Japan's economy has been growing for three decades, although not at the high growth rates experienced in emerging economies such as China and India. Investors pursuing Japan company formation enter a mature economy driven by the manufacturing and services sectors. However, the Japanese economy is negatively impacted by deflation, which restricts growth by dampening consumer spending.

Despite its slugish economic growth, Japan is home to 291 of the companies listed on the Forbes Global 2000, a ranking of 2,000 inernational companies based on sales, profits, assets and market value.

Japan company formation is challenging, due to complex incorporation procedures. Conversely, Japan is positively ranked as the world's 12th easiest place to do business in the World Bank's Doing Business 2008 Survey. In addition, the Heritage Foundation's 2008 Index of Economic Freedom ranks Japan as the world's 17th-freest economy, a factor which encourages Japan company formation.

Furthermore, Japan is positively ranked the world's 18th least corrupt country in the 2008 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.

However, Japan’s economy is vulnerable to soaring energy costs, including crude oil. Japan must import more than 80% of its energy needs. High energy costs inflate consumer prices.