November 22, 2022

Make Your Mark in Japan: 5 Startup Opportunities You Need to Know

Written by German Accelerator

Looking to make a global impact as a startup founder? Then consider Japan, the world’s third-largest economy and a gateway to Asia.

Japan is a hotbed of innovation that’s shaping the future of smart cities, clean tech, digital healthcare, artificial intelligence, and many other industries.

For German startups looking to make a mark in the world, Japan is ripe with business prospects across a wide variety of sectors. Here are five great opportunities in Japan your startup can seize today.

 

Healthtech

Healthcare is one of the largest industries in Japan and is projected to grow by US$2.39 billion in 2025.

Japan’s investment in healthtech is practical because of their aging population. One in six people in Japan will be over age 65 by 2050. This impending shortage of workers is an opportunity for German entrepreneurs, especially in automation. Experts estimate that up to two-thirds of Japan’s repetitive activities can be automated through artificial intelligence (AI) in medical diagnoses, nursing care, surgery, and preventative care.

Japan is at the forefront of innovations like AI drug discovery, and this field is projected to grow fivefold by 2024. Other popular healthtech solutions in Japan include IoT wearables in elderly care and “robot scientists” for pharmaceutical development. German startups working within healthtech (and AgeTech) should consider expanding to Japan to be a part of this dynamic ecosystem.

 

Advanced Manufacturing & Robotics

Japan’s aging society makes advanced manufacturing technologies a key area of focus in order to cope with the growing labor force shortage. It’s no surprise then that Japan holds the world’s second-largest number of industrial robots in operation, with one robot for every 190 workers.

In 2022, the government plans to spend US$1.62 billion to help SMEs in Japan to upgrade their manufacturing plant equipment, and Japanese manufacturers themselves have already spent over US$890 million on digital infrastructure. This figure is estimated to grow by US$4.1 billion by 2030.

Potential growth segments with Japan’s robotics industry include:

  • Electronics
  • Automobiles
  • Medical procedures
  • Services
  • Agriculture / AgriTech
  • Nursing care

Japan and Germany both lead the world in manufacturing capabilities, so this market is a straightforward match for German entrepreneurs.

 

Climate Tech

Along with other countries across Asia, Japan is starting to take more action on climate change. The government recently announced plans to reduce greenhouse gas emissions to net zero by 2050.

In addition, the Plastic Resource Circulation Act introduced in April 2022 incentivizes companies to adopt more circular product designs. It also encourages companies to reduce the production of single-use plastics as well as collect and recycle plastics that are currently in circulation.

Achieving these goals present a number of opportunities for German startups within the climate tech and GreenTech sectors, including:

  • Recycling
  • Transportation and disposal logistics
  • Waste management
  • Next-generation energy devices
  • Online reusable goods businesses

As Japan invests in a more sustainable future, German entrepreneurs have the chance to step in with innovative solutions.

 

Smart Mobility & Transportation

The smart mobility market in Japan is expected to nearly double by 2027, reaching an estimated US$57.4 billion in value.

Launched in 2019, Japan’s Smart Mobility Challenge aims to solve mobility challenges and revitalize regional economies through the introduction of transport services equipped with technologies such as AI, IoT, and automated driving.

Working in coordination with businesses and local governments, Japan’s national government encourages innovators to adopt a Mobility-as-a-Service (MaaS) approach. MaaS transport systems – which also exist in Europe – integrate online search, reservation, and payment services into an end-to-end solution for travelers and commuters.

 

FinTech

The financial technology industry has grown exponentially in Japan over the past few years from US$3.2 billion in 2019 to US$11 billion in 2022.

In order to enrich and diversify its FinTech ecosystem, the Japanese government has created a number of initiatives to encourage FinTech startups to enter Japan. Here are just a few of the resources available:

  • The Consortium for Japan International Asset Management Center Promotion (JIAM) is a non-profit organization that hosts workshops and webinars on FinTech opportunities in Japan.
  • Tokyo Metropolitan Government (TMG) offers free support services for businesses planning to expand in Tokyo.
  • The Access to Tokyo (A2T) program gives insights into life and culture in Tokyo and makes introductions to local contacts and partners within its network.

Ecommerce – and with it, cashless payments – are also on the rise in Japan. The government predicts that 40% of financial transactions in Japan will be cashless by 2025, a large dent in Japan’s entrenched reputation as a cash-dependent society. Cash payments dropped 15% in 2021 alone, likely due to the pandemic, and ecommerce is projected to account for 11.9% of total retail sales by the end of 2022.

 

Conclusion

Whether you’re working in climate tech or healthcare, these five trends present German startups with a wealth of opportunities for growth and expansion in the Japanese market.

The Land of the Rising Sun is a perennial innovation leader in Asia. If your startup is considering an international expansion, Japan is one potential market you can’t afford to overlook.

Sign up for the Japan Market Discovery program offered by German Accelerator to learn where and how your startup can enter the world’s third-largest economy.

Need an overview to ascertain if Japan is the right market in Asia for you? Download our free Asia Market Discovery Program Guide to find out how the 2-week program can help you identify the most suitable destination for your business.