Japan or Korea? 7 Critical Factors for EU SMEs Expanding into Asia

Jan de Vries · 2026-10-27

So you're a European SME thinking about breaking into Asia. Japan and the Republic of Korea both look promising, right? They're tech-savvy, wealthy, and eager for innovation. But which one is the right fit for your business? That's the million-dollar question. With support from the EU-funded EU Business Hub – Japan and the Republic of Korea, many SMEs are exploring both markets through targeted business missions. Here are seven factors to weigh before you take the plunge. ### 1. Investment Priorities Aren't the Same Japan is pouring money into its Green Transformation (GX) strategy. We're talking about over ¥150 trillion (around $1 trillion) in public and private investment over ten years starting from fiscal 2023. That's a massive push for renewable energy, hydrogen, and industrial decarbonisation. If you're in clean tech, Japan could be your goldmine. Korea, on the other hand, is a powerhouse in electronics, semiconductors, automotive, and medical technology. If you supply specialised components or advanced technologies, you'll find plenty of opportunities here. **For SMEs:** Figure out where your solution fits into existing supply chains. Don't just chase the biggest market—find the one that needs what you've got. ### 2. Ageing Populations Drive Healthcare Demand Both countries have ageing populations, but the dynamics differ. In Japan, about 29% of the population is 65 or older. That's a huge market for elderly care, rehabilitation, assistive technologies, and healthcare efficiency solutions. Korea became a super-aged society in 2024, with over 20% of its population aged 65+. Its advanced digital infrastructure opens doors in diagnostics, AI-enabled medical devices, and digital health. **For SMEs:** Both markets offer healthcare opportunities, but the customers and applications may vary. Do your homework to see where your product fits best. ### 3. Local Partnerships Matter More Than You Think In Japan, partnerships with manufacturers, distributors, and engineering companies can help you reach customers and integrate your tech into established systems. It's all about building trust and long-term relationships. In Korea, medical device distributors, manufacturers, research institutions, and tech companies are your go-to entry points. The right partner can make or break your market entry. **For SMEs:** Choose partners with access to your target customers and the technical chops to support your product. Don't rush this—it's worth the effort. ### 4. Business Practices Require Preparation Both markets value reliability, product quality, and established relationships. But decision-making processes can vary widely by company and sector. What works in one might not work in the other. European SMEs should prepare technical documentation, evidence of successful applications, and a clear commercial proposition. Local-language support can be a game-changer for negotiations and technical discussions. **For SMEs:** Focus on demonstrating measurable value. Generic market-entry presentations won't cut it. Show them what you can do, not just what you say. ### 5. Regulatory Requirements Differ—Big Time Medical technologies face distinct regulatory frameworks. In Japan, the Pharmaceuticals and Medical Devices Agency (PMDA) reviews medical products. In Korea, the Ministry of Food and Drug Safety (MFDS) regulates medical devices. Clean-energy technologies may also require local certification or compliance with technical standards. Don't assume European certification guarantees market access—it doesn't. **For SMEs:** Assess regulatory requirements early. It's better to know the hurdles before you start running. ### 6. Test Before You Invest You don't need to set up a local office immediately. Distributors, technology partners, and system integrators can provide access to customers and market knowledge without breaking the bank. Trade exhibitions and B2B meetings are perfect for assessing demand, understanding technical requirements, and identifying potential partners before committing substantial resources. **For SMEs:** Validate your commercial proposition before making long-term investments. Dip your toes in the water first. ### 7. Direct Engagement Makes the Difference Market research can point you to promising sectors, but only direct discussions with potential customers reveal whether your technology truly meets their needs. That's where initiatives like the EU Business Hub come in—they facilitate these critical connections. **For SMEs:** Get out there and talk to people. Real conversations beat desk research every time. ### The Bottom Line Choosing between Japan and Korea isn't about picking the "better" market—it's about finding the best fit for your business. Consider your industry, your resources, and your long-term goals. And remember, you don't have to do it alone. With the right support and preparation, either market could be your gateway to Asia.