
1. Representative Office: The Simplest Entry Option
A Representative Office is the easiest way for foreign companies to establish a presence in Japan. While it cannot engage in direct sales or business activities, it is suitable for companies focused on market research, information gathering, and advertising. Since a Representative Office does not require legal registration with the Legal Affairs Bureau, the setup process is quick and cost-effective.
Comparison of Market Entry Options
| Representative office | Branch office | Corporation | |
| Permitted Activities | Market research, information gathering, advertising (No direct sales activities) | Can engage in sales activities after registration | Can engage in sales activities after registration |
| Legal Registration Requirement | Not required | Required | Required |
| Setup Duration | 1 week ~ 1 month | Approximately 1 month | 1 ~ 3 months |
| Total Estimated Cost including registration fee and professional support fee | ¥100,000 ~ ¥300,000 | ¥300,000 ~ ¥700,000 | ¥500,000 ~ ¥900,000 |
2. Conducting Business: Branch Office vs. Corporation
If a company intends to engage in sales and other business activities, it must establish either a Branch Office or a Corporation (KK or GK).
(1) Branch Office: Faster Setup, but Limited Independence
A Branch Office is the faster and simpler option compared to a corporation. Once an office is established, and a representative is appointed in Japan, the branch can be legally registered with the Legal Affairs Bureau and start business operations.
However, since a Branch Office is not a separate legal entity, its financial obligations—including debts and liabilities—are directly tied to the foreign headquarters. Additionally, a Branch Office cannot be converted into a Corporation (KK/GK). If a company later decides to establish a corporation, it must set up a new entity and close the branch.
(2) Corporation (KK/GK): Independent Legal Entity
For companies seeking greater operational independence and liability protection, establishing a Corporation (KK or GK) is the preferred option.
A Corporation (法人) in Japan is a separate legal entity from its foreign parent company. This means that the foreign headquarters is only liable up to its investment amount and not beyond.
There are two main types of corporations in Japan:
①Kabushiki Kaisha (KK) – A Joint-Stock Company, suitable for companies that plan to raise capital from investors. It is the most common corporate structure in Japan and can be publicly listed.
②Godo Kaisha (GK) – A Limited Liability Company (LLC-equivalent), offering greater flexibility in internal governance. Unlike KK, GK does not require public financial disclosures and allows customized management structures through the Articles of Incorporation. Due to its operational flexibility, many foreign companies, including major multinational firms, prefer GK for their Japanese operations.
Comparison of Business-Operational Entities
| Category | Branch Office | Corporation | |
| Kabushiki Kaisha (KK) | Godo Kaisha (GK) | ||
| Legal Entity Status | Not an independent entity. Liabilities belong to the foreign headquarters | Independent entity. Liabilities limited to investment amount | As on the left |
| Business Activities | Can engage in sales activities after registration | As on the left | As on the left |
| Setup Duration | Approximately 1 month | 1 ~ 3 months | 1 ~ 2 months |
| Branch / Incorporation Registration Tax | ¥90,000 per branch | ¥150,000 | ¥60,000 |
| Notary Fee (Articles of Incorporation Certification) | Not necessary | ¥50,000 | Not necessary |
| Professional support fee | ¥200,000 ~ ¥600,000 | ¥300,000 ~ ¥700,000 | ¥300,000 ~ ¥700,000 |
| Legal Entity Status | Not an independent entity (Liabilities belong to the foreign headquarters) | Independent entity (Liabilities limited to investment amount) | As on the left |
| Conversion to Corporation | Not possible (Need to close branch and establish a new Corporation) | (Can be converted to GK) | (Can be converted to KK) |
| Key Features | Simplest setup process, but liabilities belong to the foreign headquarters. | Joint-Stock Company. Suitable for fundraising and IPO. Most common in Japan. | LLC equivalent in Japan. More operational flexibility, no requirement for financial statement disclosures, but cannot go public. |
Considering Expansion into Japan?
Japan provides a business-friendly environment for foreign companies, with relatively few restrictions on corporate entry, except in certain regulated industries.
If your company is considering expanding into the Japanese market or is in the process of evaluating the most suitable market entry strategy, please do not hesitate to contact us through our inquiry form. Our team would be delighted to assist you in assessing the best approach for your business in Japan.
This article is based on the “Investing in Japan” content from the JETRO website.
For more detailed information, please refer to JETRO’s website:
https://www.jetro.go.jp/en/invest/
