Running A Foreign Business In Japan    Running your own business is challenging anywhere, but Japan adds a bit of spice to the broth. According to official statistics, 70% of Japanese companies are unprofitable. Business seems pretty simple at one level – constantly seek to increase revenues and reduce or hold down costs. To increase revenues you can find more customers, more repeater customers and raise prices.   Raising prices in Japan gets tough, when you are in the churning wash of decades of deflation and when there are always lots and lots of competitors. When the consumption tax was raised previously, the economy immediately plunged into recession, which indicates the price sensitivity of the populace. The Abe Cabinet blinked and gave up on the last scheduled increase out of fear of the consequences.   The usual way of differentiating yourself and justifying higher prices is through the added value you provide. Naturally, there is a major sales and marketing effort required to get that value message out. Both options in Japan however come with high price tags.   By the way, whenever we do training as part of a global arrangement, we always get push back on the pricing in Japan, especially when the yen is converted to other currencies. Abenomics is not helping much at the moment, with the rapid strengthening of the yen.   Why overseas head office staff would imagine that pricing here should be the same as at home is a mystery, but that is often the expectation. The cost structures here in Tokyo for wages and rents are high relative to other countries and the prices reflect that. Downtown Tokyo office space rents per square meter, in a reasonable location, will fall in the JPY9000 – JPY 14,000 range (USD$90-USD$140).   I refer these global partners back to their own local operation’s wage and rent bills in Tokyo. I point out these are nothing like what they are costing at home, so why expect global pricing to be uniform? In general, fixed costs as a percentage of revenue are high in Tokyo and it is a struggle to get them down.   Unlike other Western countries, where salespeople are prepared to work on a 100% commission basis, very few Japanese staff are attracted by that option. Again this opportunity to move wage costs away from fixed to variable is less available here. This means there must be a base salary plus bonus or commission arrangement and the base will be relatively high. Especially if you are a foreign operation, as you need to attract potential employees. When were a start-up in 2007, we had to pay our sales staff close to double the norm, to get them to work for us. By the way, add another 15% to you wages bill for all the various social insurance and pension costs.   Of course, if you are a prestigious mega corporation, encapsulated by a powerful brand, this attracting staff challenge may not be such an issue. If you are a Small Medium Enterprise (SME) then attracting people becomes more competitive. If your team needs to speak some reasonable level of English, then the wage bill goes up immediately. As an illustration, a competent English speaking PA in Tokyo would earn around JPY7m-JPY 8m (USD$70k-USD$80k) per annum.   There is also a limited supply of Japanese who want to work in an international environment and that number is declining rapidly, as less and less young people go overseas to study. We are currently in the midst of a real turning point regarding the internationalisation of the younger generation. The young don’t want to learn English and they don’t want to live overseas, because everything is so wonderful here in Japan and it is safe. They are going to become almost impossible to hire for SMEs, as we are simply outbid by bigger companies.   Marketing in Japan, especially in Tokyo is a remorseless pit into which you have to throw lots of money. Print ads and content marketing driven advertorial are very expensive here and the publishers have plenty of Japanese companies able and willing to p