Japanese turn to isles For Japanese entrepreneur Hiroshi Kawasaki, setting up a small Internet-consulting company in Tokyo at first seemed to be an impossible task.
to register businesses
For about $1,800, entrepreneur Mamoru Kobayashi will help a Japan-based company become a registered Hawaii business. It's a bit of a premium over the state business registration fee of $100 to $150, but considerably less than the $80,000 it would cost to set up shop directly in Japan.
By Lyn Danninger
ldanninger@starbulletin.comA start-up fee of ¥10 million, about $80,000, is required -- far too large a sum for many would-be entrepreneurs.
Second, Japan's corporate laws were written for the Sonys and Hondas of the world; not small start-up firms like Kawasaki's. Even if they can meet the capital requirements, most small firms would have difficulty complying with the labyrinth of regulations set up by the Japanese government.
Amid his anxiety about getting off the ground, Kawasaki learned a few things that would change his business prospects and those of hundreds of like-minded Japanese entrepreneurs.
Kawasaki found that the United States had few requirements for setting up a company. Moreover, Japan recognizes U.S.-registered firms; and a Japanese subsidiary of a U.S. firm could be set up relatively easily.
Kawasaki turned to Hawaii-based Mamoru Kobayashi and his company, Nitten USA Management Inc., to help him establish Digital Point Inc. in Hawaii.
Kobayashi, who went to college in the United States and has lived in Hawaii for about 10 years, knew from starting a couple of businesses here that U.S. business registration laws were far less complex and more business-friendly than those in Japan.
But having worked in Japan, he also believed there were many people there who would prefer to have a business headquartered in Hawaii rather than in another U.S. state, such as corporate-friendly Delaware. While Delaware is known in the United States as a major center for corporate registration, most Japanese are not as familiar with it as they are with Hawaii, Kobayashi said. Moreover, the cachet of a Hawaii-headquartered company can help open doors, he said.
"Ninety-nine percent of our clients love Hawaii, so they have dreams of setting up here," he said.
About four years ago he started charging about $1,800 to perform basic business registrations in Hawaii. He has registered about 900 Japan-based firms so far -- Kawasaki's Digital Point included.
But Kawasaki was so impressed with the ease of the transaction that he decided not only to write a book about the experience but also set up his own firm to offer the service. So far Kawasaki has registered close to 500 Japan-based companies in Hawaii.
The success of the book gave Kawasaki a foothold in the business, but also brought more customers to Kobayashi's door. These days the two men are friendly business rivals, said Kobayashi, who also intends to publish his own "how to" guide in Japan next month.
"It's a win-win, so there's no bitterness," Kobayashi said.
While there are several small firms now offering the same service, Nitten and Digital Point appear to be the best known in Japan.
The lure of Hawaii for Japanese business registration is more than just familiarity with the location, said Ryan Ushijima, securities commissioner for the Business Registration Division of the state's Department of Commerce and Consumer Affairs.
Hawaii is one of the few states that offer online business registration, he said. Changes in the law in the past few years have also made it easier for foreign and mainland companies wishing to register, he said.
"We used to have a resident director requirement where a director of the firm had to be a resident. That disappeared several years ago. Now the only requirement is to have a registered agent here who can be someone like Mr. Kobayashi who represents his clients and is the official contact person of the corporation," he said.
Ushijima said registration can be accomplished fairly quickly -- in about three to five days at a cost of $100. For an extra $50, expedited registration takes about a day and can be paid by credit card. Moreover, firms such as Kawasaki's and Kobayashi's can set up as subscribers to the DCCA Internet site and be billed monthly for their business registrations.
While Delaware also has an efficient registration system, it can be potentially more expensive to maintain registration there, Ushijima said. In Hawaii, once the company is registered, the annual filing fee is just $25, he said.
"Delaware may have favorable laws but it's potentially more expensive to maintain a company when you consider their filing fee, which is based on the number of shares issued by the company," he said.
Seiji Naya, director of the state Department of Business, Economic Development and Tourism, sees the Japanese trend to register companies in Hawaii as not only a good niche market for Hawaii, but also as a way to encourage more companies to expand their business activities to the state. Naya estimates that 20 to 30 Japanese companies register in Hawaii every month.
"Eventually these guys will start doing business in Hawaii. They find it easy to get licenses and that leads to doing business," he said.
While the vast majority of Japanese companies who now register in Hawaii confine their business activities to Japan, eventually more will do business here as well, agreed Kawasaki and Kobayashi.
"With Japan in the middle of a recession, many of them start thinking of doing business in other countries," said Kobayashi. He said he has already helped three or four Japanese companies set up retail businesses in Hawaii.
To encourage such activities, both men say they help their clients in Japan network and work toward joint ventures in places like Hawaii.
Kawasaki said Hawaii will soon have a branch of the Japanese business group National Conference of the Association of Small Business Entrepreneurs, or "Doku-kai." The goals of the association are to assist Hawaii companies who want to do business in Japan and Japanese companies who want to do business in Hawaii. The group is planning to celebrate the opening of the Hawaii branch of Doku-kai on Nov. 29, he said.
But for Securities Commissioner Ushijima, the immediate goal is to have Hawaii recognized as "the Delaware of the Pacific."
"Our goal is to be one of fastest and most efficient places to register in the country. Easy for both overseas people as well as domestically" Ushijima said.