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Japanese Business Culture Essay

What do you do to prepare for this meeting?

In order to prepare for this meeting, apart from the usual prepaparation with regards to presentations, brochures and other information material, information about the product as well as the company, etc, I need to gather extensive information about the Japanese business culture as the peculiar characteristics of this particular trading company with whom we are meeting. It is extremely important in international business that one should pay attention to prevailing business culture, customs and peculiarities of the companies from other countries in order to conclude a successful business deal. Therefore, I need to peep into material describing the Japanese way of doing businesses, their negotiation styles, things which one should avoid during the meetings, etc.

What do you want to know about the trading company?

The first thing which I would like to know about the trading company is its similarity to the traditional Japanese companies which possess certain typical characteristics. For example, one of the important things to know about this trading firm will be whether it is part of Japanese Keiretsu or not. The knowledge of this information in advance will help me to identify key features of Japanese trading firms who are still part of the large groups or Keiretsu. Knowledge about few characteristics of the firm will help us to present ourselves in a more comfortable manner at deal stage.

I am presenting below few important characteristics of Japanese firms:

1) Connections are very helpful in this country, but choose your intermediaries carefully: the Japanese will feel obliged to be loyal to them. Select someone of the same rank as the person with whom he or she will have dealings. Moreover, an intermediary should not be part of either company involved with the deal.

2) If you know a highly respected, important person in Japan, use his or her endorsement and connection. Before you enter into negotiations, request a consultation, and then ask if you can use the endorsement and connection to further your business efforts. This method of using connections is standard practice among Japanese businesspeople.

3)Generally, the Japanese are not receptive to “outside” information. They will consider new ideas and concepts only within the confines of their own groups.

4)The Japanese tend to think subjectively, relying on feelings rather than empirical evidence.

5)Getting acquainted is the purpose of the initial meetings. You may, however, introduce your proposal during these preliminary discussions.

During presentations, and especially during negotiations, it is essential that one maintain a quiet, low-key, and polite manner at all times. The highest-ranking individual may appear to be the most quiet of everyone present. For a persuasive presentation, you must describe how your product can enhance the prosperity and reputation of the Japanese side. Making these claims effectively requires a thorough knowledge of Japanese economy, business, and product lines.

The Japanese will commit themselves to an oral agreement, which may be acknowledged by a nod or slight bow, rather than by shaking hands. Contracts can be renegotiated; in Japanese business protocol, they are not final agreements.

After gathering knowledge about these typical characteristics of Japanese firms, we will try to compare this particular firm with these characteristics by analyzing the available information.  source: http://www.executiveplanet.com/business-etiquette/Japan.html Comment to student: click on the link above. You will find many links on this page with respect to business culture in Japan.

The Japanese have been raised to think of themselves as part of a group, and their group is always dealing with other groups. This is viewed on many angles — internationally it is “We Japanese” vs. everyone else (more on that later), but in schools, companies, sections of companies etc. there are many groups and sub-groups — and not always in perfect harmony and cooperation as it may look on the surface. Dealing with Japanese on a one-to-one basis usually comes very easy to non-Japanese, but dealing with Japanese as a group can be a different matter altogether. source: http://www.thejapanfaq.com/FAQ-Primer.html

about the V.P. and his/her delegation?

There are certain things which we need to know about the VP and his delegation. The strong hierarchical structure in Japanese business is reflected in the negotiation process. They begin at the executive level and continue at the middle level. However, decisions will often be made within the group. Generally speaking, in business meetings the Japanese will line up in order of seniority, with the most senior person at the front and the least senior person closest to the door. In addition to this rule however, you may find that the most senior person chooses where to sit. It is important to bear in mind that in contemporary Japan, even a low ranking individual can become a manager if his or her performance is good. (source: http://www.communicaid.com/japan-business-culture.asp )

Further, it is important to know few personal information about the visiting team. For example, their level of proficiency with English, whether or not a translator will be required, the age as it is directly related to seniority in Japanese culture, whether they have travelled abroad to US or other Western Countries before because it may have serious implications with respect to few culturally sensitive issues such as some Japanese men who have not been abroad are not used to dealing with women as equals in a business setting.

..about their inquiry?

The foremost thing about their inquiry which I will like to know is the nature of relationship they are looking to establish with our company with respect to selling our products in Japan. For example, are they looking for some kind of manufacturing joint venture in Japan, or are they looking to take distributorship or license for our products. Such information will help us to present ourselves in a better and precise manner and will help us in coming to common ground with them.

One of the sources for finding such information will be the local Santa Clara office of the company. Further, internet can prove to be a useful source for finding more information about the company such as its web portal, its partners and vendor relationships as displayed over the website, press releases and third party comments available on the web, etc.

When starting business in Japan and entering into initial distributor contract negotiation, many foreign executives are probably unaware of the potential value of their products in Japan, but you can guarantee that the Japanese distributors on the other side of the negotiation will have a very good idea of the value. source: http://www.venturejapan.com/japanese-distributors.htm

If you are doing business in Japan with a Japanese distributor, then you absolutely must negotiate a strong agreement before starting in the Japanese market.  Another issue to be aware of, and which if uncontrolled will have a significant impact on the final percentage of revenue you receive, is that the Japanese market is awash with multi-layered distribution channels.

Your Japanese distributor may in fact be a ‘master distributor’ who will pass your products through one or more layers of sub-distributors prior to it reaching its intended consumer or corporate buyer destination. In some situations its unavoidable – for example, if your distributor sells to a large Japanese company you can expect that the customer will mandate a trading company (usually one of it’s subsidiaries) to handle the purchase and take a 5% – 15% fee for its efforts.

source: www.venturejapan.com/japanese-contract-negotiation.htm

What do you want to highlight in the meeting with the V.P.?

As discussed in the above paragraphs, it is very important in Japanese business negotiations with a distributor to explain to them the potential value of our products in Japan. It is important to present them with some revenue forecasts with respect to sales in Japan.

First, you must know the Japanese value, not the US, UK, German, French or Italian value but the Japanese value of your product or service before you can negotiate a win-win relationship with a Japanese distributor. If you spent your first month doing business in Japan aggressively networking and information gathering you should have a pretty good idea of your product’s value. By comparing with your home market statistics you should also be able to extrapolate some reasonable revenue forecasts: idealized of course but an invaluable benchmark for contract negotiation with a Japanese distributor.

Armed with the results of your first month’s Japanese business analysis, you stand a good chance of convincing a reputable distributor that they should put your product into their lead portfolio and invest in aggressively promoting it. Your ability to assert the potential Japanese value of your product and your ability to defend that value will support your justifiable contract negotiation claims to require transfer fees calculated on net revenues, not on your home market price list. The result is that you have a chance to get the best possible distribution deal for your company and a deal that could only ever be bettered by a direct entry into the Japanese market using a Japanese subsidiary company or office.

source: www.venturejapan.com/japanese-contract-negotiation.htm

If things look positive in that meeting, what would you expect to happen at the next stages of the discussions?  Even if the things look positive in that meeting, Japanese generally take time time finalize their decision as the decision making process can be very slow for Japanese firms. I expect the Japanese trading firm to extensively discuss the issue within their group in order to arrive at the final
decision.

From the pre-meetings, to the informal parties, the Japanese style of doing business will take the shape of an intricate spider’s web, where few outsiders can fully understand the implications of what exactly is occurring. Japanese culture effects every aspect of daily life. The cultural tradition of Japan reflects a strong desire to be harmonious, efficient, and most important, to promote group solidarity, and this is best achieved by making decisions based on consensus. Robert Marshall elaborates by saying that, “…group decision making in Japan promotes unanimity in result through consensus” {Marshall},[p. 7].

source: http://www.earlham.edu/~consense/scott2.shtml

Comment to student: The above mentioned link is an excellent article on group decision making in Japan. Please read through it to gather more information on decision making in Japanese culture. How are your actions in this situation different from the situation in which you make the first move in order to find a licensee?

The actions in this situation is different from my first move because I have a more informed and better view along with a clear understanding of the Japanese business culture and negotiation process now. My first move was a sort of unorganized effort to explore the Japanese markets. This situation is different in the sense that I am now preparing myself for specific company which has already shown little interest in our products and are ready to explore more about our company.

It is very important to have clear understanding of Japanese culture, prevailign market conditions, information about the industry and knowledge of other peculiar characteristics before one can enter into a successful negotiation with a Japanese company. My initial failures have made me realize that in order to successfully conclude a deal with a Japanese company, one needs to present him in a manner that proves the value of our product with respect to Japanese market.


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