Joint Ventures

— Latest update: August 2024 —

The joint venture is one of the most implemented approaches in trying to enter a foreign market, the Japanese one included. With Japan’s unique business landscape and cultural nuances being a contributing factor, many foreign companies have chosen to form a joint venture with a local company to enter the Japanese market in order to leverage their partner’s local knowledge and expertise and to overcome market barriers. While there are no official statistics on the number of joint ventures that have been established between foreign and Japanese companies, it is estimated that, as of 2020, around 600 to 900 joint ventures in Japan with both Japanese and foreign capital. Furthermore, joint ventures had been gaining popularity as a way of entering into the Japanese market between 2015 and 2019. The number of collaborations and joint ventures between Japanese and foreign companies in Japan has increased by approximately three times over the past ten years.

Since the Limited Liability Partnership (LLP) system was established in 2015, joint ventures have been promoted between companies and beetween people with specialized skills.

Advantages include shared costs, shared risks, and shared responsibilities. These types of ventures are especially useful when it comes to Japan, as having established partners can make or break an entry in Japan, which is notorious for having a unique business environment. According to METI, the main benefits of collaborations and joint ventures between Japanese and foreign companies can be classified into management, operations, and employees, which have been observed to pertain to common benefits under the multiple cases.

Major benefits brought about by collaborations and joint ventures

METI, Limited Liability Partnership (LLP) System　　　　　　　　　　　　　　　　　　
Japan Center for Economic Research, Why is Japan’s inward FDI so low?, 2017
Investopdia, What Are the Primary Advantages of Forming a Joint Venture?, 2024        
METI, Case Studies Relating to Collaborations and Joint Ventures between Japanese and Foreign Companies in Japan companies Compiled, 2024
Chambers and Partners, Joint Ventures Japan, 2023

Joint ventures are recognized by the Japanese law as subsidiary companies, which can either be a limited or an unlimited partnership. Foreign firms tend to rely more on limited ones in order not to be personally responsible for the subsidiary’s debts. There are two kinds of limited partnerships, which are:

• Joint-stock Corporation, or Kabushiki Kaisha (KK)
• Limited Liability Company, or Gōdo Kaisha (GK)

The unlimited partnerships, as rare as they may be, fall under the following categories:

• Unlimited Partnerships, or Gōmei Kaisha
• Limited Partnerships, or Gōshi Kaisha

JETRO, How te set up business in Japan - Section 1. Incorporating Your Business
June Advisors Group, Setting Up an Office / Company in Japan

Table of Contents

• Kabushiki Kaisha and Godo Kaisha
  • General Information
  • Pros and Cons of Kabushiki Kaisha and Godo Kaisha
  • Main Differences Between Kabushiki Kaisha and Godo Kaisha
  • Setting Up a New Business
    • Incorporation Process
    • Business Licenses and Permissions
    • Work Visas
• Recent Trends in EU-Japan Joint Ventures
• International Joint Ventures
  • Main Factors Contributing to the Success of International Joint Ventures
    • Case Study: All Nippon and Lufthansa Cargo
    • Case Study: Aichi Sky Expo
    • Case Study: Prismadd Japan Co., Ltd.
  • Main Factors Contributing to the Failure of International Joint Ventures
    • Case Study: Vodafone Japan
    • Case Study : Successful end of a JV
• Expert Reports & Webinars
• Annual Reports
• Further Reading
• Relevant Organisations and Trade Fairs