Business relation ships in japan

Conflict Negotiations

(final paper)

Moscow State University

(International College)

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.

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.

Exchanging meishi

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.

Sources

1. Internet (Alta Vista, Lycos)

2. Boye D Mente «Business guide to Japan. Opening doors... and closing

deals!»,1998