Manual on
Collaborating with Japanese Companies
JETRO Singapore
April 20 th 2023

Why Japan?

2Japan as a Market
Japan is attractive to foreign companies due to its vast domestic market as well as its role in leading innovation andleveraging the innovation to solve social issues

Japanese market size is one of the most attractive feature−Japan’s GDP: World No. 3◦ 4,937 US$ Billion−Number of Global 2000 by Forbes: World No.3

Japan faces a series of challenges that will soon be facing byother countries and is leading in the innovations to solve these−Aging population and labour shortage◦ 29.1% of the population are over 65−Disasters: An earthquake prone area, heavy rain, typhoon…

◦ Japan has 196 companies on the Forbes’ 2022 Global 2000

−60% of the survey respondents of Foreign-affiliated Companies cited theJapanese market size as the most attractive feature of doing business inJapan

Japan’s aging population leads to a strong needs for AI
solution for elderly care
Emotion AI Startup

Robotics Startup

Japan is the 2nd insurance market in world and Japanese
regulator is open to change/discuss regulatory
InsureTechStartup*

Labour shortage resulting from aging and declining
population stimulate the application of robot solution
Japan has a vast aging infrastructure

Construction AI Startup

Japan has a national screening program and the highest
mammography screen rates in Asia
Healthcare AIStartup

Note: * Startups’ name will be disclosed shortly
Source:"アジア新興国における競争力強化に資するスタートアップ投資に関する調査” (JETRO, April 2021), ”FY2022 Survey on Business Operations of Foreign-affiliated Companies in Japan” (JETRO, March 2022) ,Forbes Global 2000 2022, initial Database3

Japanese Companies as a Partner
Japanese companies are open to embrace new technology, have high global presence and intend to maintain a long-term
partnership once the decision is madeOpen to adopting innovation withworld’s leading R&D capabilities

A strong global presence and open tocross-boarder collaboration−Number of Patent Applications(2021): WorldNo.3−Japanese companies venturing into theinternational markets with strong market
presence. Once the solution is adopted, there
is a possibility to expand to a global market◦ 289,200−Number of Researchers :OECD No.2
◦ 681,821

Japan is the only country in the region
that has a prominent practice in recycling
FoodTechStartup

Japanese Companies are constantly
looking for innovative solutions and are
Emotion AI open to using AI
Startup

Many large infrastructure companies
involved in multi billion dollar
Construction developments
AI Startup

InsureTech
Startup

Long-term partnership−Japanese companies tend to have long-term
relationships with their suppliers. Although it
takes long time for Japanese Companies toadopt a service, once they make decision on
the adoption, they will be on a long-termbusiness with startups

InsureTech
StartupPatience is important, and Japan has own
way to adopt. Long time to accept new
thing but once adoption, people will use
it.

Collaborate and leverage large
conglomerate to convince the people
more easily and accelerate our path to be
No.1 insurtech company.

Note: * Startups’ name will be disclosed shortly
4Startups Investment in JapanThe amount of startups investment in Japan is 60% of than that in Singapore in 2022, while the number of deals in Japan
is 3.4 times of that in Singapore

Deal amount keeps increasing despite deal number decreased

Number of IPO and M&A saw a increasing trend

Startups Investment in Japan

Number of IPO in Japan

Deal amount, $B

Deal number
160

98765
4
32
10

2,721
2,915 2,876 2,739 7.75

2,425
1,950
1,348

0.83

2,094

5.50
4.56

1,605

5.20

6.68
2,224

3.24
1.18

1.85

2.29

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Deal Amount

Deal Number

3,500

140

3,000

120

2,500

100

2,000

80

1,500

60

1,000

40

500

20

00136
123

122

112
95
83

80

8975

82
66

6237

2013

452014392015

2016

47

4643

2017

2018

2019

IPOs

50

2020

2021

582022

M&As

Source:“アジア新興国における競争力強化に資するスタートアップ投資に関する調査” (JETRO, April 2021), ”Singapore Venture Funding Landscape 2022” (Enterprise Singapore, Deal Street Asia, March 2023)“Japan Startup Funding 2022” (initial Database, February 2023)
5Startups Investment in JapanThe amount of startups investment in Japan is 60% of than that in Singapore in 2022, while the number of deals in Japan
is 3.4 times of that in Singapore

Deal amount keeps increasing despite deal number decreased

Number of IPO and M&A saw a increasing trend

Startups Investment in Japan

Number of IPO in Japan

Deal amount, $B

Deal number
11.3

122,915 2,876

102,425

607.8

1,348

1,605
4.6

422,739 2,721

1,950 2,094

80.8

1.2
257

1.9
162

2.3
284

5.5

11.0

3,000

2,224 2,500
6.7

5.2

3.2
265

295

417

437528730

SG Deal AmountJP Deal Numbers

SG Deal Numbers

160
136

140

123

2,000

100

1,500

80

1,000

60
40

0

20122

112

120651 500

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
JP Deal Amount

3,500

95
83

80

8975

8266

6237

45

394746432017

2018

2019

50

580
2013

2014

2015

2016

IPOs

2020

2021

2022

M&As

Source:“アジア新興国における競争力強化に資するスタートアップ投資に関する調査” (JETRO, April 2021), ”Singapore Venture Funding Landscape 2022” (Enterprise Singapore, Deal Street Asia, March 2023)“Japan Startup Funding 2022” (initial Database, February 2023)
6Startups Investment in Japan: Investment from Large companies
Large companies play an important role with a significant number of general business corporation investors, and many companies
have CVC arms other than investment from general business unit which contribute to 9% of the VC investment

Percentage of VC Fundings in Startups by Fund Type

Number of Investors by Type in Japan
VCs (including CVCs)

General Business Corporations

Financial Institutions

University5%Foreign Corporations

810

National andLocal
Government
7%439Foreign
22%

718

678

658

Others5%

Independent
34%

655

510
444

427

355

207
112

2013

247
142

2014

224

247

320

285

356

174

2015

CVC
9%
2016

2017

2018

2019

2020

2021

FinancialInstitution
18%

2022

Note: VCs in the left graph includes corporate venture capitals(CVC) funds
Source: “Japan Startup Funding 2022” (initial Database, February 2023)
7

Japanese Companies’ Innovation Activities in Singapore
Japan Companies’ subsidiaries in Singapore are expanding the business scope from marketing, manufacturing,to R&D collaboration, and in recent years started focusing on startup collaboration and investment
1970s

Sales and Marketing Base

Kao

1980s

Murata

1990s

2000s

2010

Asahi Kasei

Makino(unmanned factory)（1972） （1978） （1981）（2005）（2017）

Asia Regional Head Quarter

Innovation HubR&D collaboration
with Academic
Collaborations
with startups

Yakult2022（2013）
MakinoMurata2020

Astellas
PharmaNEC（1965）（1972） （1977）

Manufacturing Base2015

Mitsubishi
TakedaHeavy
PharmaceuticalIndustry（2013）（2014） （2015）（2006）（2007）
Bridgestone

Mitsui& Sumitomo
ChemicalCo

MakinoAsics（2010） （2014）

JFE
engineering（2018）

ArkrayTakenaka(COT-Lab)MOL PLUS
Singapore（2021） （2022） （2023）

Source: Organized by JETRO based on public information
8Japanese Companies' innovation activities in Singapore: Examples
More Japanese companies established open innovation arms in Singapore, and started investing in Singapore basedstartups

Establish Open Innovation or CVC Arm
Arkray− In Feb 2022, announced a ¥10bn ($86.8m) Singaporebased CVC to back early-stage medical technology
developers

Takenaka Corporation− In June 2022, established a cocreation base COT-LabSingapore to accelerate collaboration in carbon
neutrality and DX field

MOL PLUS− In Mar 2023, established MOL PLUS Singapore Deskfocus on startups in Maritime and Logistics industries
and those who is seeking to solve social issues inSoutheast Asia

Startup Investment
Mitsui Chemical

Apeiron Bioenergy− In Aug 2022, Mitsui Chemicals Invested in Apeiron
Bioenergy, one of the Largest Used Cooking Oil
Collectors in Southeast Asia and China Region, toexpand its procurement of biomass raw materials tomeet growing demand for bio-based chemicals andplastics

Tokio Marine

BoltTech

VCs or collaborating with VCs
AOZORABankGeneis AlternativeVentures− In June 2021, Aozora Bank invests in Genesis
Alternative Ventures fund, signs MOU to support
Japanese start-ups’ expansion into Southeast Asia

RealTech Fund
− In May 2022, Real Tech Holdings announced its
incorporation of RTHD Singapore Pte. Ltd. (RTS), its
first global office in Singapore− In Oct 2022, Tokio Marine form a a capital andbusiness alliance with BoltTech, a startup in
Embedded Insurance field, aiming to realize the global
expansion of Embedded Insurance and innovative
insurance binding processes through a unique digitalplatform

Source: Organized by JETRO based on public information9Japan Companies Investment in Singapore Startups
In 2020, investment from Japan Companies consisted 27% of the total investment to Singapore Startups in terms ofamount and 11% in terms of number of deals.

Deal Number of SG Startups and by JP Companies

Deal Amount ($M) of SG Startups and by JP Companies
6,000
5,000

0.5
5,026

43%

4,220
4,000

3,437

3,412
27%

3,000
2,000

1,842

22%

20%

10%

1,000
0792

692

2016

2017

1118
2018

Deals Amount for SG Startups

423914

2019

2020

500

0.45

450

0.4

400

0.35

350

0.3

300

0.25

250

0.2

200

0.15

150

0.1

100

0.05

5000Deals Amount By JP Companies% of JP companies' investment

0.14
417

12%

437
0.12
11%

265

295

0.1

295
0.08

7%

6%

7%

0.06
0.04
0.02

33

19302932

201620172018

2019

2020

No. of Deals for SG Startups

0No. Deals By JP Companies% of JP companies' investment

Source:“アジア新興国における競争力強化に資するスタートアップ投資に関する調査” (JETRO, April 2021)
10Japan Companies' Collaboration with SEA Startups
20% of Japan Companies have collaborated or have collaboration plans with Singapore Startups, and about 30% of them
have intention or interest in collaborating with Singapore Startups
Percentage of Japan Companies Interested or Involved in Collaboration with ASEAN Startups（2021）

010Singapore(453)9.1

20304011.7

Myamar(165)

6.1

7.9

Malasia(173)

5.8

8.1

Vietnam(670)

4.8Indonesia(351)

3.7

5.7

Philiphine(85)

3.5

4.7

Thailand(526)

3

4.9

52.8%

38.8
30.6

44.5%

29.7

42.4%

26.2

35.6%

25.9
24.1

Have collaboration plans

60 %
50.4%

29.6

7.9

In collaboration

50

34.1%
32%

Haven't collborated yet but have intention and interest in collaboration

Source: ”2021 年度海外進出日系企業実態調査 アジア・オセアニア編” (JETRO, December 2021)
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How to collaborate with Japanese Companies
From the perspective of ASEAN Startups

12Collect Information
Japanese and local (SG) Govt/trade agencies, existing investors and partners, trade shows and events, accelerator
programs and professional service providers are good sources to obtain in-market information and connect with potential
partners
Government/Trade Agencies− JETRO:launched J-Bridge, a business platform forsupporting Japanese Companies in collaborating withoverseas companies and startups− Local governments in Japan: e.g., Tokyo
Metropolitan Government X-hub Programs− Enterprise Singapore: operate Global Innovation
Alliance, an acceleration program supporting
Singapore Startups and SME to expand to 17 cities
including Japan

Existing partners/investors− Japanese investors or partners◦ Japanese investors and stakeholders often provide
insights into market trends, culture, behaviour anddevelopments in the industry− Japanese subsidiaries in Singapore◦ Successful collaboration with Japanese Companies
in Singapore often open doors to morecollaborations with partners in Japan.

Tradeshows and Events− Tradeshows and Exhibitions in Japan:◦ The International Robot Exhibition@Tokyo:
world’s largest robot exhibitions◦ City-tech Tokyo: Large-scale global startup
exhibition organized by TMG◦ CEATEC@Tokyo: a comprehensive exhibition ofSociety 5.0* covering all types of businesses andindustries− Regional events attended by Japanese businesses

Startup Incubators and VCs− Real Tech: a VC started from investing in Japanese
deep tech startups to solve global issues, raised theGlobal Fund in May 2020 and opened its first global
office in Singapore in May 2022

Professional services− Investment banks and big 4s◦ Only suitable for late-stage startups with steadycashflow− Startup oriented professional services◦ FHA Food&Hotel @Singapore: Asia’s largest
international F&B showcase◦ InsureTech Connect Asia (ITC) @Singapore: Theregion’s largest insurtech event− Events◦ Morning Pitch Asia: Pitching platform to create
innovative new business between startups andlarge companies or investors

13

Communication and Building RelationshipThe decision process takes a long time but the companies active and more experienced in Open Innovation may have afaster process. It’s important to invest time to build the relationship and trust

Understand the decision-making process− Understand decision making process◦ Japanese companies have a structured decision- making process and startup
should have a realistic timeline when working with Japanese partners.
◦ Those who are active in Open Innovation or have collaborated/invested in
ASEAN startups may have a significantly faster decision-making process− Understand culture and language◦ It is important to understand the language, or involve hiring interpreters, or haverepresentatives who are fluent in Japanese and familiar with business practices

Build relationship and trust− Invest time to understand your partner and build a relationship◦ Keep frequent contact with the partner, meet online and in person◦ Spend time after office hours in a social setting to get to know partners beyond
official meetings.
− Demonstrate mutual respect◦ Communicating and negotiating effectively requires building a foundation of trust
through demonstrating cultural sensitivity, transparency and honesty incommunications.

− Finding the right person

InsurTech
Startup

Understanding the decision-making process in the target company
and finding who is right people to talk with. (Find the top ofinvestment team when raise fund, the right department when incommercial side)

Robotics
Startup

When proposing deals and partnership, it is critical to identify theright person to make the pitch. Demonstrate respect and courtesy tobuild relationship and trust with partners throughout the command
chain is important.

HealthTech AI
StartupEstablishing trust is important, understand counterpart needs or concerns
and address all possible issues will increase the success of collaborationand partnerships. Understand pain points and to provide structured
solutions, to reduce needs of changes and ensure ease of businessNote: * Startups’ name will be disclosed shortly
14After Forming the Collaboration or Entering Japan market
Having a local partner or local country manager who understand the culture and language, customizing product via data
training, technology and regulation adaptation and finding a balance of high operating cost is important

Product Customization− Technology
In Japan, different frequency
spectrums is usedConstruction Ai Startup

Our solutions have been localised
to recognise emotions within theEmotion AI Startup Japanese demographic− Regulation
Japan has a stricter regulation on
CE mark

Food Robotics Startup

It’s difficult to get PMDA
approval in Japan, and we need asubsidiary in Japan responsiblefor import licenses and apply for
Medical Robotics regulatory approvals that enable
Startupthe company to introduce
medical devices into the market

Human Resource− It’s important to have local country manager who
could speak Japanese and bridge the gap− Hiring cost is high in Japan◦ In Japan, the recruiting agent fee is 50% of theannual salary comparing with 30-35% in Singapore.
◦ Other ways such as personal network,
introduction from partners, or even scout
someone from your local dealers is important tofind the right person in a lower cost.
− Labor cost is high◦ People don’t shift job very often and once hired,it’s difficult to fire someone and you must takethe burden of the labor cost even if you find out
they are not suited, which makes the cost evenhigher.

Operating− Operating cost is high as the corporate tax is 30%− A clear manual and training is very important◦ Once you have a manual and get the employee
familiar with it through guidance and enoughtraining, Japanese could execute exactly as themanual to make sure everything is on track.

Marketing− Marketing cost is high, and a strong marketingbudget is necessary◦ You need to pay the transport and corporate
benefit, which are ways Japan safeguard theemployee.

Note: * Startups’ name will be disclosed shortly
15

Voice and advice from Japanese Companies
From Japanese Companies’ perspective, speed gap and the ambiguity in decision-making process and the language
barriers are among the top problems. Leveraging JETRO/J-BRIDGE could help bridging the gap
Area of Problems

Overview

Advices/Comments from Japanese Companies (Industry)

Speed Gap

• Decisions on business collaborations andinvestments are often made at the head officein Japan. It takes a long time and sosometimes not meeting the timelines requiredby startups.

• It takes six months at the earliest for due diligence and approval, and one year for earlystage startups (Food manufacturer)• The decision-making speed required by startups in Singapore is fast and the speed of Due
Diligence is not suitable, so the collaboration was cancelled (Food service)• ASEAN Startups should understand that partnerships with Japanese Companies taketime (Trading)Ambiguity ofDecision-makingCriteria• Since there are often no clear criteria forbusiness collaboration and investment
implementation, it is necessary to foster asense of trust through conversations• Startup should clarify not only the technology but also the business model and clarify what
they can do & where they can't do it (Health care)• It will be easier to persuade the head office in Japan if there are concrete examples suchas actual data and results of what was implemented with other companies that can bedisclosed (Food manufacturer)

Language/CommunicationBarrier• Later it becomes clear that the startup
conditions required by the Japanese Company
do not match the actual situation of thestartup because of the language barrier &miss-communication• When considering collaboration with a certain startup, we assumed industrial use, butstartup was mainly for commercial use and there was a difference in the use (Plantengineering)• Startups with Japanese management and easy communication are preferred (Insurance)

16

Support by JETROJETRO provides extensive support to fill the gap between Japanese companies and startups and break through the entry
barrier to the Japanese market.
Support for alliances between Japanesecompanies and Singaporean startups

Membership•

J-Bridge member companies consist of Japanese big
companies that wish to collaborate with overseas startups.

•Industries include ICT, finance, manufacturing, chemicals, etc.

Areas of alliances in Singapore
Healthcare, biotechnology, food tech, automation,environment/green tech, AI, etc.
Types of alliance•Business/technology alliances, capital investment, JV
establishment, etc.

•M&A

•

Investment in VC as LPs

Support for Singapore startups entering
Japanese market◼ Growing Industries in Japan

Health Tech

Foodtech

Work Style Reform Smart City

Cyber Security Blockchain
Robotics Artificial Intelligence

Sustainability

ICTFintech

E-commerce◼ Business opportunities in local cities

17