Foreign Direct Investment in Japan (hereinafter referred to as FDI) refers to investments in which foreign investors have a substantial impact on corporate management in Japan. In addition to stock exchanges, FDI also includes the aim of earning profits by operating directly locally through capital investment. In recent years, the methods of cross-border M&A and establishment of local subsidiaries and subsidiaries have expanded. As a recipient of FDI, Japan has many advantages, such as increasing employment and creating innovation by attracting advanced human resources from overseas and abundant funds, but as of 2024, FDI for Japan has remained at a low level among developed countries. In order to accelerate FDI, the Cabinet Office has formulated a priority program and set a target to set the FDI balance to 100 trillion yen in 2030. In response to these measures, the development of laws related to FDI has been frequently revised, so the support of lawyers who are legal experts will become increasingly indispensable in the future

The main strategies for FDI include horizontal foreign direct investment, which reduces transportation costs by reducing the physical distance between production sites and the market, and vertical foreign direct investment, which aims to reduce costs by producing at sites with low labor costs. In addition to these, in recent years, more complex FDI, which is done with the aim of reducing both transportation costs and production costs, is also scattered. At ALG, we carefully interview the purpose and industry of FDI, other business strategies, etc., and support the realization of business strategies by FDI. We have a large number of lawyers who only handle corporate legal affairs, and we are working on corporate matters in various industries, so we are familiar with industry-specific business practices. We also cooperate closely with overseas bases, so if cooperation with collaborators is possible, you can consult with us with confidence about FDI projects by cross-border M&A.

As a limitation of FDI to Japan, there is the existence of foreign exchange and foreign trade Act (hereinafter referred to as foreign exchange Act). The Foreign Exchange Act aims to promote sound investment and prevent the outflow of technology related to national security. In FDI, it is also important to understand these systems correctly and respond appropriately. In some cases, prior notification to the Ministry of Finance, etc. is required, but this notification involves not only the attributes of investors but also the conditions of the industry, etc. If investment is carried out without delivery, there is a possibility that an administrative order for the sale of shares may be issued, which may cause great disadvantages not only for foreign investors but also for the receiving company. In addition, even in cases where prior notification is not required, it may be necessary to submit a post-report depending on the situation. Furthermore, it is not easy to understand the whole picture of the system, such as being exempted from prior notification by complying with certain standards. You should seek advice from a lawyer who is familiar with FDI as to what kind of response is required based on the FDI method and conditions.

There are many points to consider in FDI, such as the complexity of the notification system, the diversification of FDI methods, repeated legal reforms, and the customs and unique culture of each industry, which are also barriers to entry. However, given the trend of the Japanese government's promotion of FDI, it is expected that FDI will become more active as part of management strategy in the future. While management strategy requires a global perspective, its implementation requires careful investigation and legal response.

In addition, when establishing a subsidiary in Japan, etc., it is necessary to consider a wide range of matters to be considered in advance, such as establishing a corporation in Japan, acquiring a status of residence for activities in Japan, securing a head office or residence that is the premise of these, opening an account in Japan, and obtaining a license in business activities in Japan.

ALG has established a department specializing in corporate legal affairs, and has a track record of supporting a wide range of laws and regulations in Japan. In addition, we also collaborate with our established base in Thailand and partner with other overseas law firms, so we can implement FDI strategies, prepare for activities in Japan, and even respond to international disputes. This corporation can provide total support from preventive legal services to dispute resolution related to FDI, so we can minimize the risk to FDI and contribute to the business expansion and profit acquisition of client companies.