Perhaps the most universally known aspect of the Japanese business world is the real or supposed difficulty of entering it. An integral part of the government’s strategy to re-build the Japanese economy after World War II was the imposition of import tariffs and other inward trading barriers, so that while Japanese products captured markets around the world, the home market remained the province of Japanese manufacturers alone. Largely in response to external pressure, this policy and the barriers it imposed have been to varying degrees dismantled, and many companies from around the world enjoy sales success in Japan. Yet whilst tariffs and other governmental barriers are easing and usually aren’t an obstructing factor, obstacles that can arise may be at a more grassroots level, connected with some aspect of normal business activity or daily life in Japan. Thus an understanding of these – accepted and everyday aspects of business and daily life – can be very useful.
1. The relationship
Integral to any arrangement of a business nature in Japan is a relationship – the Japanese are very fond of doing business within the framework of a stable, trusting relationship. Before committing themselves financially, they like to get to know the people they’re considering doing business with, and the business organisation behind those people.
Presuming business dealings get off to a good start and progress smoothly, the Japanese partner will want it to be a long and of course fruitful relationship. As starting up a new business relationship is, for them, a big step, especially with a foreign company, they’ll want to continue reaping rewards from the initial efforts many years into the future, growing together. As they’ll be keen to get as much benefit out of the relationship as possible, on an ongoing basis, they’ll seek out other products or ways of doing business the supplier can provide.
A Japanese company would be much more attracted to a prospective supplier with a range of products available, or the potential to easily expand its existing range, than to a supplier with just one or a limited number of products, and with little prospect of building on those. Theirs is a long-term approach, with a constant thought to growing the business. As the relationship grows and strengthens, the Japanese customer will become more confident, increasing the chance of increased orders. Price will always be a factor, but dealing with a supplier they know and have found they can trust is of paramount importance.
For the Japanese, the process of getting to know each other, in the early stages, is best achieved by socialising, including eating and drinking, and going to places of entertainment such as karaoke bars. At this stage and whenever opportunities arise, socialising together will be an important part of cementing and maintaining the business relationship. Entertaining of business associates is usually not done in the home, and a wife rarely accompanies her husband on these occasions. However invitations to a Japanese business man’s home do occur, and at least the first such instance for any non-Japanese will undoubtedly be a memorable occasion. These topics are covered in more detail below.
For the prospective exporter to Japan, this process of relationship-building will be aided by an awareness and understanding of the kind of life the Japanese business man has lived up to this point. To illuminate this issue, the demographics and stages of life in Japan are outlined in subsequent pages. However it can be stated with some accuracy that a man’s life’s path is set at a very young age, from when he commences at a kindergarten, then progresses through the three stages of school and into university. His primary purpose in selecting the university would have been the importance of attending that particular university in relation to finding a job upon graduation, as the actual university attended is an important factor considered by companies in their hiring process.
Once he joined the company, he commenced a long and gradual process of incremental elevation, which might have included one or more transfers to other cities, or overseas if he had the language ability. In every likelihood he would have no interest in attempting to speed up this elevation process by swapping to another company, as he would know his turn to reach the higher echelons will eventually come around.
Furthermore, among Western and Asian nations Japan has the lowest level of acceptance of entrepreneurs, which makes the practice of university graduates seeking jobs in big companies, rather than striking out on their own or seeking work in small but dynamic start-ups, all the more entrenched. This has also been a contributing factor in the stagnation of the Japanese economy for over two decades, although in early 2014 there are faint signs of greater acceptance of the entrepreneurial spirit, with some universities incubating their own start-ups, and some of the top graduates joining small dynamic companies.
An understanding of these background factors and the pressures to conform young Japanese men face can provide a very useful insight for business people from other countries wanting to establish tie-ups in Japan, and be a valuable aid in the essential process of building relationships.
2. The personal approach
As a result of this emphasis on building relationships, the Japanese value personal interaction, always wanting to have face-to-face contact with prospective new business associates. This is especially the case when an exporter is trying to make contact with a company for the first time, and usually the best way of doing this is via a personal and formal introduction from a third party – by someone who already knows the target company or executive, or by someone whose position will carry some weight when they make this first contact on the exporter’s behalf.
The person making the initial approach, the introducer, known as shokaisha, will seek to do so to a member of the target company at a similar management level as the member of the exporting company. If the prospective exporter is an individual, the approach will be made to an appropriately senior person. If the shokaisha is owed a favour by the person approached, there will be a higher likelihood of a positive response.
It should be noted though, if a business relationship develops out of this initial introduction, the introducer will continue to bear some responsibility to the person approached, being the person who got things started in the first place. This in turn means that the exporter, as the person introduced, owes the introducer some responsibility, or a kind of duty of care, because if the exporter fails to fulfil its obligations the introducer will feel personally responsible and that he should step in to help sort out any problem, perhaps as a kind of mediator. This relates back to the subject of giri referred to earlier.
Once an opening with the company has been made by the shokaisha, if the person initially approached is not the appropriate person for the exporter to deal with, someone who is and whose level in the company structure equates with that of the exporter should soon be sought out. Due to the consensus way of decision-making, information about the exporter’s proposal will in due course filter up and down the company’s hierarchy, as part of the internal deliberation process.
3. Reliability, dependability and trustworthiness
These are essential qualities. Expressions such as ‘she’ll be right’, and ‘near enough is good enough’ have no place in Japanese business practices. The Japanese won’t establish relationships with a foreigner unless and until they’re sure they won’t be let down.
Unwavering quality, continuing availability of the product and certainty of supply are points about which they’ll want to assure themselves before agreeing to any purchase. Their usual thinking is that it’s better to stick with local products and not take on anything imported, if a chance exists for availability, quality, or any other problems to arise, and the resultant adverse effects that would flow on to their customers.
The relationships a business has with its customers, whether they be at the wholesale or retail level, are considered the most valuable commodity of the business, and usually the hardest to acquire. No business wants to be made to look bad in its customers’ eyes, so before establishing a relationship they want to be sure this won’t happen. After business begins, any hint of a problem will bring a swift, and in some cases final, reaction from a Japanese business partner.
In Japan agreements are often only verbal, with anything in writing considered a formality. Insistence on a contract being in writing may even be found to be offensive, as it implies the other party won’t act in an honest and honourable manner. Where documentation is required as part of normal business activities, it should always be neat, tidy, and completely accurate, its design and presentation giving an air of quality and professionalism, acting proudly as the face of the business behind it.
The notion of amae, involving feelings for a mother, is also relevant in a business context, as it indicates a kind of mutual dependence each person in a business arrangement has on the other, regarding goodwill and trust.
20. Gift-giving in Japan
A business person who spends some time in Japan, and who also is invited to a private home, will need to be familiar with gift-giving practices, as this is an item of significant importance in Japanese culture, in both a personal and business context. As noted earlier, there are two main times of the year when gifts are exchanged, usually given by people who have some kind of obligation to the recipient. These times are ochuugen, in mid-summer, and oseibo, at the end of December.
Department stores and other shops are full of specially packaged goods for selection as gifts at these times, which are wrapped and often delivered by the store. Although the nature of any gift given is of importance, reflecting as it will the relationship between giver and recipient, the act of giving and the thought behind it is of equal importance.
To get an idea of what might be appropriate as a gift in a business environment, it’s useful to observe what others do in a similar situation, and ideas for giving can be gained from any gifts previously received. For men, imported scotch or cognac is appreciated; children of associates can be given electronic toys, bought in Japan. Goods should be of well-known Japanese or foreign brands. Gifts brought to a private home can be flowers (not white, as white flowers are associated with death), cakes (Japanese style, in a small box), or some kind of sweets.
The value will depend on the nature of the business relationship, and the recipient’s level of seniority, but as a minimum 5,000-10,000 yen can be taken as a guide. For a home visit, a box of cakes, or a selection of fresh cakes or fruit, costing up to around 5,000 yen, would suffice. Gifts should always be wrapped, such as at a department store or good shop, using paper familiar to the Japanese.
Again, this paper won’t be white, which is used for funerals, and red shouldn’t be used in wrapping gifts for ill or bereaving people, as this colour represents blood. If a gift is purchased at a well-known department store it should remain wrapped in that store’s paper, as this adds status to the gift, along with the bag it comes in.
If the gift comprises a number of items, such as a bunch of flowers, or set of placemats or coasters, even numbers should be avoided, especially four, as this word means death. Nine items also shouldn’t be given. When looking for gifts, such as in the ceramics section of a department store, it will soon be noticed that sets of goods, such as plates or bowls, usually comprise five items, never four or six.
A gift is handed to its recipient with both hands and a slight bow, in a humble manner. The giver might like to remark that the item is only little, but please accept it. Normally people don’t open a gift in front of the person from whom they received it, but from the bag and wrapping paper they will have keenly observed where it was purchased.
Should the situation arise, wedding invitees are required to bring a gift of money, which should be placed in an appropriate envelope, and should be no less than 30,000 yen, in new or uncreased 10,000 yen bills. Amounts of fractions of 10,000 yen, such as 35,000 yen, shouldn’t be given, and nor should an even amount, such as 40,000 yen. There is no need to also give a gift, and in fact all guests receive gifts prior to the reception’s end.