The Yen Advantage

How Foreign Investors and Businesses Are Capitalizing on Currency Discounts, Surging Tourism, and Market Reforms in Asia’s Most Resilient Economy

As of early 2025, the Japanese yen remains at historically weak levels, hovering around 150 to 155 yen per U.S. dollar—a stark contrast to levels seen in the previous decade. While this currency depreciation has raised concerns domestically due to import inflation, it is simultaneously creating unprecedented opportunities for foreign investors, companies, and entrepreneurs looking to enter or expand in Japan.

A Discounted Entry Into a Stable Market

Japan is the third-largest economy in the world, known for its political stability, advanced infrastructure, and strong rule of law. With the yen significantly weaker than its historical average, foreign investors are effectively gaining a “discount” on Japanese assets—from real estate and equities to entire companies.

For example, foreign real estate buyers are purchasing properties in Tokyo, Osaka, and regional cities at prices that are 15–25% cheaper in USD terms compared to just a few years ago.
In the stock market, foreign investors are increasing exposure to Japanese equities, especially as the Nikkei 225 index reached an all-time high in February 2025, surpassing its 1989 bubble-era peak. Despite the rally, foreign investors see value because corporate governance reforms and share buybacks are increasing shareholder returns.

Surge in Foreign Business Activity

The Japan External Trade Organization (JETRO) reported that the number of foreign companies establishing operations in Japan surged in 2023 and 2024, with further growth expected in 2025. Reasons include:

Lower costs for market entry: Office space, local salaries (in USD terms), and operating expenses are significantly lower now for foreign firms.
Strong domestic demand: Japan remains a massive consumer market, with high purchasing power despite currency weakness.
Talent access: Japan has a large pool of skilled professionals, particularly in tech, manufacturing, design, and R&D.

Tourism and Retail Booms Fuel Business Confidence

International tourism has also roared back, with record-breaking visitor numbers in late 2024 and early 2025, driven largely by the weak yen making Japan one of the most affordable developed-country destinations.

According to the Japan National Tourism Organization (JNTO), visitor arrivals in January 2025 surpassed 3 million—a new monthly record.
Luxury goods, electronics, and experiences are significantly cheaper for visitors from the U.S., Europe, and parts of Asia, fueling spending in retail, hospitality, and transport sectors.

These trends create knock-on effects: businesses in hospitality, F&B, logistics, and retail are expanding, hiring, and seeking partnerships—opening more doors for foreign entrepreneurs, investors, and SMEs to enter the Japanese market.

Strategic Manufacturing Relocation and M&A Deals

Manufacturing firms, especially in semiconductors, electric vehicles, and precision engineering, are increasingly looking to Japan to diversify supply chains. The weak yen helps reduce costs, making Japan competitive again as a base for high-tech and specialized production.

Additionally, the M&A space is heating up:

In 2023 and 2024, cross-border M&A into Japan hit its highest levels in over a decade, according to data from Refinitiv.
Foreign buyers, especially from the U.S. and Southeast Asia, are acquiring undervalued Japanese companies, often family-owned SMEs without clear succession plans.

Japan’s Push to Welcome Foreign Capital

The Japanese government has been actively supporting this trend. Key initiatives include:

Digital transformation policies to make doing business easier.
Startup visa programs for entrepreneurs.
Reforms in corporate governance and a focus on capital efficiency.
The Tokyo Stock Exchange’s pressure on companies to improve return on equity (ROE) and reduce cross-shareholdings.

These structural reforms, combined with a weak yen, create a “perfect storm” of opportunity for foreign entities looking at Japan—not just for short-term gains but also long-term presence.

Conclusion: A Window That Won’t Stay Open Forever

While the weak yen creates a favorable environment now, currency cycles can shift. With discussions of interest rate normalization by the Bank of Japan and global geopolitical changes, the window of maximum opportunity may be limited.

Still, for businesses, developers, and investors, 2025 is shaping up to be one of the most strategic times in recent memory to enter the Japanese market—not in spite of the weak yen, but because of it.