I will be using third party accounts (very generalised, non-identifiable kind) when I can, but this post is ultimately an anecdotal post. Where you stay and when you stay and a whole host of different factors will affect your experience in Japan, so please don't assume that my/our experiences will happen for everyone. So if you have a different experience, please chime in in the comments or send me an email if you have a lot to say and want to make it a post.
On being an Asian Foreigner in Japan
So if you rely mainly on internet sources to find out how foreigners are treated in Japan (keywords like "being foreign in Japan" and all that), you may assume that all foreigners stand out like crazy and get treated like pop stars, with people taking photos and what not.
Well, most of the people writing those are caucasian, so all that doesn't really apply to us.
And by us, I mean "Asians who don't stand out". I know Asia is a huge multicultural area, but to make things easier, I'll be referring to people with the same skin colour as Japanese for this post (Singaporeans, Korean, Chinese, Vietnamese, etc). Not because I don't think other kinds of Asians aren't Asian, but because I don't have the experience to speak on their behalf. (So chime in if you have something to share)
And from what I've found, there are only two blog posts on this topic (Gaijinpot and Tofugu) and both are by Singaporeans. I even know the author of one! Both are good pieces so take a look! Google "Asian Foreigner in Japan" or something along those lines.
Anyway so far, the differences between Asian and non-Asian foreigners can be summed up in what one of my teachers at TUFS said:
If you don't look Japanese, you'll be forgiven more but it's harder to fit in. If you look Japanese, it's easier to fit in, but you're expected to know 'The Rules'.Incidentally, towards the end of the first year (when we were starting to understand the unspoken rules of society), we started 'taking turns' to get the best of both worlds.
Want to be a bit more excited and louder in the street? Well, I was normally with a South African friend (we were a group of three) so we got a 'pass' (or so we imagined - at least we didn't really get dirty looks). Want questions to go more smoothly? We sent my friend, who looks Japanese and is fluent to speak with whoever it was.
But generally, I think this rule holds true (at least for the part for Asians).
In terms of 'fitting in', it normally takes an extended conversation/my name for strangers to realise that I'm not Japanese. It's a good and bad thing because it's easier to ask questions without people panicking about you not possibly understanding Japanese, but then the sales agent (for Internet, newspapers, etc) tend to be a bit pushier until they find out I'm foreign.
And for what it's worth, I have noticed a difference in how I'm treated when I'm out with family vs with Japanese friends.
With my family, I'm normally speaking in English to them, so even if I make a reservation in Japanese, the English menus (if there are any) automatically come out. Which my mom is always grateful for. I have not noticed any difference in the level of service, by the way.
When I'm with my friends, I'm speaking Japanese to them and I never get handed an English menu or asked if I can understand Japanese.
And when I'm alone, I normally get handed the Japanese menu too, and it's basically like my friends.
And for the "must follow rules" part... I don't break too many rules nowadays, but I think it's true.
About two or three weeks ago, I was at Daiso when this old man bumped into me (I am very sure that I didn't bump into him). So to my surprise, he started scolding me and told me that I needed to apologise to him. And uh, because I didn't think I had anything to apologise for (because I didn't bump into him!) I pretended that I didn't speak Japanese and he just paused and walked away rather huffily.
The only other incident I recall is when I was scolded on the train for talking in English (in English too, by this Japanese lady), but I was at fault for that so I apologised and shut up.
So yeah, on the surface, it does seem like Asians are excepted to follow the rules (either because they're mistaken as Japanese or otherwise), though there seems to be more latitude if you are obviously foreign in a tourist area. Except on trains.
So is blending in good, or is standing out better?
I think it depends on the person. I have plenty of friends who complain that even after 5 years in Japan, they're still asked questions like "do you speak Japanese" when they meet someone new (I do get asked this too, but at a much lesser frequency. Mostly only if my name is given right away).
On the other hand, some of my friends think we blend in too well. I've heard from people in Tokyo that during the Japanese-Foreign student parties, the Asians tend to be ignored because... not exotic.
And if even if your first language is English, it's pretty hard to get students if your name isn't obviously foreign. I have a senior who had his profile (with picture) up on a teacher-student matching site with no luck for one or two years. But the minute he picked up a new, English, name and put it in the site, he got a call. Oddly enough, girls tend to be exempted from this phenomenon.
Oh yes, and I haven't mentioned this yet, but I haven't been checked before. To back up and explain a little, in Japan, it's legal for the police to ask you to show your gaijin card (or whatever it's called) at any time. In this LinkedIn group I'm in, quite a few people have mentioned that they get checked once a week (or month). On the other hand, I have never gotten checked since I came.
And as for me, I haven't really felt 'ignored' by the Japanese students in favour of the non-Asian looking students. But then again, I tend to not go to such events, so I assume that I don't really meet the "only want gaijin friends" Japanese.
In short, I don't really have an opinion on whether blending in is better or not. I'm pretty happy where I am, and with the friends I have. But, I have heard from others, and according to a mom who's living in Japan, blending in seems to help her kids become accepted in the community, which is something that is important to her. So it really depends on who you are, who you're with and what you want.