Commandments for Doing Business in Japan

doing-business-in-japan

With commerce between Japan and its trading partners at the highest levels ever, there should be many foreign corporations that are now considering entry into the Japan­ese marketplace for the first time or at least expansion of their current efforts here.

by Jack Seward

For such companies a review of 20 of the most important “do’s” and “dont’s” for do­ing business with the Japanese may be useful. And even veterans in the field of trans­actions with Japan may benefit from reviewing them:

1. Try to arrange a formal introduction to someone in the company with which you want to do business. Introductions are always undertaken with great care and deliberation in Japan, one reason for this being that the party introducing one person (or company) to another is thereby accepting some responsibility (moral, if not legal) for the actions and words of both vis-a-vis each other. In one vital sense, the person making the introduction in Japan takes the place of a lawyer, which helps to explain why in Japan there are only about one-thirteenth as many lawyers per capita as, for instance, in the United States. Also, keep in mind that when you prevail upon a Japanese friend to make an introduction, you have incurred what is, in essence, a debt—and no small one at that. Your friend has dipped into his social capital to perform an important service for you, and sooner or later you will be obliged to repay that kindness.

2. Do not appeal to logic. In Japan, emotional considerations are more impor­tant. The Japanese regard Westerners as being dorai (from “dry” or without tears) and themselves as being uetto (wet). In cross-cultural clashes, the Japan­ese company explains that it did not respond by a certain date because the wife of the company president died, while the foreign company is more concerned with the contractual obligation to respond by that date. The Western executive complains that the arguments of the Japanese partner in the joint-venture are not logi­cal, while being logical may have been the farthest thing from the mind of the Japanese partner.

3. Don’t be obsessed with the notion that you must always see the top man in every organization with which you do business. Of course, if you already are well acquainted with the company president, by all means, deal through him, but you should be aware that many more recommendations and proposals leading to significant corporate decisions emanate from upper-middle management in Japan than in most western nations, where the chief executive officer of a corporation may be the most capable and experienced person in that organization. Even if, however, he does not deserve that accolade, he will often have the authority to make decisions that he may pass down, without their being seriously questioned, to lower echelons. This is not always so in Japan, where the CEO may be where he is by virtue of seniority and, oddly enough, the degree of his reliance on his subordinates for decisions — the very antithesis of the western ideal. It would be wise, if one is contemplating a lengthy and extensive relationship, to undertake a study aimed at ascertaining the centers — or levels —of power and decision in the target organization.

4. Bear constantly in mind the fact that it is the way business is done that is often considered as important as the results. Sometimes even more so. In Japan it is more of a compliment to say of an executive, “He worked by the rules and by the expectations of his co-workers” than, “He is the man who developed such-and-such a successful product for the company.”

5. Soften your sales approach. The art of persuasion, when carried to extremes, may tend to overwhelm and even distress the Japanese listener. The approach of one-minded determination to present to the Japanese customer every reason why your gadget is both better and cheaper than all competitive gadgets does not always set too well in Japan, even though it must be admitted that many Japanese companies in foreign markets have hardened their sales pitch in the interest of competitiveness. (The business methods of the Chicago or London branch of a Japanese company do not always reflect those of its parent in Tokyo.)  For the most part, one should leave praise of his own products or services up to intermediaries or to sales literature, unless asked directly. In short, foreign enthusiasm for our own creations is not infectious in Japan, where in the face of such pressure, the Japanese tend to dig in their heels and begin to back off.

6. Remember that humility and patience have their uses. The Japanese say proverbially that they expect to call on any company at least eight times before their visits begin to bear fruit. Then there is the parable about the young man who wanted a job with a certain company but whose applications kept being rejected. Finally, he stationed himself outside the gate of the company president’s house and waited each morning to silently bow to the president as he was getting into his limousine. At last, on the 63rd morning, the president called the young man to his side and asked who he was and what he wanted. (The young fellow got the job, for the president felt that such pa­tience should be rewarded.) As for humility, one does not need to be obsequious in the number and depth of his bows, but at the same time an attitude of stiff-necked reserve will be counter-productive.

7. Never cause a Japanese to lose face by putting him in a position where he must admit failure or show that he does not know some­thing that he should know professionally (such as correcting, even with the best of intentions, the English or German or Danish of a translator or interpreter). Even within their own corporations, Japanese are seldom discharged, which is, of course, the ultimate failure. Japanese companies are as reluctant to discharge an employee as a father is to disinherit his own child.

8. Personalize your business relationships. Get to know the people with whom you want to do business on a social basis. Entertain them often, and accept their invitations whenever possible. There is a serious purpose to the desire to get to know socially their future business partners on the part of the Japanese. They realize that further on in the relationship difficult situations and even crises will arise, and at such times it is the character of the individuals with whom they deal that will lead to smooth solutions—or bitter re­criminations and even collapse of the relationship. Ac­cordingly, it is important to the Japanese to know the facets of their partners’ personalities not readily re­vealed over the conference table. Meeting your Japanese business friends after working hours in the mizu-shobai (the nighttime world of bars, restaurants and night­clubs) can be just as important as conferences at the office. Often more so.

9. Always carry and use business cards that give your company affiliation and exact posi­tion. I remember one wealthy, influential European who handed out business cards that listed only his name and his telephone number when when he was first in Japan. When he realized that he was not getting the same warm reception that he was accustomed to in other countries, he asked me why; I explained the purposes of the meishi or business card to him. Until they knew his title and organization affiliation, the Japanese simply did not know how to deal with him… On the other hand, you should be careful about passing out your meishi too freely, since they are sometimes used by unscrupulous Japanese to lay claim to high-level for­eign connections that they do not really have.

10. When you request that a Japanese do something for you, you are, in effect, placing yourself completely in his hands. If, for example, you ask a Tokyo businessman to recommend to you a reliable maker of low-cost pitchforks, do not off­-handedly reject his recommendation, even though you are certain that those particular pitchforks are of miserable quality and exorbitant price.

11. If you meet a Japanese away from Japan, entertain him lavishly. Help him make contacts, get his tickets and re­servations, find addresses, and overcome language problems. When you meet him again in Japan, he will repay you many fold.

12. Familiarize yourself with the decision-making process in Japanese companies. Contrary to the west, the tendency in Japan is to reach consensus slowly—sometimes even tortuously—but then to act quickly once consensus is achieved. The ringi-sei is a uniquely Japanese pro­cess by which almost anyone in the company can originate a proposal and then begin circulating it among his co-workers and superiors for comment — favorable or unfavorable. Eventually this document—which is called a ringi-sho—will reach the uppermost level where the votes will be counted. The cost in time of this process may dishearten the western businessman, but the ringi-sei has two distinct advantages: it makes many employees feel they are vital parts of the decision­making process, and it obviates the need to later famili­arize those same persons with the details of the pro­posed undertaking.

At conferences, remember that the Japanese side will try to outnumber you. If three of you go to the meeting, they may bring ten. They do this for four reasons, and the validity of each varies somewhat with the situation: a) The larger number gives them con­fidence, b) it is a courtesy to you, since it shows the importance they attach to you and your business, c) the vertical compartmentalization of Japanese business means that they actually need more people to provide even preliminary answers than you would have needed, and d) they simply like the feeling of doing things as a group.

13. Give presents to your business acquaintances at the midsummer season of Chugen and at the year-end season of Seibo. Also souvenirs from distant cities like Stockholm, New York, Paris and Sydney are much appreciated. Liquor, golf balls, cigarette lighters and fountain pens are favored items. You should not, however, over­whelm your friend in Japan with gifts of extremely high cost, since he may feel compelled to reciprocate at the same level, even though he doesn’t have the means. Also bringing a gift for the man’s wife is usually not good form unless you have met her, with her husband, in your home country or are being invited to the couple’s home that night.

14. Acquaint yourself with Japanese social customs and usages. The Japanese tend to be lenient and forgiving of foreigners who are guilty of misinterpretations of their etiquette, but it is the wise man who arms himself with some knowledge of the fundamentals of good manners in Japan. Samples: The Japanese prefer the bow to the handshake. They prefer not to have their wives ac­company them when they go out in the evening. Gifts are not opened in the presence of the giver, but later in private. Unless they grew up or went to school together, Japanese seldom use first names.

The postscript to this advice is that these waters are muddied considerably by some Japanese who do not expect the foreign visitor to know their customs and as a consequence conduct themselves in accordance with Western etiquette, assuming that they are familiar with such. In fact, one may even see in Japan such aberrations as a Japanese trying to shake hands with a Westerner, who is trying to bow to the Japanese. Assuming that the foreigner is ignorant of his customs, a Japanese may conduct himself in accordance with, say, British etiquette, which, when observed by the foreigner, may lead him to assume that his Japanese friend’s version of British manners may constitute true Japanese etiquette and he then, in turn, will take this version of social mores back to his native land for further dissemination, thus creating a circle of misinfor­mation.

15. Avoid direct confrontations, whatever the cause. Surface harmony is all important in Japanese society and business. Strong direct demands for remedial action, pounding on desks, protests the tones of outrage, abrupt announcements of vital policy changes, subtle threats of retaliation — all these are alien to the Japanese spirit. The Japanese would rather be harmonious than right. If disappointment must be expressed, it should be done with the utmost delicacy or, better still, through a go-between.

16. Learn something about the art of communication in Japan. The first question will be whether or not to learn Japanese and if you decide in the affirmative, how much should be learned. Manifestly, the answers to these two questions will depend on certain variables: how much time you plan to spend in Japan, whether or not your counterparts handle English adequately, how much free time you have to devote to the acquisition of Japanese, what your own linguistic facility is, etc. If the visitor does not know good Japanese and if it seems that his business counterparts do not speak adequate English, then one or the other must provide a competent inter­preter. Since interpreting is a terribly difficult science, extreme care should be taken in the choice of an interpreter.

The visiting businessman can seek sound advice on the selection of this person from his embassy or from his own business consultant, if he has one. Next, he must prepare his interpreter by giving him a detailed review of the background of the business in question as well as a preview of the remarks he intends to make, if these are predictable. Then, when actually speaking at the business conference, he should pause after every two or three sentences to allow the inter­preter to do his job. He should speak slowly and distinctly. He should avoid colloquial, idiomatic speech. Remember that the Japanese express themselves in language that is vague and ambiguous. If you ask a Japanese how far it is from the Ginza to his home and even if he had measured the distance only the day before and knows it is precisely 5.3 miles, he will say “a few miles,” because to be precise is a form of impertinence. It smacks too openly of an unpalatable display of superior knowledge.

There is even a long-standing tradition of silence in Japan, and one proverb holds that, “Literary proficiency betrays an insincere heart.” If, therefore, the Japanese across the conference table from you is silent for long periods, do not be distressed. This silence should not be taken for inattentiveness or disinterest or boredom. Don’t assume that the word “Hai” is limited in meaning to simply “Yes.” Many Western businessmen learn this to their sorrow—later. Hai can also convey such meanings as “I’m listening” or “I understand” or “Go ahead, I’m following what you say.”

Remember also that although a Japanese business­man’s answer to your request, proposal or demand may actually begin with Hai, followed by a sentence or two of apparent general agreement, you would do well to listen carefully to the rest of what he has to say. In feudal times any inferior who began his answer to a superior with “No” or “I won’t” or “It’s impossible” stood in active danger of being cut in twain. Accord­ingly, it became customary to ease one’s way into anything short of absolute agreement or instant com­pliance with such fair words as “Yes, I would be delighted to do as you instruct,” etc. until at last approaching that one word “but” most circumspectly and diffidently. Even today this tendency is far from extinct.

Keep in mind that the Japanese have a tradition of polite evasion. This evasion is not necessarily of the cunning, deceitful variety but rather a simple dislike of responding to direct approaches.

Don’t try to do business by telephone or letter, and especially not in the early stages of a business rela­tionship.

17. Be aware that the Japanese avoid in­dependent or individual action and that their first compulsion in decision making is to look for precedents. Whereas we admire a man who succeeds on his own without undue reliance on the help or advice of others, the Japanese are not similarly impressed. Long before we coined the phrase, they were already the perfect “Organization Men.” They don’t like to stand out for any reason, even if it be one of striking superiority. They strive for an organiza­tional ideal of anonymous consensus. The hoary proverb Mazu wa sodan no ue expands to mean, “Don’t do anything until you have first consulted others.”

18. Avoid making frequent or pointed re­ferences to contractual obligations be­tween you. The Japanese do not care much for the fine print in a contract and never quote it. The important thing about such a contract is not so much what it says specifically, but rather who signed it and the fact that its existence signifies a bond between the two corporations. This is not to say, however, that the contract is meaningless, for the Japanese well understand its legal force in interna­tional commerce. They look upon it as a somewhat distasteful but nonetheless necessary adjunct to dealings with foreign corporations but would prefer to avoid dwelling on it.

19. Be aware that when discussing a possi­ble business transaction with a Japanese, he is more receptive to mention of potential market share than profits. “This deal will make your company millions” carries less appeal than “This will give your company a healthy slice of the market.” Do not dwell on the subject of money, especially in specific amounts. Leave bargaining over prices to go-betweens or the lower echelons. Never remind your vis-a-vis of how much money you helped him make. Don’t talk about how much it cost you both to “do the town” the previous night, no matter who paid the bill. Leave the handling of cash to others. If you have to turn cash over to a businessman, be sure to wrap it neatly in white paper or enclose it in an envelope. Keep in mind that in Japan time is not money.

If a Japanese businessman gives you a specific de­livery or payment date of his own accord, it is much more likely to be reliable than the one you squeeze out of him. Westerners tend to cajole and plead until they have won a victory. It is only later that they learn they have usually accomplished nothing, other than turning the Japanese against them. If your Japanese vis-a-vis quotes you a price that you feel is excessive, don’t reject it out of hand and especially not with overtones of outraged protest. No matter how un­reasonable the price may be, you will insult him if you do not at least pretend to give it serious consideration. After that you can say that you understand his position, etc., and, if only it were possible, you would like to meet his price. Unfortunately, however, a new develop­ment in the home market precludes your paying more than half of the price he had just mentioned. Then add suitable words of regret. This applies as well to other business proposals in general.

20. When the time comes, take extreme care in choosing the right person to re­present you in Japan. If you are going to station a full-time representative in Japan or if you are going to have someone already a member of your staff be the conduit through which all your Japanese business flows, think long and hard about whom you appoint. Your first decision will be whether to appoint a Japanese or one of your fellow country­men to this position. A Japanese will know his own country better than most foreigners you could send there and, since he already lives there, he will be less expensive to maintain than a foreigner, to whom you will normally have to give allowances for rent, utilities, transportation, cost of living differentials, tuition for children and perhaps even maids, drivers and home leave fares.

On the other hand, one of your own countrymen would be more likely to understand your business philosophy and methodology better and be able to gain home office support for important projects. Usually you will have to choose between sending one of your own employees to school to learn the Japanese language and culture or hiring an outside expert and training him in the essentials of your business. The former course will take at least two or three years of full-time study; the latter should take only three to six months (depend­ing, of course, on the nature of your business).

If you will keep these “do’s” and “don’ts” in mind—and deal courteously with your Japanese business acquaintances—you should find that your proposed transactions have a much better chance of success.

Image: gullevek/Flickr, used under CC BY-NC-ND 2.0

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