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Business relationships in Japan


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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

one 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.

siness 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

Internet (Alta Vista, Lycos)

Boye D Mente «Business guide to Japan. Opening doors... and closing
deals!»,1998


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