Why global innovators are choosing Japan

Global companies are rethinking where they invest. As geopolitical risks rise and industries race to commercialize next-generation technologies, executives are increasingly searching for trusted research partners, resilient supply chains, and world-class engineering.

For many, that search is leading to Japan.

The Japanese government is aiming to nearly double the country’s inward foreign direct investment (FDI) balance over five years to 2030, a goal backed by reforms to streamline investment procedures, attract capital to strategic sectors, and promote investment and collaboration in regional innovation clusters.

But FDI policy is only part of the story. What sets Japan apart is the combination of technical expertise, sophisticated industrial networks, and close collaboration among businesses, universities, and research institutions.

Three global companies illustrate how these advantages are translating into long-term investment.

German pharmaceutical company Boehringer Ingelheim last year committed 48.4 billion yen to expand its manufacturing plant in eastern Yamagata Prefecture, where it produces treatments for diabetes, kidney disease and other chronic illnesses. The investment reflects the plant's strong productivity, global competitiveness, and advanced manufacturing capabilities, and positions Japan as a key manufacturing hub for the Asia and Oceania region.

Meanwhile, the company’s Kobe Pharma Research Institute plays a central role in its global drug discovery network, connecting Japanese research with its worldwide development capabilities.

“Japan offers a unique combination of scientific excellence, manufacturing expertise, high-quality healthcare data, and a foundation for a strong innovation ecosystem,” says Marc Hasson, Chairman and President of Nippon Boehringer Ingelheim. “For Boehringer, it serves as both an innovation and a manufacturing hub.”

The company’s experience reflects one of Japan's distinctive strengths: innovation is often rooted in regional clusters that bring together universities, hospitals, research institutes, manufacturers and local governments.

In Kobe, for example, Boehringer partners with organizations such as Nakanoshima Qross, an international healthcare-innovation hub based in nearby Osaka, to identify promising drug discovery technologies and connect them to its global pipeline.

With manufacturing capabilities that comply with pharmaceutical standards across multiple markets, the Yamagata plant enables innovative medicines produced in Japan to reach patients not only domestically but also across the Asia and Oceania region.

Taiwan’s Anjet Corporation has built a similar model in semiconductors.

The company chose Kyoto as its base for developing silicon carbide (SiC) power semiconductors, next-generation chips capable of operating more efficiently than conventional silicon devices in electric vehicles, renewable energy systems and AI data centers. Through its Japanese subsidiary Anjet Research Lab, Anjet works closely with Japanese suppliers of advanced materials and manufacturing equipment while collaborating with universities on new semiconductor technologies.

“Japan has built up decades of expertise in power semiconductors and has an exceptional pool of engineering talent,” says Jimmy Wu, CEO of Anjet Research Lab. “The ability to work closely with suppliers and materials manufacturers was one of the main reasons we chose to invest in Japan.”

Proximity to companies and universities in Kyoto has accelerated product development while also providing opportunities for Anjet to work with and meet Japan's exacting manufacturing standards, Wu adds.

“Japan sets extremely high standards for quality, and we’ve learned a great deal from that approach,” he says. “By combining Taiwan's speed with Japan’s commitment to quality, we believe we can develop better products more quickly.”

Such experiences align closely with Japan’s economic policy agenda. The government has identified 17 strategic fields, including AI and semiconductors, green transformation (GX), and drug discovery and advanced medical care. Projected domestic public and private investment is expected to exceed 370 trillion yen by fiscal 2040.

In parallel, the government's Strategy for the Future of Regions aims to build more resilient local economies. And under the Basic Policy on Economic and Fiscal Management and Reform 2026, it plans to step up efforts to attract FDI, tailoring its approach to the distinct strengths and characteristics of each region.

Japan's FDI policy is set out in the Program for Promotion of Foreign Direct Investment in Japan (2026), which includes measures to promote R&D, attract investment to strategic sectors, support partnerships between foreign and domestic companies, provide information on suitable land for industrial use, and expand English-language administrative services.

An important goal of this policy push is to encourage foreign companies not just to sell into Japan but to establish lasting operations there.

Italian electrochemical technology company De Nora Permelec is doing just that in the field of GX. From manufacturing and R&D facilities in Fujisawa, south of Tokyo, and western Okayama prefecture, De Nora develops advanced electrodes and electrolysis systems for water treatment, industrial chemicals and the emerging hydrogen economy. The company is also investing in technologies to recover and recycle lithium from used batteries, helping strengthen supply chains for the critical mineral.

“Our Japanese customers are more curious about new technologies than many companies in other countries,” says Makoto Okura, Representative Director of De Nora Permelec. “They're willing to work with us from the development stage and test new products. That kind of collaboration is a tremendous advantage for innovation.”

Okura says Japan’s willingness to engage with new technologies at an early stage gives the country an outsized role in De Nora’s global innovation pipeline.

“Many of our new technologies are developed first with Japanese customers,” he says. “Once they've been proven here, we can roll them out to the rest of the world.”

SUMMARY

·  Japan is attracting foreign companies with its combination of research excellence, engineering talent, and strong industrial ecosystems.

·  Companies such as Boehringer Ingelheim and Anjet Corporation are investing in Japan to accelerate innovation through close collaboration with local partners and universities.

·  Many global firms are using Japan not only as a market, but as a hub for developing, testing, and scaling new technologies worldwide