Japan’s Innovation Push: Mexico Is Welcome to Join

Talking about innovation is equal to talking about social challenges. The expansion of innovation is a common goal that the world shares, directly related to achieving the Sustainable Development Goals (SDGs). For Japan, innovation is equal to evolution: to create benefits for Japanese society that include solving social challenges, such as those arising from the aging population, and the decrease in the economically active population. 

To face these challenges, Japan is concentrating its efforts on promoting the acceleration of the startup ecosystem and on promoting open innovation, which is seen as a national and international collaboration, sharing technologies and resources to solve common problems. Innovation includes the vision of Japanese Society 5.0, which is oriented toward the development of human beings to achieve balance between economic growth and the use of technology in daily life, mainly facing and solving environmental problems, labor shortages, improving productivity, and the development of a smart and resilient Japan.  

The Startup Development Five-year Plan, announced by the Japanese government in November 2022, set the basis to reach ¥10 trillion (US$67 billion) in total investment in startups by March 2028 and the creation of 100 unicorn companies and 100,000 startups.

There are a number of actions that Japan is implementing to reach these goals:

• Building human resources and networks for startup creation. For instance, university programs focus on the creation and development of startups, often including participation of overseas investors, such as accelerators and venture capital — entities that promote research on innovation. 

• Enhancing funding provision for startups and diversifying exit strategies, such as helping national venture capital, and improving the business ecosystem for overseas investors. 

• Promoting open innovation. For example, by tax policies applying to companies that encourage the growth of startups.  

The Japanese startup ecosystem is continuously growing and evolving. According to the Global Startup Innovation Ecosystem Index of 2025, Japan is ranked in the 18th place for the best country for innovation. The United States is in first place, the United Kingdom is in second place, and Israel is  third. Gradually, but with greater expediency more recently, Japan has been scaling higher in the ranking. In 2021, Japan was  22nd, rising to 18th in 2025. But it is still a long road to reach the ranking of top countries. 

Looking at the cities that have the best innovation ecosystem, Tokyo is in 13th place, with San Francisco, New York City, and London holding first, second, and third respectively. 

Within Japan, Tokyo is the city with the best ecosystem. Its top industry is marketing and sales. The Tokyo government is working hard to promote the development of startups and innovation. For instance, SusHi Tech is a top fair that promotes the participation of startups from all over the world. In the 2024 edition, 82 countries participated with a total of 434 startup booths, of which 60% represented foreign startups. This fair offers a huge number of opportunities for startups to attract capital in one place, with 635 venture capital investors and other financial institutions participating. From April 13 to Oct. 13, 2025, Expo Osaka is taking place, with the participation of 150 countries. Its objective is to “design the future society for our lives,” and represents innovation from around the world.

What are we doing in Mexico? JETRO Mexico has two main programs that promote innovation alliances. The first is Invest Japan, which focuses on the attraction of foreign investment in Japan, in priority sectors such as digital technology like AI, automatization of manufacturing industry processes, life sciences, including biomedicine, and sustainability and energy, such as greentech. The second is J-BRIDGE, a program first created for Japanese companies seeking international partners to develop mutual innovation projects. 

Japan ranks highly as an investment destination, according to the 2025 Kearney FDI Confidence Index. Japan is ranked fourth in the latest index, gaining in trust compared to 2024, when it was at No. 7. Japan is seen as a gateway to enter the Asia-Pacific markets, holding  21 trade agreements with 24 countries/regions to date. As previously mentioned, Japan is working to create a better innovation environment, including  technology cluster cities integrated by the collaboration of companies, universities, research institutes, and government to promote open innovation.  

If you want to invest in Japan but you do not know where to start, you can first select a region according to your business needs. To that end, Japan is divided into six main regions: Hokkaido/Tohoku, Kanto, Chubu, Kansai, Chugoku/Shikoku, and Kyushu/Okinawa. 

For instance, the Hokkaido and Tohoku regions have industrial clusters in digital technology and AI, biotechnology and life sciences, mobility and transportation, semiconductors, robotics, and more. If your company has developed an innovation in these sectors, you can check the relative prefecture or city, which can provide some incentives for establishing your operations. There are also incentives for international startups. 

Under the Invest Japan program, JETRO can support foreign companies with free use of our Invest Japan Business Support Center located in Tokio, Yokohama, Nagoya, Osaka, Kobe, and Fukuoka, as a location to begin business meetings, and for consultations regarding laws and regulations on setting up a business in Japan. If you are interested in applying for the program, please contact us. 

The J-BRIDGE program connects Japanese companies with international startups for the development of new business. Startups with technology and services in mobility, healthtech, life sciences, agritech, smart cities, retail tech, robotics, renewable energy, smart infrastructure, and others, are welcome. Companies can create business alliances that involve technical cooperation or develop  capital alliances like joint ventures. 

In short, Mexican companies and innovative startups focused on solving social challenges can find many opportunities to establish their operations in Japan. For more information, please talk to JETRO first.