Business relationships in Japan are characterized by a well-structured hierarchy and a strong emphasis on nurturing personal contacts. Generally they are built up over long periods of time or are based on common roots such as birthplace school or college. Also an unusually strong emphasis is placed on social activities to strengthen ties. It is not surprising therefore that those looking in from the outside may see the Japanese business world as comparatively hard to break into. In fact there are many different kinds of business relationships but most share two features - they have been built up slowly and carefully and much time is spent in keeping them up to date.
Business relationships in Japan are part of an ever-broadening circle that starts within the company (uchi - inside or"us") and moves towards the outside (soto) to include related companies industry or business organizations and the like.
Most Japanese companies have a series of very close relationships with a number of other companies that provide them with support and a multitude of services. It has been traditional practice for a company to hold shares in these "related" companies a practice which has given rise to a high proportion of corporate cross-share holdings in Japan. This has been a show of faith on the part of one company towards another and also has been useful in providing companies with a core of stable and friendly shareholders.
When dealing with a Japanese company it is important to be aware of the existence and nature of some of these close relationships in particular those with banks and trading companies. Understanding these can help to define the nature of the company and the way it does business as well as its positioning in the Japanese business world. It should also be understood that there is a constant flow of information between Japanese enterprises and their banks and trading companies. Unless the need for confidentiality is made very clear these may soon be aware of any negotiations in which the company is involved.
Larger corporate groupings are becoming more familiar to non-Japanese business circles. These groupings are known as keiretsu and some have their roots in the large pre-World War II conglomerates. Accusations of keiretsu favouritism overriding more attractive outside offers sometimes are levelled at Japanese companies. When asked about this practice by a foreign businessman the president of a large Japanese electronics company replied: "It's like going to the tailor your father went to. He may be more expensive than the competition and perhaps even not the best but he has served your family well for many years and you feel duty bound to remain a faithful customer." There is a tendency in Japanese business to be guided by the familiar and human considerations and thus it is important for anyone wishing to do business in Japan to go a major part of the way in establishing a communications network and a real presence.
Business Negotiations & Meeting Etiquette
Face to face contact is essential in conducting business. It is more effective to initiate contact through a personal visit (set up by an introduction through an intermediary) than through correspondence. Initial contacts are usually formal meetings between top executives; more detailed negotiations may be carried out later by those who will be directly involved. During the first meeting you get acquainted and communicate your broad interests; you size each other up and make decisions on whether ongoing discussions are worthwhile. At this point you should not spell out details or expect to do any negotiating.
Exchange business cards (meishi) at the beginning of the meeting. The traditional greeting is the bow. Many Japanese businessmen who deal with foreign companies also use the handshake. If you bow then you should bow as low and as long as the other person to signify your humility. First names are not usually used in a business context. In Japan the family name is given last as in English. You should address Yoshi Takeda as "Mr. Takeda" or "Takeda-san." Expect to go through an interpreter unless you learn otherwise. If meeting high-ranking government officials an interpreter is always used even if they can speak English fluently because customarily they refrain from speaking foreign languages in public. Other businessmen may speak some English but may not be adequate for undertaking business negotiations.
Conservative dress is common for both men and women in public. Most Japanese professionals wear Western-style dress (European more than American) although during the hot summer months men often do not wear suit jackets.
Concern about how others perceive you pervades business and social communication in Japan. Since saving and losing face are so important you should avoid confrontation or embarrassing situations. A distributor that cannot follow up on a promise made to a customer loses face and may suffer damages to its reputation. Remember if you are supplying distributors in Japan to deliver on time (especially if they are samples) or else face a long chain of lost faces and apologies. An error or delayed shipment even if it is not your fault may damage your company's reputation with the Japanese company you are dealing with as well as all the companies and customers that Japanese company does business with. Following through on promises and agreements both oral and written is of utmost importance and when you cannot do this you will have to swallow your pride and apologize profusely until you are forgiven. This is all part of common business practice and you may see business people (including top executives) on their knees apologizing. When in Japan be ready to include this as a part (hopefully not regular part) of your own business practice.
Nonverbal communications - gestures nuances inferences - are very important in signaling intentions. "No" is seldom said directly and rejection is always stated indirectly. Remember that the Japanese hai means "Yes I understand you" rather than "Yes I agree with you." The Japanese will sit in silence for some time - it is a way to reflect on what has been said. Early business and social contacts are characterized by politeness and formality.
The Japanese like to launch new products or take other important initiatives on "lucky days." The luckiest day called the «taian» occurs about every six days. Your Japanese counterpart will probably want to delay a major announcement until the next «taian». Japanese calendars usually indicate these days.
The presentation of a new product is traditionally followed by a reception with the product on display; an omiyage or gift is given to each attendee. This adds to the overall cost of the event.
Japan epitomizes the rule "Make a friend then make a sale." When selling to or negotiating with the Japanese do not rush things. the Japanese prefer a ritual of getting to know you deciding whether they want to do business with you at all instead of putting proposals on the table and seeing whether agreement is possible within a broad framework.
The Japanese prefer to close with a broad agreement and mutual understanding preceded by thorough discussion of each side's expectations and goals. If they decide they want to do business they will negotiate the details with you later.
A Japanese negotiator cannot give a prompt answer during an initial discussion. No commitment can be made until the group or groups he or she represents reach a consensus. Do not expect an immediate answer. Negotiations may take an extended period.
Japanese executives emphasize good faith over legal contractual safeguards. They are not in the habit of negotiating detailed contracts that cover all contingencies. However Japanese managers who are accustomed to Western business dealings are familiar with more structured contracts. In case of disputes the Japanese prefer resolving issues out of court on basis of the quality of the business relationship.
A Japanese partner or customer will usually prefer to develop a business relationship in stages with a limited initial agreement that if successful is gradually extended into a broader more binding agreement. So once you make a commitment expect it to be for a long time. If you break it your reputation will be affected and everyone will know. It may be difficult to find another Japanese partner after this happens.
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Boye D Mente «Business guide to Japan. Opening doors... and closing deals!» 1998