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Open a Branch vs. a Subsidiary in Japan

Open a Branch vs. a Subsidiary in Japan

Foreign businesses are able to expand their operations in the country through opening a branch or subsidiary in Japan. In this article, our company formation consultants in Japan analyze the differences between a branch and a subsidiary here.

A brief comparison between branches and subsidiaries in Japan

A branch in Japan is easier to set up and less expensive, however, it lacks certain advantages which come with a subsidiary in the country.

Subsidiaries in Japan are usually opened as Kabushiki Kaisha (KK), which is a joint stock firm, or a Godo Kaisha (GK), which is a limited liability kind of company.

Subsidiaries in this county are regarded as being more ingrained to the local business market because of their status as domestic legal entities. Our Japan company formation advisors can offer more details on this matter, as well as assistance related to setting up a company in Japan.

The branch office in Japan is structured as an extension of the parent company, which implies that the parent company has to absorb all liabilities created by the branch in Japan.

On the contrary, the subsidiary in Japan is organized as a separate entity, having flexible connections with the original corporation.

Subsidiaries have more legal authority to act independently and can assume responsibilities and liabilities, separately from the foreign parent company.

Characteristics of branches and subsidiaries in Japan

Here are a few characteristics of the branches in Japan:

  • • They can undertake commercial activities;
  • • They have less credibility;
  • • They are the least costly to open;
  • • They might seem unconsistent;
  • • The set-up costs are around JPY 150,000.

As about a Kabushiki Kaisha (KK), this type of subsidiary is characterized by:

  • • Being most similar to a C-corporation in the USA;
  • • Having a strong credibility;
  • • Appears to be more stable, and is extremely trusted by local clients and employees;
  • • Our company registration agents in Japan can offer more characteristics of a KK company in the country.

Our team offers complete assistance for the incorporation of branches and/or subsidiaries in Japan. Moreover, we are also able to answer questions about gaining Japanese residency through the Business Manager visa, which can be an option for foreign professionals appointed in Japan. You can reach out to our team for more information about the conditions and the application process.

If you have questions about immigration to Japan, you should know that the Business Manager visa is not the only route for medium to long term stay in the country. There are other categories of visas, such as those for other types of highly qualified professionals, that allow foreign nationals to remain in Japan. After a minimum number of consecutive years spent in the country, one can apply for permanent residency. 

If you need to know more about the pros and cons of a branch vs a subsidiary in Japan, or for help related to starting a company in Japan, we invite you to get in touch with us.