Doing Business In Japan

DOINGBUSINESS IN JAPAN

UKTI_DoingBisInJapan.Stg1 26/2/04 11:17

This publication offers advice tohelp your company access theJapanese market, taking youthrough the processes ofpreparation, visiting the market,winning the business, andestablishing and maintainingbusiness relationships. It is intendedprimarily for companies new to themarket, but more experiencedexporters should also find it useful.

When reading this booklet, thefollowing points need to be bornein mind:

– Japan is currently undergoing aperiod of considerable change,as it moves from a high-growth,protected economy to a mature,open economy. The guidancegiven here relates largely todealing with mainstreamJapanese companies whichretain the traditional ways ofdoing business. Newer, moreentrepreneurial and youngercompanies which retain thetraditional ways of doingbusiness areas ofcommunications and e-commerce – may not abide sostrictly by these practices. Inparticular, their decision-makingprocesses may be faster and lesshierarchical than those describedhere.

– On the other hand, the pace ofchange can be exaggerated.What change there is – forexample, the breakdown of thejobs-for-life culture, and ofconsensus decision-making – isstarting from a very low base. Itwill take many years for thesechanges to permeate through toevery level of Japanese businessand society.

– The answer therefore is to usethe guidance given here as atemplate for your businessdealings with Japan. As in everysociety, there will be those whodo not fit the norm. But if indoubt, no-one will be offendedif you follow the advice givenhere.

Above all, do not be put offtackling the Japanese market forfear of getting it wrong. TheJapanese do not expect foreigners,especially on their first visit, to havemastered all the rules of Japanesebusiness practice and etiquette. Andif all else fails:

– Be courteous

– Be patient

– Be sincere

These three virtues will see youthrough most difficulties andembarrassments.

FOREWORD

FORE

WOR

D3


Why Japan?Despite its well-publicised economicproblems over the past decade,Japan remains a market of veryconsiderable importance for Britishexporters. It is the UK’s largestexport market outside WesternEurope and the USA, with ourexports rising by an average of 11per cent year since 1991. Those far-sighted British companies whichhave had the patience to take along-term strategic view of Japanare now reaping the benefits.

There lies the key to success inJapan: it is not a short-termmarket, which companies can dip inand out of depending on sparecapacity and their other priorities. Ittakes time and patience to establishyourself in Japan. But as manyBritish companies (large and small)have found, it repays the effortmany times over.

Key facts about Japan– Japan is still the second largest

economy in the world, with aGDP roughly as large asGermany and the UK combined.It accounts for some 51 per centof the total Asian economy and12 per cent of world GDP.

– With its population of 126million, Japan is a highly-educated homogenous andaffluent society, with the largestprivate savings in the world.

– As increasing numbers ofJapanese people travel abroad,for both work and pleasure, theybring back with them a taste forforeign goods and lifestyles. Atthe same time, British productsand brands are becoming morewidely known and available inJapan. A desire forimprovements in the overallquality of life and greaterindividuality also create newconsumer demands whichoverseas suppliers are wellplaced to fulfil. Consumers areseeking value for money muchmore than in the past.

– Japan’s population is ageingrapidly as its birth rate declinesand people live longer. This isgiving rise to new businessopportunities in welfare,healthcare and associatedservices. The Japanese are alsobecoming increasingly health-conscious and aware ofenvironmental issues, creatinggood opportunities for exportersof sports and leisure goods,food products andenvironmental services andequipment.

– Although the Japanese have ahigh reputation for the designand use of technology, theyrecognise that they cannotproduce all of the innovationsthemselves. There areopportunities for companieswith new

– products and technologies inthe software and mobilecommunications sectors, eitherby building relationships toenter the indigenous market orin partnership with Japanesecompanies to enter otherinternational markets. It isestimated that the Japanese e-commerce market alone will beworth ¥6,662 billion by 2004.1

INTRODUCTION

Doin

g Bu

sine

ss in

Jap

an 4

1 Source: E-com; Anderson Consulting

1


INTR

ODUC

TION

5

– Deregulation over recent yearshas opened up newopportunities for foreigncompanies in the Japanesemarket, fromtelecommunications to retailing.While some may argue that, insome sectors, the pace ofchange is too slow, the processof deregulation is firmlyestablished and is supported bythe Japanese government,business and consumers. In themeantime, Japanese industryand commerce are having torestructure to meet newcompetitive pressures, and areincreasingly open to the notionof buying from overseas.

– Above all, British companiesshould forget their oldpreconceptions about Japanbeing a "closed" market. Theformal barriers to entry are nowno greater than in most otheradvanced economies.

– Japan is indeed unique, with itsown traditional culture andways of doing business. But, asthe many British companies whoare successful in the market willattest, it is by no meansimpossible to enter the Japanesebusiness market. There is also awealth of information, adviceand help available from a varietyof sources, many of which arereferred to in this booklet.


Read, listen and learnWhile this booklet aims to be ascomprehensive as possible withinthe space available, it is not asubstitute for talking to others whoknow the Japanese market andlearning from their first-handexperience. In particular, talk topeople who know your sector, andcan give specific market-orientedadvice. Take (or create)opportunities to meet Japanesebusiness people here in the UK.This way, you will start to get a feelfor the way business is done inJapan.

Your first point of contact shouldbe the Japan Unit of UK Trade &Investment: either contact themdirectly or through your localBusiness Link. They can put you intouch with sector specialists – theExport Promoters – who have awealth of knowledge andexperience of the Japanese market,and can tell you what other helpand advice is available from theBritish Embassy in Tokyo and theother commercial posts in Japan.They will also be able to advise youof any trade missions, buyingmissions, trade fairs and otherJapan-related events which youmay be able to take part in.

It pays to keep in touch with theJapan Unit. As well as gaining up-to-date information on marketdevelopments and forthcomingevents, you will have chance tomeet other people, both British andJapanese, who are directly involvedin UK/Japan trade and investment.This opportunity to build up yournetwork of Japanese contacts canbe invaluable aid in developingyour business in Japan

Another good source of advice isthe London office of the JapanExternal Trade Organisation(JETRO). JETRO is a semi-government trade-promotion bodywhich, uniquely, encouragesimports into Japan, as well asinvestment and other forms ofindustrial and technological co-operation. JETRO in London has awell-stocked reference library, andalso runs several programmes tohelp British companies in theJapanese market.

Building andmaintainingrelationshipsOne of the most significantdifferences between Western andJapanese business practices is theimportance which the Japaneseplace on developing andmaintaining long-termrelationships. This is the key todoing business in Japan

In your initial meetings, yourJapanese counterparts will belooking primarily to establish apersonal relationship with you andyour company. Only on that basis,they believe, can good businessrelationships be developed. Theyneed to know that your companywill be a good and reliable long-term business partner. For thisreason, your early encounters withJapanese business people may seemto you to be unnecessarily long-drawn out and inconclusive. Bepatient. Without these initialgetting-to-know-you sessions, yourbusiness in Japan will go nowhere.

GETTING STARTED

Doin

g Bu

sine

ss in

Jap

an 6

THIS SECTION COVERS SOME OF THE THINGS YOU NEED TO KNOWBEFORE YOU PLAN YOUR FIRST VISIT TO JAPAN, OR HAVE YOUR FIRSTMEETING WITH JAPANESE POTENTIAL CUSTOMERS OR PARTNERS,EITHER IN THE UK OR ELSEWHERE.

2


GETT

ING

STAR

TED

7

The decision-makingprocessThe decision-making process inJapanese companies evolves frommiddle management and filtersupwards. Top-down decision-making is very rare. Everyone whowill be involved in implementingthe decision has to be consultedand their agreement sought. Onlythen will the proposals be passedon upwards to the next level,perhaps for the process to startagain. In Japanese, this process ofgaining a consensus is known asnemawashi, literally digging aroundthe roots of a tree prior totransplanting it.

This all inevitably takes time. Whileit is going on, you have to bepatient, responding as necessary torequests for further information.Sometimes you will be asked topresent your proposals several timesto different groups of people withinthe company. This may seem time-wasting and repetitive, but itensures that all concerned have achance to hear first-hand what youare proposing – and to judge youas a prospective business partner.

While the process may becumbersome – and is in fact beingabandoned or adapted by somefleet-footed Japanese companies –the corollary is that, once thedecision is made, everyoneunderstands it and implementationcan begin almost immediately.British companies can be caughtout at this point: having delayedthe decision for weeks or months,the Japanese will expect you to bein a position to implement italmost immediately. It is wise,therefore, to try to stay in touchwith progress on the Japanese side,so as to be ready to go when youget the green light.

Do not be tempted to try to speedup the process by appealing directto top management over the headsof those you are dealing with. Thiswill cause confusion, offence andfurther delays.

At the same time, if an opportunityarises – for example, if one of yoursenior executives is visiting Japan,or meeting the Japanese companyin another context – it can beuseful to tell their top managementthat negotiations are taking place,and to assure them of yourcompany’s commitment to asuccessful outcome. If you dodecide to take this course of action,you must keep your day-to-daycontacts informed of what you aredoing, and why, it must be done tosmooth the process, not in adesperate bid to hurry it up.

Presenting yourselfWhen you meet a Japanesebusiness person for the first time,the first thing he or she will do willalmost invariably be to offer you abusiness card, known as a meishi.This will have his/her name,company name and job title, aswell as details of the companyaddress etc. Those used to dealingwith foreign companies will usuallyhave the same details in English onthe reverse side of the card.

Between Japanese, the meishienables each party to place theother person, and his/her company,in a social and business hierarchy. Itis the start of the relationship-building process. In your businessdealings in Japan, you must be ableto reciprocate with your ownmeishi. Without it, you are a non-person, of little consequence andeasily forgotten.

Your meishi should be of standardJapanese size (90mm x 55m)2 andtranslated into Japanese on thereverse side. Accuracy is essential:great embarrassment and mirth, canbe caused by an inaccurate orclumsy translation. There are anumber of companies in the UKwho can translate and produce yourmeishi before you go, including theairlines which fly to Japan. If indoubt, seek advice from the JapanUnit.

2 The size is more important that it might seem. Japanese use standard-sized file boxes to keep the meishi they receive. If yours is of anodd size, it may be discarded.

DON’T LEAVE IT TOO LATE TORESEARCH THE MARKETS ANDMAKE APPOINTMENTS


Doin

g Bu

sine

ss in

Jap

an 8

Besides being a means of self-introduction, the meishi also servesas a permanent record which canbe filed away - with a note ofwhere and when you met theperson, and some salient personaldetails – for future use. It is,however, important to rememberthat the meishi is a representationof the person who gave it to you: itshould be received courteously andstudied respectfully for a momentbefore being put away. Do not foldit or crumple it, and do not writeon it in the other person’s presence.Your own meishi should bepresented in a similar respectfulfashion.

Presenting yourcompanyYou will need to consider howmuch of your company literatureneeds to be translated intoJapanese in the initial stages ofyour dealings with Japan. Cost is afactor here. Also, most Japanese areable to read and understandEnglish better than they can speakit. At this stage, attractively-produced English-languagematerials, with just the key pointstranslated into Japanese, will bemore impressive than poorly-produced and poorly-translatedmaterials in Japanese. There are,however, no hard-and-fast rules onthis, and you should take advice.

The materials you hand over at themeetings will be studied anddiscussed at internal companymeetings as part of the consensus-building process referred to above.If they include colour visuals suchas photographs, charts and graphs,so much the better; videos3 andcomputerised presentations (eg on(CD-ROMS) can also be veryeffective.

The information you provide toJapanese companies should aim toincrease their confidence in yourcapabilities and help them tounderstand your quality processes,production capacity and thedevelopment of your technology.You should be able to provide thefollowing:4

– Product samples

– Product catalogues

– Table of component ingredientsand technical data

– Outline of manufacturingfacilities and production-relateddata

– Corporate profile giving ahistory of your company and itsachievements, including businessin other comparable worldmarkets such as Germany andthe USA

– Details of any previous dealingsyou have had with Japan5

3 If presenting videos to companies in Japan, remember that Japan uses the NTSC system, not the British PAL system. VHS is the mostcommon format.

4 Not all of these will be relevant to every company, eg those selling services or technology, but this acts as a check-list of requirements.

5 You should not, of course, divulge competitive information, nor draw unnecessary attention to any past failures in the market, but donot hide any information which is anyway likely to become known, otherwise it will damage your reputation to truth and reliability.


GETT

ING

STAR

TED

9

Price will often be the last issue tobe considered, especially whenselling industrial goods. Japanesecompanies are far more interestedin your company ethos,manufacturing methods,technology and the reliability of thesupply chain. It is only oncequestions such as these have beenresolved that the subject of price isdiscussed. However, great reliance isplaced on price stability, andregular customers expect discountsof up to 20 per cent on list prices.

Making contactAll this presupposes that you haveestablished contact with suitableand interested Japanese companies,and are planning to meet them, inJapan or elsewhere. But how doyou identify and approach suchcompanies in the first place?

Japanese companies are notresponsive to "cold calling" andrarely respond to direct approachesfrom unknown people orcompanies. While trade directoriesmay help you to identify suitablecompanies to approach, simplywriting to them to introduceyourself and your company isunlikely to produce a response.Because of the importance which isplaced on relationships, it is alwaysmuch better to secure anintroduction to your targetcompany through a third party.

Reference has already been made tothe services of the Japan Unit ofUK Trade & Investment. They canhelp you to identify suitablecompanies and can effectintroductions for you, working inclose partnership with UKTIcolleagues based in Japan.

You can also make use of the manyJapanese companies which haveoffices and factories in the UK. Atelephone call to the appropriateperson in the London office of aJapanese trading company ordepartment store, for example, witha request for a meeting, is muchmore likely to be effective (andeasier) than a similar approachwould be in Japan. If there isinterest, the person in London will

effect an introduction to acolleague in Japan. Or, he or shemay suggest alternative contactsfor you to approach, and make thenecessary introductions.

Similarly, you could get a colleagueworking in a similar orcomplementary sector to yours tomake an introduction to theirJapanese business contacts.

Other ways of meeting and gettingto know some Japanese companiesbefore you go to Japan wouldinclude:

– Attending seminars and similarevents organised by UK Trade &Investment, local Chambers ofCommerce, Business Links etc.This is an excellent way oflearning more about Japan andmeeting Japanese businesspeople, some of whom may beable to make some introductionsfor you.

– Attending international tradefairs in your product sector,either in Japan or in othercountries where Japanese buyersmay be present as exhibitors orvisitors. However, do not expectto get firm orders at theseevents: the Japanese mostly usethem for research andinformation-gathering, not forbuying. Be pro-active infollowing up any contacts youmake at such events, and call onthem when you go to Japan.Even if they are not themselvesright for your company, theymay be able to introduce you toothers who are.


The Japanesedistribution systemsThe Japanese distribution system istraditionally long and complicated,with many middlemen between themanufacturer/importer and theconsumer or end-user. This hasinevitably had the effect of raisingprices. More recently, however, thesystem has become somewhat lesscomplex, under the pressure offoreign retailers such as Toys R Usand increasing consumer demandfor lower-priced quality products.Department stores andsupermarkets, in particular, haveadopted simplified distributionsystems and are increasingly buyingdirect from manufacturers. Similarly,an increasing number of small andmedium-sized wholesalers andretailers have started to import theirown goods in an attempt to reducetheir costs.

Despite these changes, a number ofbusiness practices which developedunder the more cumbersomedistribution system remain, andBritish companies – especially thoseselling consumer goods – need tobe aware of them. The main onesare:

– Providing long-term credit

– Accepting orders for small lotsor swift response to orders (sincefloor space is often limited)

– Allocating dedicated sales staffto accept orders and give adviceon product range and storemanagement

– Rewards for reaching salestargets (eg travel vouchers orconcert tickets).

Legal requirementsWhile there are now very fewrestrictions on what may beimported into Japan, there are – as in any country – regulations onstandards for consumer protection.There are also some prohibitedimports. The main categories ofprohibited or regulated products arelisted below. Always check to seewhether there is legislation coveringyour products (the Japan Unit canadvise on this).6

Prohibited importsLive animals; fake famous brandgoods and pirated products;counterfeit, forged and imitationcurrency; stocks and bonds; plantsstipulated under the PlantQuarantine Law; arms andammunition and drugs.

Imports subject to consumerprotection legislation: electricalgoods, gas appliances, automobiles,foodstuffs, food additives,pharmaceuticals and cosmetics.

Doin

g Bu

sine

ss in

Jap

an 1

0

6 Information on Japanese customs tariffs and clearance procedures can also be obtained from JETRO London


MeetingsAs we have already indicated, yourinitial meetings in Japan are animportant part of the relationship-building process. How you presentyourself and your company in theseearly stages can make thedifference between success andfailure in the Japanese market.

Much has been written and said onthe conduct of meetings withJapanese, but the advice can bereduced to a few simple rules;

– Remember that, at this stage,the meeting is for the parties toget to know one another and toexchange information; it is notthe start of negotiations.Nevertheless, be careful not toconcede here anything that maybe important to you later on.

– Meetings are generally held inseparate meetings rooms, bothin people’s offices. The hostsand visitors usually face oneanother across the table. (This isalso true when entertaining orbeing entertained in Japan.)

– Do not be surprised if you areoutnumbered by your Japanesehosts, some of whom may saynothing and seem to play littlepart in the proceedings. This isusual in Japan, and is part ofthe consensus-building process.

– Because of Japan’s age-basedpromotion system, the oldestperson in the room will usuallybe the senior one. Note how theothers defer to him, and do thesame. However, he may welltake little part in the discussion,and will leave his juniorcolleagues to do most of thetalking.7

– At the start of the meeting, youwill exchange business cards(meishi), as described previously.Do this with due respect andformality. During the meeting, itis useful to spread the cards out(discreetly) in front of you, sothat you identify each person onthe Japanese side.

– Prepare a short openingstatement beforehand, whichcan deliver once theintroductions have been made.This need say no more than thatyou are grateful to your hostsfor giving up the time to meetyou, how pleased you are to bein Japan, etc. It is also useful tohave a more substantivestatement ready to use whenthe initial pleasantries are over.This should outline why you aremeeting the company and whatyou hope to achieve. Be low-key: don’t be boastful aboutyourself, your products/servicesor your company. Confineyourself to a few key points atthis stage, and don’t seek, orexpect, a substantive response.

– The Japanese always seek toavoid confrontation, so opendisagreement should be avoided.Be aware that a silent responseto a point of issue during ameeting can mean unspokendisagreement or opposition. Donot press the point: take not,and move on.

– If the meeting is beingconducted in English, withoutthe use of an outside interpreter,be aware that the person doingall the talking – the best Englishspeaker – may not be the mostimportant person there or theone you most need to convince.

– Blowing your nose in public isconsidered impolite in Japan, soavoid doing so during meetings(or elsewhere). If you must, wipeyou nose discreetly and quietlywith a tissue.

– Do not slump back in the chair,or cross your legs; sit uprightand look attentive.

– The Japanese keep theiremotions in check, especially inbusiness, and expect others todo the same. Do not under anycircumstances show anger orirritation. This will diminish youin their eyes and suggest thatyou are an unreliable businesspartner.

WORKING WITH THE JAPANESE

WOR

KIN

G W

ITH

THE

JAPA

NES

E11

7 Hierarchy within companies is still very important in Japan. At a meeting with outsiders, Japanese managers will not contradict oneanother – especially senior to them – not engage in debate amongst themselves as often happens at Western-style meetings. If theyhave contrary opinions, they will save them for later resolution within the company.

3


– Keep an eye on the clock, andtry not to over-run your allottedtime, especially at initialmeetings – both for your hosts’sake, and to avoid being late foryour next appointment.

– At the end of the meeting,agree with your hosts what thenext steps are – who will dowhat, when etc. Even if this isno more than an agreement tomeet again, be sure who is totake the initiative.

– When is it time to leave, repeatyour thanks to the senior personpresent and express the hopethat you will stay in touch (orwhatever has been agreed).

– If you have gifts, this is the timeto hand them over.

CommunicationMuch communication betweenJapanese is indirect, implicit ratherthan explicit, and non-verbal.Added to the difficulties of theJapanese language itself and thelack of English ability on the partof many Japanese, this makes ithard to be sure in Japan that youhave correctly understood what isbeing said (or not said) and thatyou yourself have been correctlyunderstood.

The guidance which follows isintended primarily for meetings,but is applicable in your otherbusiness and social dealings inJapan.

– Do not take nods or repeated"yes" (or hai in Japanese) tomean agreement with what youare proposing. This merelyindicates that they are hearingand noting what you say, notnecessarily agreeing with it.

– Direct negative expressions like"no" are rarely used: but for aJapanese to say that somethingis "difficult" is tantamount to anegative reply.

– When speaking in English, beclear, and concise; speak moreslowly than usual; do not usecomplicated sentence structures,double negatives et ("notinconsiderable"), doublequestions (eg "You do, don’tyou?), or rhetorical questions;avoid colloquialisms and slang;and avoid jargon unless yourJapanese hosts area in the samebusiness and you can be surethey will understand it.

– Be prepared to repeat what youhave said in a different way, tomake sure you have beenunderstood.

– Use less eye contact than wouldbe normal in a meeting withWesterners.

– The Japanese do not findsilence embarrassing, and itgives them time to collect theirthoughts and give consideredresponses. Avoid the temptationto fill in by talking (or, evenworse, by making unnecessarilyconcessions).

– Don’t monopolise theconversation. Remember thatthe point of the meeting is toget information as well as togive it. Allow your Japanesehosts time to respond, and listento what they saying. Let themfinish what they are saying, anddon’t interrupt. When youanswer their questions, stick tothe point.

– The Japanese have a good senseof humour. If the meeting isgoing well, humour will oftencome naturally out of theconversation, but don’t force it.Funny stories and jokes areusually un-translatable,linguistically or culturally.Sarcasm and facetiousness arenot understood.

Doin

g Bu

sine

ss in

Jap

an 1

2


InterpretersIt is a delicate decision whether ornot to take a professionalinterpreter to the meeting,especially initial meetings when youdo not know one another. Takingan interpreter might offend if thecompany prides itself on its staff’sEnglish abilities; not taking onemight render a meeting totallyunless if there is no English-speakeravailable. It is best to take advice,perhaps from whoever introducedyou to the Japanese company inthe first place. They may be able tomake enquiries on your behalf. Ifyou set up the meeting yourself,there is no harm in asking thecompany directly. If in doubt, erron the side of caution and take aninterpreter.

For those unused to usinginterpreters:

– Meet the interpreter for 30minutes or so (at least) beforeyour meeting to brief him or(more often) her on yourcompany, the company you aremeeting, what you plan to sayand what you want to achieve.Go through any unusual wordsor technical terms that maycome up in the meeting.

– When speaking through aninterpreter, speak clearly andslowly, stopping every minute orso to give the interpreter achance to put your pointsacross. Speak in "paragraphs",not single sentences or phrases.Numbers are best written downfor clarity.

– Speak to your Japanese hosts,not to the interpreter (eg "Whatdo you think?", not "Ask MrSuzuki what he thinks.")

– Ensure that the interpreter, andyour Japanese host, havefinished what they have to saybefore continuing thediscussion.

– After the meeting, take time tode-brief your interpreter onwhat he/she thought went on atthe meeting. They can give youa "cultural" interpretation,including non-verbal signals.They can also advise you if, forexample, a phrase which, whentranslated into English, seemslike a positive response, actuallymeans that the Japanese sideare not interested. Theinterpreter – especially if youuse the same one for a series ofmeetings or visits – can be auseful ally.

WrittencommunicationsBecause of the importance attachedto personal relationships, theJapanese prefer face-to-facecontacts where possible – thoughof course in dealing withcompanies outside Japan, writtenforms of communication will beunavoidable. The preferred form ofwritten communication is the fax,followed, increasingly by e-mail.Letters are best reserved forsubstantive, formalcommunications.

When communicating with aJapanese company in writing, applythe rules shown above asappropriate. Use simple words andphrases and short, uncomplicatedsentences.

Because of the preference for thespoken word, the Japanese oftenseem slow to respond to writtencommunications and are reluctantto initiative correspondence.Japanese companies do not usually,for example, send progress reportsto tell you what is happening, orsend interim replies. The viewusually is, if there is nothing muchto say, say nothing. While this canbe frustrating, a lack of a writtencommunication should notnecessarily be viewed as a lack ofinterest. But it is well to keep upthe flow of correspondence fromyour side, within reason, so thatcontract is not lost.

WOR

KIN

G W

ITH

THE

JAPA

NES

E13


TelephonesBecause of the danger ofmisunderstanding, linguistically andculturally, the use of the telephoneshould be confined to simplematters, such as personal greetingsor meeting arrangements etc andeven then a fax or e-mailconfirmation is advisable.

Japanese etiquetteAgain, observance of some simplerules will help ease relationships inJapan. These are not complicated,and in many cases represent nomore than good sense and goodmanners.

– Punctuality is a cardinal virtuein Japan. Try to arrive at least10 minutes early for anymeeting or social occasion.When giving a lunch or dinner,or if you are the host at areception in Japan, be at thevenue at least 15 minutesbefore the starting time to beready to greet your guests.Japanese have a habit ofarriving early.

– Apart from after-hours drinkingin night clubs or bars,entertaining tends to be ratherformal. Business entertaining isalways down in hotels orrestaurants, and an invitation toa Japanese private home is arare honour. If you are invitedout, for a drink or a meal, try to

respond positively: it’s a goodopportunity to get to know yourJapanese hosts better, and tounderstand more about Japan.

– If you are the host at a formalevent, be ready to say a fewwords of welcome at anappropriate point. If you arebeing entertained, you will beexpected to respond.

– Problems sometimes arise whenfirst meeting a Japanese personover whether to how to bow orshake hands. At the start,especially in businessrelationships, it is better toshake hands. If you bow, a slightinclination of the head andshoulders is sufficient. Whetherbowing or shaking hands, do itdecisively to avoid embarrassingconfusion.

– The giving of gifts is a high-developed art form in Japan.The manner of giving the gift isas important as the gift itself.Gifts should be neatly wrapped(your hotel in Japan can usuallydo this for you), and presentedwith some ceremony andhumility. If you receive a gift, donot unwrap it immediatelywithout asking the host’spermission. If you do unwrap it,try to take the paper off neatly,without tearing it.

– For initial meetings, a simplecorporate gift is sufficient –perhaps branded goods withyour company logo. Overlyexpensive or lavish gifts mightcause embarrassment, as theyhave to be reciprocated.8 Beaware that Japanese governmentofficials are now banned fromaccepting gifts (orentertainment) of more thannominal value.

– The suffix – san is added afterJapanese names to mean Mr,Mrs, Miss or Ms. Within acompany, people are known bytheir name and job-title e.g.Suzuki-bucho for Mr Suzuki, theDepartment Head. Whenspeaking in English, however, Mr(or Mrs/Miss/Ms) Suzuki ispreferable. Never use – sanwhen referring to yourself atyour company colleagues.Japanese should not beaddressed by their first namesunless they invite you do so.

But finally, remember the advice inthe Foreword: don’t beoverwhelmed by the need to abideby the minutiae of Japanese socialetiquette. Just do your best.

Doin

g Bu

sine

ss in

Jap

an 1

4

8 When you become a frequent visitor to Japan, keep a note of what you gave to whom, and what you received, so as not to duplicategifts.


Following up the visitOn your return, write to all the keycontacts you have met to thankthem for their time. While this isintended primarily as a courtesy,the opportunity can be taken torefer to – and confirm – anyagreements that were reached onfuture action by either party.

Set in train any action to whichyou have committed yourself duringthe visit – providing additionalinformation, making contacts, etc.Given the likely delays on theJapanese side, ensure that you fulfilyour part of the bargain as quicklyas you can. You need to keep themomentum, and the relationship,going.

Repeat visitsIn view of the Japanese preferencefor face-to-face communications,you need to be prepared to make anumber of repeat visits to Japan topush the business forward, howeverslow progress may seem. How oftenthis needs to be done will dependon individual circumstances, but ifyou are serious about Japan – andwant to show the Japanese thatyou are serious about Japan – youshould be thinking in terms of onevisit every six to 12 months atleast. As the pace of the discussions(hopefully) increases, it may needto be more often than that.

Who should go? Because of theimportance placed on personalrelationships, it would obviously becounter-productive to send an ever-changing array of companyrepresentatives. There should be acore team, maybe consisting ofonly one or two people in a smallcompany, who should participate inall visits wherever possible.9

If your core team does not includeyour chief executive or someone ofequivalent stature, it is importantthat he or she should go to Japanat appropriate times – for example,to sign key agreements – so as todemonstrate your company’s fullcommitment to the Japan Unit.

Choosing the rightpartnerYour initial or subsequent visits willhopefully have identified severalcompanies, which seem interestedand suitable. Only you can decidewhich one is best for you, but youmay want to talk to some of theexperts (e.g. in the Japan Unit)before making a decision.

WINNING THE BUSINESS

WIN

NIN

G TH

E BU

SIN

ESS

15

HAVING SATISFACTORILY NEGOTIATED YOUR FIRST VISIT TO JAPAN, HOWDO YOU FOLLOW UP, MAINTAIN CONTACT AND, HOPEFULLY, WIN THEBUSINESS? CIRCUMSTANCES WILL OBVIOUSLY VARY FROM COMPANY TOCOMPANY, AND SECTOR TO SECTOR, AND IT IS NOT USEFUL TO BE TOOPRESCRIPTIVE AT THIS STAGE. THE FOLLOWING POINTS ARE DESIGNED TOPROVIDE A FRAMEWORK FOR ACTION.

9 As the negotiations move into the discussion of technical points, more expert-to-expert contact may be required, but the core teamshould always be in the background to provide continuity and hold the relationship together.

4


Beyond that, there are two generalpoints to make:

– Do not jump at the firstcompany, which shows aninterest. There is no harm,within reason, in keeping severalcandidates in the running untila final decision is made. But inthat case, to avoid accusationsof bad faith (which coulddamage your reputation in themarket-place), each companyneeds to be aware that it is onlyone of several options you arepursuing.

– Do not be tempted to sign upwith a company just becausethey have a fluent English-speaker with whom you cancommunicate easily. While this isan undoubted advantage, the moreimportant point is how well thecompany knows your marketand can communicate with yourpotential Japanese customers.

Negotiating thecontractIt is neither possible norappropriate to offer comprehensiveguidance here on negotiatingcontracts with the Japanese. Youwill need to take expert advice onthis when the times comes.

However, some general points canbe made:

– Remember all the guidancegiven so far on how to dealwith the Japanese. It will applyequally, or some so, in contractnegotiations.

– In Japan, as much importance isplaced on the negotiations thatled up to the signing of thecontract as on the contractitself. The contract is a symbolicdocument, confirming anexisting relationship. If there isdisagreement about thecontract, it’s sign that there issomething wrong in therelationship.

– Some parts of a deal (e.g. onafter-sales service, or acommitment not to raise pricesfor a given period of time) maybe taken as read since they arepart of normal Japanesebusiness practice, and may notbe written into the contract.Make sure that you and yourprospective business partnerhave the same understanding ofwhat is being agreed.

– Once the contract is signed, theJapanese will feel themselvesbound by the relationship oftrust which it signifies, ratherthan the formal agreement –and will expect you to do thesame. If disagreements arises,the Japanese will expect themto be resolved by discussion andmutual agreement, not byreference to the precise wordingof the contract. Similarly, evenmatters clearly set down in acontract may be altered bysubsequent agreement betweenthe parties concerned.

– When quoting prices for goods,it is best to quote the f.o.b.price or yen equivalent prices,rather than the ex-factory price.This makes it simpler forJapanese companies to calculatehow much a product can besold for in Japan. Ensure thatthere is agreement on theexchange rate to be used, andwho will bear transaction costsand exchange rate risk.

– The actual point of delivery ofgoods can cause confusion.Most Japanese companiesconsider delivery to the loadingport or specified airline as actualdelivery. However, you may beasked to provide a guarantee incase there is a delay inunloading at a sea point withinJapan. To avoid confusion, it isbest to confirm exactly when,during the passage to Japan,delivery is considered to havetaken place.

– Since business in Japan isconducted on the basis ofmutual trust between theparties, there may be no writtencontract at all. You must judgewhether to accept this situation,but it is probably wiser in mostcases to insist, politely, on someform of written agreement,however simple.

Doin

g Bu

sine

ss in

Jap

an 1

6


Delivery, quality andreliabilityBy far the most important aspect ofthis continued commitment is thatyou should fulfil your side of thecontract, as the Japanese interpretsit. This means, above all, that youdeliver the goods or servicespromised reliably, on time and tothe approved quality (which, inJapan, means nothing less than thehighest quality). No amount ofrelationship-building activities willbe effective if these simple criteriaare not met.

On-time delivery is not just amatter of convenience. There areimportant cultural reasons for thisfastidiousness. One is that theseasons in Japan each have adistinct flavour and many productsare distributed only at set timesduring the year. Thus, delays in thedelivery of consumer goods canmean that sales suffer and theymay even become unsaleable,especially those needed for thetwice-yearly gift-giving seasons(New Year and mid-Summer).

Within industry, most Japanesemanufacturers order parts andmaterials to fit in exactly with theirproduction schedules (the Just-in-Time, or Kanban, system). Delays indelivery can severely disruptproduction lines. This is whyJapanese manufacturers are quiteprecise about when they needgoods to be delivered, evenspecifying the time of day in somecases.

Consumers and industrial customersalike are very particular aboutquality and will not buysubstandard products, no matterwhat their price. Japanese importerswill often return a shipment ofproducts if it is judge to besubstandard. Zero tolerance meanszero tolerance.

Reliability too is important inmaintaining stable businessrelationships. It is this emphasis onreliability that has caused Japanesecompanies to use predominantlydomestic products in the past, evenif prices were higher. You have toconvince your Japanese partnerthat you are no less reliable than adomestic supplier.

To cover themselves, manyJapanese firms will start doingbusiness with foreign companies ona small scale, gradually expandingtheir orders once they haveconfidence in the other party’sability to deliver.

Those companies, which provideservices or technology rather thanphysical goods, need to be no lesspunctilious in meeting theirobligations regarding time, qualityand reliability.

MAINTAINING THE RELATIONSHIP

MAI

NTA

ININ

G TH

E RE

LATI

ONSH

IP175

YOU HAVE SUCCESSFULLY NEGOTIATED YOUR CONTRACT WITH YOURJAPANESE PARTNERS, AND BUSINESS IS STARTING TO FLOW. THIS ISNOT, THOUGH, THE TIME TO PUT THE RELATIONSHIP ON HOLD. THEJAPANESE NEED TO BE CONSTANTLY REASSURED OF YOUR CONTINUEDCOMMITMENT TO THEM AND TO THE MARKET.


Keeping in touchIn Britain, business calls on a clientare rarely made without a specificpurpose in mind, and rarely withoutan appointment. In Japan, suppliersmake regular calls on their clients,even when there is nothing specificto discuss. This regular exchange ofinformation helps achieve a deeperunderstanding of each party’s viewsand ambitions, forestalls problemsand builds on the spirit of co-prosperity as partners. Suchrelationships experience fewerproblems and minimal complaints.

While "dropping" on your Japanesepartners 6,000 miles away is clearlynot practical, you too need toensure that you remain visible andin touch. Maintain your visitingprogramme even if things seem tobe going well (and even more ifthey seem to be going badly).Invite your Japanese partners toBritain to see your company inaction, or arrange to meet in thirdcountries, e.g. at trade fairs.Exchange Christmas or New Year Cards.

Often the relationship can bemaintained by doing personalfavours, for example helping theJapanese chief executive’s son ordaughter to find a language schoolin Britain, or asking for a Japanesecolleague’s help in arranging a Japanese home-stay for a British friend.

If it all goes wrong… If, despite all your efforts anddespite taking the best adviceavailable, the relationship does gowrong, you need to extricateyourself as amicably as possible. Amessy and acrimonious separationwill damage your reputation in themarket place, and will make it hard,if not impossible, to establish newrelationships with new partners.

It is very rare for business disputesto end up in court in Japan, and ifthey do they take years to settle.This is not a realistic option if youwant to stay and be successful inthe market. It is better to cut yourlosses with as much good grace aspossible, and start again.

However, by keeping your Japaneserelationships in good order, assuggested here, you make it muchless likely that you will be facedwith this situation. Even in theworst case, you should have beenforewarned of potential problems,and been able to resolve thembefore the relationship breaksdown.

Doin

g Bu

sine

ss in

Jap

an 1

8


Organisations

Japan Unit, UK Trade & Investment

Japan Unit offers a wide range ofhelp, advice and practical supportin doing business with Japan, inpartnership with the BritishEmbassy in Tokyo and the BritishConsulate-General in Osaka, theBritish Consulate in Nagoya and the British Trade Promotion officein Fukuoka.

Japan Unit, UK Trade & Investment5th Floor, Kingsgate House66-74 Victoria StreetLondon SW1E 6SW

Tel: 020 7215 4253 Fax: 020 7215 4500www.uktradeinvest.gov.uk

Export Promoters

The Export Promoters work withinJapan Unit. They are experienceindustry experts seconded from theprivate sector to provide a businessperspective on developments inJapan. They can provide generaladvice on doing business in Japan,and on specific market sectors.

Japan External Trade Organisation

The Japan External TradeOrganisation (JETRO) is Japan’ssemi-government trade promotionorganisation, which provides helpfor exporters to Japan. It producesa number of publications andvideos on the Japanese market,including sector-specific marketreports. These are available fromJETRO’s London office, which has awell-stocked reference library. Thereare also programmes to introduceselected exporters and potentialinvestors to the Japanese market.

JETRO operates Business SupportCentres in Tokyo, Osaka and othermajor Japanese cities. These providefree short-term officeaccommodation and supportservices to visiting foreign businessexecutives.

JETRO London, Leconfield HouseCurzon StreetLondon W1J 5HZ

Tel: 020 7470 4700 Fax: 020 7491 7570www.jetro.go.jp

Business LinksA regional network of businesssupport organisations in England,providing advice and access togovernment support, including thedelivery of export trade services.Business Links have InternationalTrade Advisers whose role is to helpexporters in their area. To find yourlocal business link, see our website(www.trade.uktradeinvest.gov.uk/local/local.shtml)

Exporters in Scotland shouldcontact Scottish Trade Internationalon 0141 248 2700(www.scottishdevelopmentinternational.com/pages/index.asp)

In Wales, contact Welsh TradeInternational on 029 2082 5097(www.walestrade.com/index.htm)

In Northern Ireland, contact InvestNorthern Ireland:(www.investni.com/index.html)

UK Trade & InvestmentInformation and LibraryCentre A free self-service reference libraryfor exporters is located at the UKTrade & Investment Headquartersat Kingsgate House, containingstatistical and market informationon Japan and other countries. Ifyou are unable to visit the library,research can be undertaken on yourbehalf by a professional researcher ata cost of £40 (+VAT) per half hour.

Opening hours: Monday – Friday 9:00am – 5:30pm Tel: 020 7215 5006Email: [email protected]

SOURCES OF HELP AND ADVICE

SOUR

CES

OF H

ELP

AND

ADVI

CE196


Practical Assistance

– Overseas Market IntroductionServices (OMIS)This is a report produced toyour requirements by UK Trade& Investment staff in Japan.These can include marketinformation, assessment ofpotential local representatives,customised local contact lists,market assessments for yourproduct, and advice on how toapproach the market. Initialbriefs should be submitted viayour local Business Link.

– UK Trade & Investment SalesLead ServiceThis free service automaticallysends details of exportopportunities by e-mail toparticipating UK companies.Information is given on specificexport enquiries, as well asdetails of tenders, joint ventures,multilateral agency projects andearly notice of potentialprojects. Information is alsogiven on market-specific seminarsand similar events. See the UKTrade & Investment website atwww.uktradeinvest.gov.uk forinformation on how to register.

– Export Marketing ResearchServices (EMRS) The British Chambers ofCommerce (BCC) run an exportmarketing research service, onbehalf of UK Trade &Investment, for companies withfewer than 500 employers.Professional researchers adviseon how to carry out marketingresearch for Japan (and otherexport markets) and help drawup specifications for work to be carried out by your in-housestaff or by a professionalconsultant. Grants for up to 50 per cent of the costs are available.

Export Marketing ResearchScheme The British Chambers ofCommerce 4 Westwood House Westwood Business Park COVENTRY CV4 8HS

Tel: 024 7669 4484 Fax: 024 7669 5844

Helping you visit Japan– and bringing Japan toyou

– Trade missions to JapanTrade missions are an excellentway to visit the Japanesemarket, especially fornewcomers, who benefit fromthe advice and support of moreexperienced participants. Grantsupport is available whentravelling as part of a sponsoredmission. Full details offorthcoming missions areavailable from the Japan Unit.Industry organisations interestedin taking missions to Japanshould telephone 020 72154253.

– Programme arranging service If you are visiting Japan, staff atthe British Embassy in Tokyoand the British Consulate-General in Osaka can arrangeprogrammes for you to visitJapanese companies relevant toyour business, and make the all-important introductions for you.Contact your nearest BusinessLink for information.

Doin

g Bu

sine

ss in

Jap

an 2

0


– Meeting Japanese buyers inBritainUK Trade & Investment have anumber of programmes to inviteJapanese buyers to the UK tomeet potential suppliers inspecified market sectors. Inaddition, there are events tobring together British suppliersand Japanese companyrepresentatives based in the UKor elsewhere in Europe. Contactthe Japan Unit for details offorthcoming events.

– Seminars in the UKWorking with Industry bodies –e.g. Business Links, Chambers ofCommerce, Trade Associations –the Japan Unit arrangesconferences, seminars andworkshops on the opportunitiesfor trade and investment inJapan. These are especiallyuseful before you travel toJapan. Contact the Japan Unitto be kept informed of theirevents programmes.

– Exhibitions and Seminars inJapanThe Japan Unit supports Britishcompanies taking part ininternational trade fairs andseminars in Japan.

– JETRO Export to Japan StudyProgrammeJETRO invites selected foreigncompany representatives toJapan to take part in groupvisits to give them a first-handunderstanding of the marketand to make business contacts.Contact JETRO London (addressabove)

– Japan Industry InsightTraining ProgrammeThe EU-Japan Centre forIndustrial Co-operation runsshort training programmes inJapan for senior manager.Grants are available to helpSMEs to take part.

Tel: +81 (3) 3221 6161Fax +81 (3) 3221 6226www.eujapan.com

– Executive Training Programmein Japan (ETP)This EU-funded programmeoffers managers of Europeancompanies the opportunity tospend 12 months’ in Japanlearning the Japanese languageand culture, followed by sixmonths’ placement with aJapanese company.

Tel: 0870 070 8000Fax: 020 8335 7000Email: [email protected]

British Industry Centre The centre provides low – costoffice accommodation and supportservices for British companies newlyestablishing themselves in Japan.

Contact in Japan

Yokohama Business Park WestTower11th Floor134 Godo-cho, Hodogaya-ku,Yokohama 240-0005, Japan

Tel: 00 81 45 334 1300Fax: 00 81 45 334 1301

Contact in the UK

Mr Robin Sloan Adviser – Investment in JapanJapan Unit, UK Trade & Investment5th Floor, Kingsgate House, 66-74Victoria Street, London SW1E 6SW

Tel: 020 7215 4253 Fax: 020 7215 4500

SOUR

CES

OF H

ELP

AND

ADVI

CE21

10 A separate booklet on the British Industry Centre is available from Japan Unit


Doin

g Bu

sine

ss in

Jap

an 2

2


The pulp used in this document is totally chlorinefree and fully recyclable andbiodegradable

Published DD/MM/YYYYby UK Trade & Investment.www.uktradeinvest.gov.uk

© Crown CopyrightURN000000000000


Doing Business In Japan

Documents

Transcript of Doing Business In Japan