Doing Business in Japan Essay
Doing Business in Japan
1) A large Japanese firm makes important decision by a so-called “nemawashi” consulting system which requires all internal stakeholders to review and sign the final decision. Research the concept online and compare the advantages and disadvantages of this decision making versus the vertical U.S. system. Describe specific situations when “nemawashi” could be advantageous and disadvantageous. The culture of the Japanese is to live in harmony with nature and others and they do this by avoiding debates and clashing positions by using a decision making system called Nemawashi. They value interpersonal connectedness and consensus which is the exact opposite of how Americans think and respond. This idea was developed in 1950 when American statistics professor, W. Edwards Deming, trained Japanese leadership staff in Science and Engineering on quality control techniques. David O’Gorman (2012) wrote, The techniques Deming introduced were very compatible with the cultural value of harmony. For example, Deming had 14 key principles for quality improvement. One principle is to “Break down the barriers between departments.” Deming’s perspective on teamwork, and his other teachings on quality improvement, fit perfectly with Japan’s cultural values of harmony and consensus. Nemawashi gets its meaning from a horticulture terminology meaning “wrapping around the roots.”
When transplanting a tree from one place to another, preparing the root ball by wrapping it with fabric material and acclimatizing it to its new location before transplanting would make that tree grow healthier and stronger in its new environment. (Sakai, 2012) In practice, it means that the groundwork for a new proposal must be carefully prepared in advance if it is expected to take root, survive and prosper. (O’Gorman, 2012). Japanese managers are significantly more relationship-oriented and hierarchical than their U.S. counterparts, preferring consensus building, collectivist decision making, and risk avoidance. (FitzGerald, 2014) By informally communicating ideas to stakeholders, any issues planned for discussion in the larger meeting that might prove to be controversial are hashed out ahead of time so that they don’t create embarrassing snags. Any new ideas or proposals that are going to be presented can be floated in the pre-meeting, in order to avoid any surprises during the main meeting. (Kopp, 2010) To avoid conflict and saving face, many of the discussions of an idea are done informally with all stakeholders prior to the actual formal meeting. There are advantages and disadvantages of this decision making style.
The advantages of Nemawashi are: Nemawashi is a more disciplined business practice
Nemawashi eliminates the element of surprise
Nemawashi eliminates the likelihood of “whoever screams the loudest” getting their way Nemawashi eliminates ego and aligns interests to a common goal, focusing on the problem at hand with more input across the team or organization (Gordy, 2013). Consensus-building
The disadvantages of Nemawashi are:
It is time consuming
Is not well suited to generating the innovated products and services that Japan needs to compete globally in the future. It suppresses innovative ideas. The nemawashi-ringi process can allow good ideas to wither and die. (O’Gorman, 2012). People are worried that decisions are sometimes made behind the scenes, instead of out in the open. It is therefore seen as an undemocratic process. (Abe, 2014). Those who hold a minority view do not express it to preserve harmony. Furthermore, decisions are flexible and open to change. As a result, decisions are vague, rarely written down, allowing various parties to implement the decision differently. (Anderson, 2009). An example where Nemawashi can best be implemented occurs when a decision does not have to be reached immediately. Japanese use it effectively when they are trying to improve a product such as Toyota.
They have time to research, analyze, mull over, and share with all of the stakeholders and can flush out any inconsistencies or challenges prior to making the final decision. An example where Nemawashi is not advantageous is when a decision needs to be made rather quickly or when trying to be innovative. Because nemawashi is time-consuming, if there was a sudden decision that needed to be made, individuals who use this method of decision making would have difficulty getting everyone on board and in agreement in such a short amount of time. It may take months, perhaps years, for an idea to work its way through the nemwashi-ringi process and be implemented. In the past, this did not pose much of a problem. But in today’s rapidly changing global environment there are increasing demands on companies to make faster decisions just to maintain their competitive position. (O’Gorman, 2012). An example of innovative products can be an idea such as the iPhone or self-driving transportation.
2) Imagine that you are to welcome a Japanese delegation in your home-country. The delegation represents a potential business partner for your firm. Describe how you would prepare for the meeting and how you would decrease intercultural communication apprehension on both sides. I am welcoming a Japanese delegation in my home-country and because I am not ethnocentric, I have researched the Japanese culture and understand that they value hierarchy, status, social ranking, interpersonal relationships and nature. Japanese are polite, sensitive and have good manners and so it will be important to demonstrate those qualities, but not make an assumption because they possess these qualities that they will do business with my organization. I must prepare months in advance for the meeting because Japanese do not like to be taken by surprise. Japanese value commitment, dedication, excellent service, quality and reliability. I would send the itinerary to the Japanese delegation in advance along with any necessary paperwork for their review along with pictures of the executive members of the organization and their ranking. The professional portfolio would detail how long our organization has been in existence and our ranking in our industry.
We would have researched their organization and identified their executives as well as their salaryman with whom we are engaging to do business. At the airport, a team of individuals would meet them and acknowledge the most senior member first on down to the salaryman. A business card held by both hands would be given to each one as each of us bow the formal bow and say ‘Watashi no namae wa Jones desu’. Although you do not need to become word-perfect Japanese speaker, many Japanese people really do appreciate foreigners who make the effort to learn at least a few Japanese words and business phrases. (Web) We would receive their business card and immediately study the card and place it carefully in our business card portfolio. We then would follow the itinerary explicitly. Instead of taking them straight to the office, we would have tickets for the professional baseball team in our region in the loge with food and delicacies of their liking.
Matsuzaki (2014) as a summer scholar states that Japanese people love sports, especially baseball. After the game, each delegate would receive a baseball hat with the team logo and a baseball shirt. After the game, a walk through the company and introduction to any senior managers would be done. We would go over our goals and objectives and discuss our portfolio in detail sharing information of how with an expanded business in Japan everyone could have a substantial profit. The most important thing to remember in dealing with the Japanese is to take a passive attitude and listen very carefully to those words that are spoken as well as those not spoken. Soft sell and use facts like “we sold over a million sets last year” rather than biased information such as “we’re better than them.” Be very careful not to overstate your case. Any kind of smooth talker or talking too much can rub the wrong way. It is much better to say too little than to say too much. (Matsuzaki, 2014)
Afterwards, at an upscale restaurant we would have an uchiage, (drinking party) which is a tradition Japanese have done after the end of a business transaction. Each business partner would be advised as to drink in moderation and if they do not drink, politely provide an excuse as to why they are not imbibing. The delegation would later be escorted to their hotel and in the morning escorted to the next planned event or to the airport by our executives with a parting gift of a company pen from Tiffany’s. 3) Access JETHRO’s website and other e-Global resources and describe the complexities of setting a Japanese representative office. What are the advantages and disadvantages when compared to other forms of business establishments in Japan? There are many complexities when setting up a representative office in Japan. According to Japan Management Consulting the Representative Office needs to have a Representative resident of Japan. The Representative Office needs to prove the reality of its existence by showing:
a lease for office space in its own name
a utility bill in the Representative Office name
copy of the contract between the representative and the foreign country
The Representative of the Representative Office needs to prove its good standing with Social Insurance, Tax and Legal authorities by providing documents such as: registration with the local ward office “Juminhyo”
registration with Social Insurance, typically a copy of Pension Book is needed proof of payment of resident tax and national tax and also individual enterprise tax if she/he was self-employed. The representative office also need to register with relevant tax office to report and pay the tax withheld on employees salary. (Japan Management Consult, 2011)
The advantage of creating a Representative Office in Japan is to be able to carry marketing survey and information gathering activity in Japan before starting a full scale operation, without having to support the burden of full size company and especially keeping a Japan Yen General Ledger and paying taxes. The Representative Office can employ people in Japan and does not need to be registered with legal authorities like the Legal Affairs Bureau. The only registration needed is with tax office for payment of emplyees withheld income taxes. A representative office is often used by companies that wish to employ people in Japan for support activity or before starting a full scale activity. (Japan Management Consult, 2011) The disadvantage of a Representative Office is that it cannot engage in any for profit transactions that would raise Japan’s tax liability. It is only there to gauge the atmosphere of the environment through surveys and assessments.
Abe, Namiko. (2014). About.com Japanese Language. Nemawashi. Retrieved from: http://japanese.about.com/library/weekly/aa080597.htm Anderson, R.V. (Mar/Apr 2009) Management World. The Online Journal for Certified Managers. Japanese and American Management: A Contrast of Styles. Retrieved from http://cob.jmu.edu/icpm/management_world/CMartMar09.pdf FitzGerald, L.A. (2014). Module 2: One World Many Cultures. In Jones International University, BC 607: Leading from a Global Perspective. Retrieved from http://courses.jonesinternational.edu/display.jkg?courseSectionId=33756&uid=105453&tpl=frameset Gordy, Bill. (Dec 11, 2013). The Solutions Group Inc. Implementing the Japanese Business Practice of Nemawashi. Retrieved from www.thesolutionsgroupinc.com/implementing-the-japanese-business-practice-of-nemawashi/ Japan Management Consulting (2005-2011)