In recent years, Japan has been undergoing a series of major regulatory changes, which not only reflect the country’s determination to meet socio-economic challenges, but also reflect Japan’s efforts to integrate into the global economic system. From labor law reform to digital transformation, from environmental protection to corporate governance, Japan’s legal framework is undergoing a comprehensive update. These changes stem from the multiple pressures facing Japan: an aging population, stagnant economic growth, intensified international competition, etc., and are also important measures for the Japanese government to promote the “Society 5.0” strategy and improve its international competitiveness.

For foreign companies operating in Japan or planning to enter the Japanese market, it is crucial to have a deep understanding of these regulatory changes. This is not only about compliance operations, but also the key to seizing market opportunities and avoiding risks. New regulations may bring additional compliance costs, but they may also create new business opportunities. For example, work style reforms may increase short-term labor costs, but in the long run it will help improve production efficiency and employee satisfaction; strengthening data protection regulations may increase technology investment, but it will also bring new market space for data security service providers.

However, Japan’s legal system is well-known for its complexity and particularity, and foreign-invested enterprises often need to invest a lot of resources to understand and adapt to these changes. Language barriers, cultural differences, and subtleties in legal interpretation may all become potential risk points for foreign-invested enterprises operating in the Japanese market. Therefore, timely grasping the trends of regulatory changes and accurately understanding their actual impact on corporate operations will become one of the key factors for foreign-invested enterprises to succeed in the Japanese market.

This article will analyze the recent changes in important Japanese laws and regulations, from labor law to company law, from tax system to environmental protection, and comprehensively sort out the impact of these changes on foreign-invested enterprises. We will provide expert interpretation, share practical cases, and give suggestions to help foreign-invested enterprises better navigate Japan’s evolving legal environment, find opportunities in challenges, and achieve sustainable development.

Changes in Labor Laws and Regulations

In recent years, the Japanese government has implemented a series of major reforms to labor laws in order to cope with the aging population, increase productivity, and improve work-life balance. These changes have had a profound impact on all companies operating in Japan, especially foreign companies.

1. Latest progress on the work style reform bill

The “Work Style Reform Act” passed in 2018 continues to play an important role in Japanese society. The latest progress includes the full implementation of the overtime limit, and small and medium-sized enterprises have also been included in the scope of control. From 2024, the annual overtime limit of 360 hours will be more strictly enforced, and companies that violate the rules will face higher fines.

At the same time, the bill also strengthens the principle of “equal pay for equal work”. From April 2024, all companies must ensure that formal employees and informal employees (such as part-time and contract workers) receive equal treatment when performing the same work. The purpose of this regulation is to reduce inequality in the workplace and increase the flexibility of the labor market.

2. Strengthening the implementation of the principle of equal pay for equal work

In order to further implement the principle of equal pay for equal work, the Ministry of Health, Labor and Welfare of Japan has issued more detailed guidelines. Companies need to conduct a comprehensive assessment of job positions and establish a transparent remuneration system. This includes not only basic wages, but also various benefits such as bonuses and allowances. Foreign-invested enterprises need to pay special attention to ensure that their remuneration system complies with this principle and avoid non-compliance due to cultural differences.

3. Expansion of the childcare leave system

In order to encourage childbirth and promote work-life balance, the Japanese government has further expanded the parental leave system. From October 2024, fathers can apply for a total of 4 weeks of paid parental leave in two installments. It is worth noting that companies are obliged to actively promote this policy and create an environment conducive to employees taking leave. Companies that fail to properly implement this policy may be publicly named and criticized.

5. Impact on human resource management in foreign-funded enterprises

These changes in labor regulations pose new challenges to the human resource management of foreign-invested enterprises. First, enterprises need to review and possibly adjust their existing work time management systems to ensure compliance with the new overtime regulations. Second, the salary system may need to be overhauled to meet the requirement of equal pay for equal work. This may lead to an increase in labor costs in the short term.

In addition, the expansion of the parental leave system requires companies to establish more flexible work arrangements and personnel replacement mechanisms. Foreign-invested companies may need to introduce more diversified work models, such as remote work and flexible working hours, to adapt to these changes.

Finally, these changes also bring opportunities to foreign-invested enterprises. By actively responding to these changes, enterprises can enhance their employer brand image and attract and retain outstanding talents. At the same time, a more flexible and humane working environment can also help improve employee satisfaction and productivity.

In general, these changes in Japanese labor laws are aimed at creating a more fair, flexible and efficient labor market. Foreign companies need to deeply understand these changes and actively adjust their human resource strategies to remain competitive in the Japanese business environment.

Key points of the revision of the Company Law

The company law amendments passed by Japan at the end of 2023 aim to improve corporate governance, strengthen shareholder protection, and promote transparency and efficiency in corporate decision-making. These changes have had a profound impact on foreign companies operating in Japan, requiring companies to adjust their organizational structures and decision-making processes in a timely manner.

In terms of updating corporate governance regulations, the new bill strengthens the supervisory function of the board of directors. Listed companies are required to establish independent directors, and the number of independent directors must not be less than one-third of the board members. This provision is intended to improve the objectivity and fairness of the board’s decision-making. At the same time, the new bill also introduces the “nominating committee, etc. setting up company” system, allowing companies to delegate more power to executive officers, thereby improving operating efficiency.

In terms of shareholder rights protection measures, the new bill lowers the threshold for shareholders’ proposal rights, making it easier for small and medium-sized shareholders to participate in corporate governance. In addition, the bill also strengthens information disclosure requirements, especially in terms of executive compensation and related transactions, requiring companies to provide more detailed and transparent information. These measures help protect the interests of minority shareholders and improve the transparency of corporate operations.

The impact on the organizational structure and decision-making process of foreign-invested enterprises is particularly significant. First, foreign-invested enterprises need to reassess their board structure and may need to introduce more independent directors that meet Japanese standards. Second, the decision-making process may need to be adjusted to adapt to stricter information disclosure requirements and shareholder participation mechanisms. Finally, foreign-invested enterprises may need to consider adopting new corporate governance models, such as the “Nominated Committee, etc.” system, to improve their competitiveness in the Japanese market.

Overall, these revisions are intended to bring Japan’s corporate governance practices more in line with international standards. Although foreign companies may face challenges in the short term in terms of increased compliance costs, in the long run, these changes will help to establish a more transparent and efficient operating environment, help attract international investors, and enhance the long-term development potential of companies in the Japanese market.

Tax reform priorities

Japan’s recent tax reform has brought many challenges and opportunities to foreign-invested enterprises. This section will focus on analyzing the corporate tax rate adjustment, the new cross-border e-commerce taxation rules, the transfer pricing rule update, and provide tax planning strategy adjustment suggestions for foreign-invested enterprises.

Adjustment of corporate tax rates and their impact: In order to enhance international competitiveness, the Japanese government plans to reduce the actual corporate tax rate to below 25% in fiscal 2025. This move will significantly reduce corporate tax burdens, especially for foreign-invested enterprises investing in Japan. However, the tax rate cut may be accompanied by an expansion of the tax base, and enterprises need to be wary of new non-deductible items. It is recommended that foreign-invested enterprises promptly assess the impact of tax rate changes on their financial status and adjust their medium- and long-term investment strategies accordingly.

New taxation rules for cross-border e-commerce: In response to the development of the digital economy, the National Tax Agency of Japan has strengthened the taxation management of cross-border e-commerce. From 2024, overseas e-commerce platforms with annual turnover exceeding 100 million yen must set up tax agents in Japan. This means that many small and medium-sized cross-border e-commerce companies will also be included in the tax scope. Foreign-invested enterprises should pay close attention to changes in registration thresholds and plan compliance measures in advance, such as establishing a branch in Japan or finding a reliable tax agent.

Updates to transfer pricing rules: The National Tax Agency of Japan has further refined the transfer pricing documentation requirements and increased the intensity of scrutiny of intra-group transactions. The new rules require large multinational companies to provide more detailed value chain analysis and pricing basis for intangible assets. This places higher compliance requirements on foreign-invested groups with subsidiaries in Japan. Companies should re-evaluate their intra-group transaction pricing policies to ensure compliance with the arm’s length principle and strengthen relevant documentation management.

Suggestions for adjusting the tax planning strategy of foreign-invested enterprises: In the face of changes in the Japanese tax system, foreign-invested enterprises need to take active countermeasures. First, they should make full use of preferential policies such as R&D tax credits to improve tax efficiency. Second, consider restructuring the Japanese business structure, such as transferring some high value-added functions to Japan to obtain more tax incentives. Third, strengthen communication with the Japanese tax authorities and participate in advance pricing arrangements (APAs) to reduce transfer pricing risks. Finally, it is recommended to introduce an intelligent tax management system to achieve real-time tax risk monitoring and optimization.

In short, Japan’s tax reform has brought both opportunities and challenges to foreign-invested enterprises. Enterprises should pay close attention to policy trends, actively adjust tax strategies, and optimize tax burdens on the basis of compliant operations. At the same time, it is recommended to hire professional Japanese tax consultants to ensure that the right decisions are made in a complex and changing tax environment.

Strengthening of data protection and privacy regulations

In recent years, Japan has made significant revisions to its data protection and privacy regulations, which have had a profound impact on foreign companies operating in Japan. The amendment to the Personal Information Protection Act, which came into effect in April 2022, and a series of related regulations that followed, marked a new stage in Japan’s data protection legal system. These changes not only increased compliance requirements, but also brought new challenges and opportunities to companies.

The main points of the revision of the Personal Information Protection Law include: First, the scope of application of the law has been expanded, and all enterprises and organizations that process personal data have been included in the supervision, and no distinction is made between large and small enterprises. Second, the protection of personal rights has been strengthened, and the “right to data portability” and “right to be forgotten” have been introduced, giving individuals more power to control their own data. Third, the penalties for violations have been increased, and the maximum fine has been raised to 100 million yen. In addition, the law also clarifies the concept of “pseudonymized information”, providing a legal basis for enterprises to use personal data for innovation.

In terms of cross-border data transfer, the new requirements are more stringent. When companies transfer personal data overseas, they need to obtain explicit consent from individuals, unless the destination is recognized as having a personal information protection system at the same level as Japan. It is worth noting that Japan has reached data adequacy mutual recognition agreements with the European Union, the United Kingdom and other regions, which facilitates cross-border data flows. However, for other countries and regions, companies need to take additional protective measures, such as signing standard contractual clauses (SCCs).

To help foreign-invested enterprises build an effective data compliance system, the following are some key recommendations: First, designate a data protection officer to oversee and coordinate the company’s data protection activities. Second, establish a comprehensive data mapping and classification system to clearly understand the types, sources and purposes of personal data processed by the company. Third, formulate detailed data processing policies and procedures, including full life cycle management of data collection, use, storage, transmission and destruction. Fourth, conduct regular employee training to enhance data protection awareness throughout the company. Fifth, implement technical and organizational security measures, such as encryption, access control, etc., to prevent data leaks. Finally, establish a data breach response mechanism to ensure that relevant parties can be notified in a timely manner and remedial measures can be taken in the event of an incident.

For multinational companies, special attention should be paid to coordinating the requirements of Japanese regulations with those of other countries, especially in terms of cross-border data transfer. It is recommended to hire professional consultants familiar with Japanese law to regularly review and update the company’s data protection practices to adapt to the changing legal environment.

By actively responding to these regulatory changes, foreign-invested enterprises can not only avoid compliance risks, but also enhance customer trust and improve their brand image. In a data-driven economy, high-standard data protection practices will become an important competitive advantage for enterprises.

Changes in Foreign Investment Regulations

In recent years, the Japanese government has made a series of adjustments to foreign investment regulations in order to strike a balance between encouraging foreign investment and protecting national security. These changes are mainly reflected in the improvement of the foreign investor information reporting system, the strengthening of investment review in specific fields, and the fine-tuning of market access and operating conditions for foreign-invested enterprises. Although these changes have increased the compliance costs of foreign-invested enterprises, they have also created new opportunities for those enterprises that are well prepared.

First, in terms of the foreign investor information reporting system, the Japanese Ministry of Finance revised the implementation rules of the Foreign Exchange and Foreign Trade Act in 2023, further refining the reporting requirements for foreign investors. The new regulations require foreign investors to make advance declarations when they invest in Japanese listed companies with a stake of 1% or more. The lowering of this threshold means that more foreign investment activities will be included in the regulatory field. At the same time, the content of the declaration is also more detailed, including the purpose of investment, shareholding plans within the next 12 months, etc. These changes are aimed at improving the transparency of foreign capital flows, but they have undoubtedly increased the compliance burden of foreign investors.

Secondly, the Japanese government has strengthened the review of investments in specific areas. In early 2024, the Ministry of Economy, Trade and Industry of Japan issued a new version of the “Foreign Investment Review Guidelines”, focusing on strengthening the review of investments in areas involving cutting-edge technology, critical infrastructure and sensitive data. The new guidelines expand the scope of industries that require prior approval, and include emerging technology fields such as artificial intelligence, quantum computing, and high-end semiconductors as key review targets. The review process is also more stringent and may require multiple rounds of inquiries and in-depth investigations. This means that foreign-invested enterprises’ investments in these areas will face longer approval cycles and higher uncertainty.

Finally, these regulatory changes have had a profound impact on the market access and operations of foreign-invested enterprises. On the one hand, the entry threshold in certain areas has been raised, and foreign-invested enterprises need to be more fully prepared and wait longer. On the other hand, the Japanese government is also actively promoting foreign-invested friendly policies, such as simplifying investment procedures in some non-sensitive areas and providing multilingual services. For foreign-invested enterprises that have already operated in Japan, the new regulatory requirements may require adjustments to internal governance structures, information reporting processes, etc. In general, these changes make the operations of foreign-invested enterprises in the Japanese market more complicated, but they also create opportunities for differentiated competition for those enterprises that can adapt to the new rules.

In summary, these changes in Japan’s foreign investment regulations reflect the general trend of countries to balance openness and security in the global economic environment. For foreign companies that intend to enter or expand their market share in Japan, a deep understanding of these regulatory changes and making compliance preparations in advance will become key factors for future success in the Japanese market.

Update of Environmental Protection Laws and Regulations

In recent years, the Japanese government has introduced a series of new regulations in the field of environmental protection, aiming to achieve the 2050 carbon neutrality goal and promote the development of a circular economy. These changes have brought new challenges and opportunities to foreign companies operating in Japan.

1. New requirements under the carbon neutrality goal

After the Japanese government announced its 2050 carbon neutrality goal in October 2020, it quickly introduced a series of supporting policies. The Law on Promoting Global Warming Countermeasures, revised in May 2021, explicitly requires local governments to formulate regional plans to promote the use of renewable energy. In 2022, the government further promulgated the Law on Promoting Climate Change Response, requiring large companies to regularly disclose climate-related financial information.

These policies mean the following for foreign-invested enterprises: First, energy-intensive enterprises need to accelerate low-carbon transformation and invest in clean energy and energy-saving technologies. Second, all large enterprises need to establish climate risk assessment and information disclosure mechanisms. Finally, foreign-invested enterprises in the field of green technology will usher in new market opportunities.

2. The introduction of circular economy-related laws and regulations

In order to promote the development of the circular economy, the Japanese government revised the Law on Promoting Effective Utilization of Resources in April 2022, expanding the recycling responsibilities of plastic product producers. In 2023, the newly revised Law on Promoting the Recycling of Food Resources strengthened the management requirements for food waste.

These regulatory changes require foreign companies to: First, plastic-related companies need to redesign their products to improve recyclability. Second, food industry companies must establish a more complete waste tracking and recycling system. Third, circular economy solution providers will face greater market demand.

3. Analysis of environmental compliance costs and opportunities for foreign-invested enterprises

The new environmental regulations will undoubtedly increase the compliance costs of enterprises. According to the Japanese Ministry of Economy, Trade and Industry, large enterprises will need to increase their operating costs by about 0.5%-1% per year on average to cope with new carbon emissions and information disclosure requirements. The relative burden on small and medium-sized enterprises may be heavier.

However, these changes also bring new business opportunities. Companies that are the first to complete the low-carbon transformation will gain a competitive advantage in the Japanese market. Foreign-invested enterprises in the fields of green technology, renewable energy, and circular economy solutions are expected to achieve rapid growth. In addition, the Japanese government has introduced a number of subsidy policies to support the green transformation of enterprises, such as the “Carbon Neutral Investment Promotion Tax System”, which foreign-invested enterprises are also eligible to apply for.

In general, although the new environmental regulations have brought short-term pressure to foreign-invested enterprises, in the long run, they will promote enterprises to improve resource utilization efficiency and enhance international competitiveness. Enterprises should actively respond, regard environmental compliance as an opportunity for transformation and upgrading, and seize new development opportunities in Japan’s green economic wave.

New Trends in Financial Supervision

In recent years, the Financial Services Agency (FSA) of Japan has continued to promote the modernization of the financial regulatory system to cope with the rapid development of financial technology and changes in the global financial environment. These new regulatory trends not only affect local financial institutions, but also bring new challenges and opportunities to foreign financial institutions operating in Japan.

The improvement of the regulatory framework in the field of financial technology is one of the focuses of Japan’s financial supervision. The revised “Capital Resolution Law” and “Financial Instruments and Exchange Law” in 2020 officially included crypto assets in the scope of supervision and established clear operating rules for financial technology companies such as digital currency exchanges. In addition, the Japanese Financial Services Agency has also introduced a “regulatory sandbox” system to encourage financial innovation while ensuring that risks are controllable. These measures provide clearer guidance for foreign financial technology companies to enter the Japanese market, but also increase compliance requirements.

In terms of anti-money laundering (AML) and counter-terrorism financing (CFT), the Japanese government has recently stepped up its supervision. In 2021, the revised “Criminal Proceeds Transfer Prevention Law” came into effect, requiring financial institutions to strengthen customer identification procedures and improve the quality of suspicious transaction reports. The Japanese Financial Services Agency also issued an updated version of the AML/CFT guidelines, clarifying the specific requirements for risk assessment and internal control. This means that foreign financial institutions need to invest more resources to upgrade their compliance systems and processes.

For foreign financial institutions, these regulatory changes have brought a series of compliance challenges. First, the balance between technological innovation and compliance requirements has become a major problem. How to promote financial technology innovation while meeting increasingly stringent regulatory requirements requires institutions to make careful considerations at the strategic level. Secondly, the complexity of cross-border data transmission and information security management has increased, and foreign institutions need to reassess their global data strategies. Finally, the strengthening of localization requirements also means that foreign institutions may need to adjust their business models and organizational structures.

To address these challenges, foreign financial institutions may consider adopting the following strategies: First, strengthen communication with Japanese regulators and proactively understand policy intentions and regulatory priorities. Second, invest in compliance technology (RegTech) solutions to improve the efficiency and accuracy of compliance management. Third, cultivate local talents familiar with the Japanese market and build a strong local compliance team. Finally, establish strategic cooperation with local Japanese financial institutions and technology companies to jointly address regulatory challenges.

In general, the new trends in Japan’s financial regulation reflect the regulator’s efforts to find a balance between promoting innovation and maintaining financial stability. For foreign financial institutions that intend to enter or expand their market share in Japan, it is crucial to deeply understand these changes and adjust their strategies in a timely manner. Although there may be pressure from increased compliance costs in the short term, in the long run, adapting to these new regulations will help build a more robust business model and win the trust of regulators and customers.

Strengthening intellectual property protection

As a global leader in intellectual property protection, Japan has continuously improved its intellectual property legal system in recent years. The latest revisions are aimed at further strengthening intellectual property protection and providing stronger legal support for innovation activities. These changes have a significant impact on foreign companies doing business in Japan, and they need to adjust their intellectual property strategies in a timely manner.

1. Key points of the revision of the Patent Law

The latest revision of Japan’s patent law focuses on improving the efficiency of patent examination and expanding the scope of patent protection. First, an accelerated examination procedure has been introduced, especially for inventions in emerging technology fields such as artificial intelligence and the Internet of Things. This means that companies can obtain patent protection more quickly and accelerate the process of technology commercialization.

Secondly, the revised law expands the scope of indirect infringement, allowing patent owners to more effectively combat patent infringement. This change is particularly helpful in preventing others from evading infringement liability by providing core components of patented products.

In addition, the patent term compensation system has been optimized to provide a fairer compensation mechanism for patent holders who lose protection period due to delayed examination. This is especially important for inventions in the field of life sciences, as such inventions often require longer examination time.

• New measures for trademark and copyright protection

In terms of trademark law, Japan has introduced new non-traditional trademark types, such as protection for sound trademarks and hologram trademarks. This provides companies with more diversified brand protection options. At the same time, the trademark examination procedure has also been simplified, which is conducive to companies obtaining trademark registration more quickly.

The revision of the Copyright Law focuses on the challenges of the digital age. The new law strengthens the crackdown on online infringements, especially unauthorized streaming and file sharing. At the same time, a more flexible copyright licensing mechanism is introduced to facilitate the legal use of other people’s works and promote cultural innovation.

It is worth noting that Japan has also strengthened copyright protection related to AI creations. The new regulations clarify the ownership of copyright for AI-generated content and provide legal guidance for companies’ innovative activities in the field of AI.

• Suggestions on adjusting the intellectual property strategy of foreign-invested enterprises

In the face of these changes, foreign companies operating in Japan need to adjust their intellectual property strategies in a timely manner. First, it is recommended that companies make full use of the new accelerated examination procedures, especially in highly competitive technology fields, to obtain patent protection as soon as possible.

Second, companies should re-evaluate their patent portfolios and consider whether they need to apply for additional patent protection for key components of their core technologies to take full advantage of the expanded scope of protection against indirect infringement.

In terms of trademark strategy, companies can consider registering new types of non-traditional trademarks for their brands to obtain more comprehensive protection. At the same time, they should pay close attention to competitors’ trademark application activities and file objections in a timely manner to protect their own rights and interests.

For companies involved in digital content, stricter copyright compliance measures need to be formulated to ensure that the content used has been properly authorized. At the same time, new flexible authorization mechanisms should be actively used to explore new ways to monetize content.

Finally, it is recommended that companies strengthen cooperation with local Japanese intellectual property lawyers and agents to keep abreast of legal changes and practice trends and ensure that intellectual property strategies are consistent with the latest legal environment. It is also more important to conduct regular intellectual property audits to identify potential risks and opportunities.

By actively adapting to these changes, foreign-invested enterprises can not only better protect their intellectual property rights, but also gain a stronger competitive advantage in the Japanese market.

Conclusion: Strategies for Foreign-invested Enterprises

The continuous evolution of Japan’s regulatory environment has brought about a complex situation of both challenges and opportunities for foreign companies. This section will summarize the impact of these changes and provide foreign companies with strategic recommendations to help them develop steadily in the Japanese market.

1. Summary of challenges and opportunities brought about by regulatory changes

In recent years, changes in Japanese regulations have involved multiple areas, including labor law, company law, taxation, data protection, foreign investment and intellectual property rights. These changes have undoubtedly increased the compliance costs and operational complexity of foreign-invested enterprises. For example, the Work Style Reform Act requires companies to adjust their human resource management policies; the strengthening of data protection regulations requires companies to upgrade their data processing systems and processes.

However, these challenges also contain opportunities. The improvement of laws and regulations has created a fairer and more transparent operating environment for foreign-invested enterprises. For example, the update of relevant corporate governance regulations has helped improve corporate management efficiency; the strengthening of intellectual property protection has provided better legal protection for innovative enterprises. In addition, the update of environmental protection laws and regulations has also opened up new market space for foreign-invested enterprises in the fields of environmental protection technology and services.

• The importance of establishing a dynamic regulatory monitoring and response mechanism

Faced with the ever-changing regulatory environment, foreign-invested enterprises must establish a dynamic and efficient regulatory monitoring and response mechanism. This mechanism should include the following key components:

First, establish a dedicated regulatory monitoring team or designate a dedicated person to continuously track the dynamics of laws and regulations in various fields in Japan. You can keep updated by subscribing to official announcements, attending industry seminars, etc.

Secondly, establish an internal rapid response process. Once a regulatory change that may affect the company’s operations is discovered, the impact can be quickly assessed, a response plan can be developed, and the plan can be effectively communicated among relevant departments within the company.

Thirdly, regular compliance audits are conducted to ensure that the company’s businesses always comply with the latest regulatory requirements. This not only helps avoid legal risks, but also helps the company discover new opportunities brought about by regulatory changes in a timely manner.

Finally, incorporate regulatory changes into the company’s strategic planning process. When formulating mid- and long-term development strategies, potential regulatory changes should be considered to improve the company’s adaptability and competitiveness.

• Advice on maintaining communication with local legal experts and government departments

In a complex regulatory environment, it is essential to maintain good communication with local legal experts and government departments. This will not only help to accurately understand and implement regulations, but also help companies gain more support and resources. Specific suggestions are as follows:

• Establish long-term partnerships:Establish long-term cooperative relationships with trusted local Japanese law firms. They can not only provide professional legal advice, but also help companies understand the policy intentions and cultural background behind the regulations.
• Participate in policy consultation:Actively participate in policy consultation meetings or public consultation activities organized by government departments. This will not only allow the voice of the enterprise to be heard, but also help understand the policy direction in advance and provide important reference for the company’s decision-making.
• Join an industry association:Actively participate in the activities of local industry associations in Japan. These associations usually have good communication channels with government departments and can represent the interests of member companies in dialogue with the government.
• Building Government Relations:Under the premise of compliance, we will establish good communication channels with relevant government departments, regularly report the company’s development, proactively consult policy questions, and demonstrate the company’s contribution to local economic development.
• Cultivating local talents:We attach great importance to cultivating and employing local talents who are familiar with Japanese laws and culture. They can better understand and implement relevant regulations and can also serve as a bridge for communication between the company and government departments.

By establishing a sound regulatory response mechanism and maintaining good communication with local experts and government departments, foreign-invested enterprises can better cope with Japan’s ever-changing regulatory environment, turn challenges into driving forces for corporate development, and achieve long-term and steady growth in the Japanese market.

Expert opinions

Kentaro Sato, a professor at the Faculty of Law at the University of Tokyo, gave a profound insight into the recent regulatory changes. He pointed out: “The 2024 regulatory adjustments reflect Japan’s efforts to balance openness and protection in the context of globalization. For foreign-invested enterprises, this is a period of both challenges and opportunities.” Professor Sato particularly emphasized the importance of corporate governance reform, believing that this will promote more transparent operations of foreign-invested enterprises in the Japanese market, which will help build investor confidence in the long run.

Kazuhisa Takahashi, chief economist at the Japan Center for Economic Research, analyzed the impact of regulatory changes from a macro perspective. He said: “The new tax reforms and environmental regulations will increase corporate costs in the short term, but in the long run, this will help Japan optimize its industrial structure and achieve sustainable development. Foreign-invested enterprises should actively adapt to this trend and see it as an opportunity to enhance their competitiveness.” Takahashi specifically mentioned that foreign-invested enterprises in the fields of new energy and environmental protection technologies may benefit from this.

In terms of specific industry impact, the following cases are quite representative:

On the manufacturing side, Taro Yamada, CEO of German auto parts maker Bosch Japan, said: “The new environmental regulations have indeed increased our compliance costs, but at the same time they have also pushed us to speed up the development of electric vehicle parts. This has actually helped us win more orders in the Japanese market.”

In the field of financial technology, Akiko Suzuki, general manager of PayPal Japan, an American payment giant, shared her experience: “The new financial regulatory framework may seem to increase the difficulty of market access at first glance, but it actually provides us with clearer compliance guidance. By actively communicating with the Financial Services Agency, we successfully launched several innovative products, which in turn accelerated market expansion.”

In the retail industry, Masako Nakamura, legal director of French cosmetics group L’Oréal Japan, said: “New consumer protection regulations and data privacy requirements did pose challenges, but it also prompted us to review our customer data management processes. As a result, we built a more secure and efficient CRM system, and customer satisfaction has increased.”

In summary, although regulatory changes bring short-term adaptation costs to foreign-invested enterprises, in the long run, enterprises that actively embrace these changes can often gain greater development space in the Japanese market. Experts generally recommend that foreign-invested enterprises should pay close attention to regulatory developments, actively communicate with regulators, and transform compliance requirements into a driving force for improving corporate competitiveness.