23 July 2025 - The Japanese market has been a particularly bright spot within the wider Asia Pacific market for alternatives managers in recent years.

Core factors driving interest in Japan include demographic and structural shifts, an engaged government, and low financing costs via ultra-low interest rates which stand in stark comparison to the wider developed world.

For those alternatives managers assessing Japan, there are also headwinds to consider. If not approached correctly, Japan’s unique culture, language barriers and a slower pace of change can be headwinds to establishing and running successful businesses in the land of the rising sun.

However, working with experienced partners, there are several ways managers can better prepare themselves to make the most of the opportunities on offer. At a recent roundtable hosted by the Citco group of companies (Citco), this topic was explored and solutions put forward from leading participants in the region. Below Citco analyses some of the main challenges to operating in Japan and shares tips for tackling them.

• 1. Culture is king

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  In Japan's evolving business landscape, while the traditional "job for life" concept has diminished, the cultural emphasis on stability and longevity remains deeply ingrained. This cultural shift presents a unique dynamic where modern workplace flexibility meets traditional values. Japanese professionals now seek employers who can offer both stability and growth opportunities, rather than just lifetime employment. Companies with established histories are seen as more reliable partners, both by potential employees and clients.

  This preference for longevity stems from the Japanese value of "shinrai" (trust) built over time. Managers that understand and embrace this cultural nuance while adapting to contemporary workplace expectations are better positioned for success. The key is to balance traditional Japanese business values with modern operational practices, creating an environment that resonates with local sensibilities while remaining globally competitive.

• 2. Accuracy

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  In Japanese business culture, precision and attention to detail are fundamental principles that cannot be overstated. The concept that "a one-yen wrong problem is a big problem" reflects the broader Japanese philosophy of "kaizen" (continuous improvement) and zero-tolerance for errors. 

  This meticulous approach to accuracy is not merely about numerical precision; it represents a deeper cultural commitment to excellence and reliability. When servicing clients in Japan, managers and their partner firms must implement robust quality control systems and multiple verification processes to ensure absolute accuracy in their operations. This extends beyond financial calculations to every aspect of business interactions, including documentation, communication, and service delivery. Errors that might be considered minor in other markets can significantly damage business relationships and reputations in Japan.

• 3. Give primacy to your on-the-ground team in Japan

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  Success in the Japanese market heavily depends on empowering local teams and implementing effective people strategies. While many managers who want to operate in Japan will have senior leadership teams based externally, giving primacy to on-the-ground teams in Japan is crucial as they possess intimate knowledge of local business practices, cultural nuances, and market dynamics. These teams should have substantial autonomy in decision-making while maintaining alignment with global objectives.

• 4. People strategy

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  The size of the talent pool in Japan presents unique challenges, making strategic recruitment and retention essential. Managers must focus on hiring individuals who can effectively bridge East-West cultural and communication gaps. This often means seeking professionals who are not only bilingual but also bicultural, understanding both Japanese business etiquette and Western corporate practices.

  Investment in language training, cultural education, and clear communication channels between global and local teams is vital, as is creating a supportive environment that values both Japanese and international perspectives. This helps build strong, effective teams capable of navigating complex cross-cultural business landscapes. As part of any strategy, managers can outsource specific functions to experienced partners with teams on the ground in Japan, allowing them to focus on their core businesses.

Japan appeals to alternatives managers on many levels, and by taking the above factors into consideration, they can enhance their chances of successfully operating in the region.

Citco launched its own local operational headquarters in Japan last year in response to the growing demand for alternative investments in Japan. Citco Japan Co KK offers fund accounting, fund operations and Special Purpose Vehicle (SPV) administration services, with an overarching focus centered on automation to further enhance scalability and growth via its industry leading expertise and proprietary technology.