BUSINESS RELATIONSHIPS IN JAPAN
Moscow State University
BUSINESS RELATIONSHIPS IN JAPAN
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.
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
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.
— 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 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.
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
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
Boye D Mente
«Business guide to Japan. Opening doors… and closing deals!»,1998