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Startups

Entrepreneurs cross seas to chase the 'Japanese dream'

Untapped opportunities await those who clear high barriers

Stephane Danton, who hails from France, made use of his experience as a sommelier to start a business that sells flavored green tea.

TOKYO -- When it comes to ease of doing business, the World Bank ranked Japan 106th this year. But that number is not scaring off international entrepreneurs, who are coming to the country in growing numbers to seize opportunities their Japanese counterparts might be missing.

Chinese entrepreneur Dong Lu is one of them. He has lived and studied in his homeland, the U.S. and Japan. Of the three, he chose to start a business in Japan -- a restaurant reservation and payment app for international visitors -- because he found relatively reasonable office rents along with quality education and infrastructure.

Dong also recognized that Japan has countless good restaurants that tourists would be keen to try. So he set up Nihonbishoku, which released the Japan Foodie app in 2016. Today the app is used by travelers from 55 countries.

For Dong, this is the era of the "Japanese dream," as opposed to the American one.

Quite a few global businesspeople seem to agree. At the end of last year, there were 2.56 million foreign nationals residing in Japan, according to the Ministry of Justice. Of those, around 24,000 were on business manager visas, double the figure from five years earlier. The tally includes managers of the Japan units of overseas companies, but also individuals who have come to establish businesses of their own.

"More foreign entrepreneurs are starting businesses in Japan because they are fascinated by Japanese culture," said Makoto Sano, president of Acroseed, a Tokyo company that provides legal services for international residents.

Some entrepreneurs are cashing in on that same cultural fascination.

Alex Wang is chairman and CEO of Kawayuii Holdings (Hong Kong), which sells illustrations created by designers in Japan to companies in China and elsewhere. It also streams educational videos, in which well-known Japanese cartoonists and other artists show how they create their work.

After working at a Chinese gaming company, Wang attended a Japanese university and went on to set up Kawayuii in 2015. He suggested his market is virtually limitless, given strong demand for Japanese content. The company's videos reach viewers in 54 countries.

Stephane Danton, a 54-year-old Frenchman who runs a Tokyo tea shop called Ocharaka, said Japan has high-quality products but does not always know how to sell them abroad.

Danton saw green tea as one example. So, using his experience as a sommelier, he added flavors of fruits and other ingredients to make Japanese tea more palatable to non-Japanese drinkers. This has helped him score overseas sales, and he plans to help set up a flavored-tea store in Taiwan soon.

Nobody said establishing and expanding a business in Japan is easy. Paul Chapman, an Australian and co-founder of household budgeting app Moneytree, knows how difficult it can be.

As a foreign national with no title or banking background, Chapman said it was tough to secure funding from venture capital companies and other backers. His solution was to bring in a former Japanese banker introduced by a friend.

Chapman has since built Moneytree into an app with more than 2 million users, in part by cultivating relationships with Japan's megabanks and credit card companies. The app integrates bank accounts, credit cards and securities accounts to help users visualize their spending.

Anton Noffke, right, the South African president of Junno Design, sells furniture made from old wood with Malaysian co-founder Junn Chee.

Anton Noffke, the South African president of furniture company Junno Design, said he visited a few banks but was turned down because he is not Japanese. He used his own funds to set up the company, which distributes furniture made from old wood, along with wood wax.

Now, he said the business is solid, but he is still having a hard time raising additional money to expand.

The language barrier is often another issue.

Grenet Sebastien of L'Apocope, an importer and distributor of French cookies, olives and other goods in the city of Fukuoka, said it is very hard to start a business in Japan unless you can speak Japanese. Sebastien, who is studying the language intensively, said he had difficulty setting up the company and applying for a work visa.

Japan's close-knit business community hinders the entry of foreign players, according to Casey Wahl, CEO and founder of a Tokyo-based employment agency for startups, Wahl and Case. He cited U.S. ride-hailing company Uber Technologies as an example of a failed attempt to enter the Japanese market in the face of stiff resistance.

Wahl also said listing procedures in Japan are more cumbersome than in other countries. It takes only two months to go public in the U.S., he noted, but it takes at least two years in Japan.

Miku Hirano, who has founded companies in Singapore and Japan and is now CEO of Tokyo artificial intelligence startup Cinnamon, said, "Governments of other countries are more equipped to support entrepreneurs."

But Japan is trying.

Since 2015, five cities in three Japanese prefectures, including Fukuoka and Tokyo, have introduced a startup visa to ease requirements for those wishing to start businesses in Japan, based on the system of strategic special economic zones.

Entrepreneurs from overseas usually must meet stringent requirements, such as opening an office, hiring at least two employees and stockpiling capital of 5 million yen ($44,530) in order to obtain business manager visas. With startup visas, they can stay up to six months if they submit action plans and other documents and meet certain expectations.

The central government is keen to lure enterprising individuals as well. The Ministry of Economy, Trade and Industry and the Ministry of Justice are poised to reinterpret ministerial ordinances to enable foreign entrepreneurs who use shared offices to obtain business manager visas, contingent upon other requirements.

This will spare founders the expense of renting offices of their own, making it a little easier to chase that dream.

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