Japan Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in japan, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Investment Climate Statement
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The Investment Climate Statement Chapter of the CCG is provided by the State Department.

The U.S. Department of State’s Investment Climate Statements help U.S. companies make informed business decisions by providing up-to-date information on the investment climates of more than 170 countries and economies. They are prepared by our embassies and consulates around the world and analyze each economy’s openness to foreign investment. Topics include:

  • Openness to, and Restrictions upon, Foreign Investment,

  • Investment and Taxation Treaties,

  • Legal Regime,

  • Industrial Policies,

  • Protection of Property Rights,

  • Financial Sector,

  • State-owned Enterprises,

  • Corruption,

  • Labor Policies and Practices,

  • Political and Security Environment, and

  • U.S. International Development Finance Corporation (DFC) and Other Investment Insurance or Development Finance Programs

Each statement provides a starting point for U.S. firms and offers a point of contact at the relevant U.S. embassy or consulate abroad.

These reports are also a resource for foreign governments to create business environments that ensure fair treatment for the United States and our companies and investors. 

To access the full Investment Climate Statement, visit the U.S. Department of State Investment Climate Statements website.

Executive Summary - Japan

Japan is the world’s fourth largest economy, the United States’ fifth largest trading partner in 2024, and the largest source of foreign direct investment (FDI) in the United States. Despite its economic strength and openness to foreign investment, Japan’s inward FDI stock remains the lowest among the OECD countries relative to GDP. As of the end of 2023, inward FDI stock was $350.6 billion, 8.5 percent of GDP. The Japanese government aims to increase this to ¥120 trillion ($800 billion) by 2030.

Japan offers a generally favorable legal and regulatory environment for investors, with strong intellectual property protections, robust capital markets, and few restrictions on foreign exchange transactions. However, foreign investors continue to face numerous challenges. A traditional aversion towards mergers and acquisitions within corporate Japan has inhibited foreign investment, and historically weak corporate governance, among other factors, has led to low returns on equity and cash hoarding by Japanese firms. Investors and business owners must also grapple with inflexible labor laws and a highly regimented system of labor recruitment and management that can significantly increase the cost and difficulty of managing human resources. Although courts are independent, attorney-client privilege does not exist in civil, criminal, or administrative matters, except for limited application in cartel anti-trust investigations. The Japanese government has recognized many of these challenges and is pursuing

Future improvement in Japan’s investment climate is contingent largely on the success of structural reforms to raise returns on assets and economic growth.