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Doing Business In Japan


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Doing Business In Japan

  2. 2. FOREWORD FOREWORD 3 This publication offers advice to When reading this booklet, the – The answer therefore is to use help your company access the following points need to be borne the guidance given here as a Japanese market, taking you in mind: template for your business through the processes of – Japan is currently undergoing a dealings with Japan. As in every preparation, visiting the market, period of considerable change, society, there will be those who winning the business, and as it moves from a high-growth, do not fit the norm. But if in establishing and maintaining protected economy to a mature, doubt, no-one will be offended business relationships. It is intended open economy. The guidance if you follow the advice given primarily for companies new to the given here relates largely to here. market, but more experienced dealing with mainstream exporters should also find it useful. Japanese companies which Above all, do not be put off retain the traditional ways of tackling the Japanese market for doing business. Newer, more fear of getting it wrong. The entrepreneurial and younger Japanese do not expect foreigners, companies which retain the especially on their first visit, to have traditional ways of doing mastered all the rules of Japanese business areas of business practice and etiquette. And communications and e- if all else fails: commerce – may not abide so strictly by these practices. In – Be courteous particular, their decision-making – Be patient processes may be faster and less – Be sincere hierarchical than those described here. – On the other hand, the pace of These three virtues will see you change can be exaggerated. through most difficulties and What change there is – for embarrassments. example, the breakdown of the jobs-for-life culture, and of consensus decision-making – is starting from a very low base. It will take many years for these changes to permeate through to every level of Japanese business and society.
  3. 3. 1 INTRODUCTION Doing Business in Japan 4 Why Japan? Key facts about Japan – Japan’s population is ageing rapidly as its birth rate declines Despite its well-publicised economic – Japan is still the second largest and people live longer. This is problems over the past decade, economy in the world, with a giving rise to new business Japan remains a market of very GDP roughly as large as opportunities in welfare, considerable importance for British Germany and the UK combined. healthcare and associated exporters. It is the UK’s largest It accounts for some 51 per cent services. The Japanese are also export market outside Western of the total Asian economy and becoming increasingly health- Europe and the USA, with our 12 per cent of world GDP. conscious and aware of exports rising by an average of 11 – With its population of 126 environmental issues, creating per cent year since 1991. Those far- million, Japan is a highly- good opportunities for exporters sighted British companies which educated homogenous and of sports and leisure goods, have had the patience to take a affluent society, with the largest food products and long-term strategic view of Japan private savings in the world. environmental services and are now reaping the benefits. equipment. – As increasing numbers of There lies the key to success in Japanese people travel abroad, – Although the Japanese have a Japan: it is not a short-term for both work and pleasure, they high reputation for the design market, which companies can dip in bring back with them a taste for and use of technology, they and out of depending on spare foreign goods and lifestyles. At recognise that they cannot capacity and their other priorities. It the same time, British products produce all of the innovations takes time and patience to establish and brands are becoming more themselves. There are yourself in Japan. But as many widely known and available in opportunities for companies British companies (large and small) Japan. A desire for with new have found, it repays the effort improvements in the overall many times over. – products and technologies in quality of life and greater the software and mobile individuality also create new communications sectors, either consumer demands which by building relationships to overseas suppliers are well enter the indigenous market or placed to fulfil. Consumers are in partnership with Japanese seeking value for money much companies to enter other more than in the past. international markets. It is estimated that the Japanese e- commerce market alone will be worth ¥6,662 billion by 2004.1 1 Source: E-com; Anderson Consulting
  4. 4. INTRODUCTION 5 – Deregulation over recent years has opened up new opportunities for foreign companies in the Japanese market, from telecommunications to retailing. While some may argue that, in some sectors, the pace of change is too slow, the process of deregulation is firmly established and is supported by the Japanese government, business and consumers. In the meantime, Japanese industry and commerce are having to restructure to meet new competitive pressures, and are increasingly open to the notion of buying from overseas. – Above all, British companies should forget their old preconceptions about Japan being a "closed" market. The formal barriers to entry are now no greater than in most other advanced economies. – Japan is indeed unique, with its own traditional culture and ways of doing business. But, as the many British companies who are successful in the market will attest, it is by no means impossible to enter the Japanese business market. There is also a wealth of information, advice and help available from a variety of sources, many of which are referred to in this booklet.
  5. 5. 2 GETTING STARTED Doing Business in Japan 6 THIS SECTION COVERS SOME OF THE THINGS YOU NEED TO KNOW BEFORE YOU PLAN YOUR FIRST VISIT TO JAPAN, OR HAVE YOUR FIRST MEETING WITH JAPANESE POTENTIAL CUSTOMERS OR PARTNERS, EITHER IN THE UK OR ELSEWHERE. Read, listen and learn It pays to keep in touch with the Japan Unit. As well as gaining up- Building and While this booklet aims to be as to-date information on market maintaining comprehensive as possible within the space available, it is not a developments and forthcoming relationships events, you will have chance to substitute for talking to others who One of the most significant meet other people, both British and know the Japanese market and differences between Western and Japanese, who are directly involved learning from their first-hand Japanese business practices is the in UK/Japan trade and investment. experience. In particular, talk to importance which the Japanese This opportunity to build up your people who know your sector, and place on developing and network of Japanese contacts can can give specific market-oriented maintaining long-term be invaluable aid in developing advice. Take (or create) relationships. This is the key to your business in Japan opportunities to meet Japanese doing business in Japan business people here in the UK. Another good source of advice is In your initial meetings, your This way, you will start to get a feel the London office of the Japan Japanese counterparts will be for the way business is done in External Trade Organisation looking primarily to establish a Japan. (JETRO). JETRO is a semi- personal relationship with you and government trade-promotion body Your first point of contact should your company. Only on that basis, which, uniquely, encourages be the Japan Unit of UK Trade & they believe, can good business imports into Japan, as well as Investment: either contact them relationships be developed. They investment and other forms of directly or through your local need to know that your company industrial and technological co- Business Link. They can put you in will be a good and reliable long- operation. JETRO in London has a touch with sector specialists – the term business partner. For this well-stocked reference library, and Export Promoters – who have a reason, your early encounters with also runs several programmes to wealth of knowledge and Japanese business people may seem help British companies in the experience of the Japanese market, to you to be unnecessarily long- Japanese market. and can tell you what other help drawn out and inconclusive. Be and advice is available from the patient. Without these initial British Embassy in Tokyo and the getting-to-know-you sessions, your other commercial posts in Japan. business in Japan will go nowhere. They will also be able to advise you of any trade missions, buying missions, trade fairs and other Japan-related events which you may be able to take part in.
  6. 6. DON’T LEAVE IT TOO LATE TO RESEARCH THE MARKETS AND MAKE APPOINTMENTS GETTING STARTED 7 The decision-making While the process may be cumbersome – and is in fact being Presenting yourself process abandoned or adapted by some When you meet a Japanese The decision-making process in fleet-footed Japanese companies – business person for the first time, Japanese companies evolves from the corollary is that, once the the first thing he or she will do will middle management and filters decision is made, everyone almost invariably be to offer you a upwards. Top-down decision- understands it and implementation business card, known as a meishi. making is very rare. Everyone who can begin almost immediately. This will have his/her name, will be involved in implementing British companies can be caught company name and job title, as the decision has to be consulted out at this point: having delayed well as details of the company and their agreement sought. Only the decision for weeks or months, address etc. Those used to dealing then will the proposals be passed the Japanese will expect you to be with foreign companies will usually on upwards to the next level, in a position to implement it have the same details in English on perhaps for the process to start almost immediately. It is wise, the reverse side of the card. again. In Japanese, this process of therefore, to try to stay in touch Between Japanese, the meishi gaining a consensus is known as with progress on the Japanese side, enables each party to place the nemawashi, literally digging around so as to be ready to go when you other person, and his/her company, the roots of a tree prior to get the green light. in a social and business hierarchy. It transplanting it. Do not be tempted to try to speed is the start of the relationship- This all inevitably takes time. While up the process by appealing direct building process. In your business it is going on, you have to be to top management over the heads dealings in Japan, you must be able patient, responding as necessary to of those you are dealing with. This to reciprocate with your own requests for further information. will cause confusion, offence and meishi. Without it, you are a non- Sometimes you will be asked to further delays. person, of little consequence and present your proposals several times easily forgotten. At the same time, if an opportunity to different groups of people within arises – for example, if one of your Your meishi should be of standard the company. This may seem time- senior executives is visiting Japan, Japanese size (90mm x 55m)2 and wasting and repetitive, but it or meeting the Japanese company translated into Japanese on the ensures that all concerned have a in another context – it can be reverse side. Accuracy is essential: chance to hear first-hand what you useful to tell their top management great embarrassment and mirth, can are proposing – and to judge you that negotiations are taking place, be caused by an inaccurate or as a prospective business partner. and to assure them of your clumsy translation. There are a company’s commitment to a number of companies in the UK successful outcome. If you do who can translate and produce your decide to take this course of action, meishi before you go, including the you must keep your day-to-day airlines which fly to Japan. If in contacts informed of what you are doubt, seek advice from the Japan doing, and why, it must be done to Unit. smooth the process, not in a desperate bid to hurry it up. 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 an odd size, it may be discarded.
  7. 7. Doing Business in Japan 8 Besides being a means of self- Presenting your The information you provide to introduction, the meishi also serves Japanese companies should aim to as a permanent record which can company increase their confidence in your be filed away - with a note of You will need to consider how capabilities and help them to where and when you met the much of your company literature understand your quality processes, person, and some salient personal needs to be translated into production capacity and the details – for future use. It is, Japanese in the initial stages of development of your technology. however, important to remember your dealings with Japan. Cost is a You should be able to provide the that the meishi is a representation factor here. Also, most Japanese are following:4 of the person who gave it to you: it able to read and understand – Product samples should be received courteously and English better than they can speak studied respectfully for a moment it. At this stage, attractively- – Product catalogues before being put away. Do not fold produced English-language – Table of component ingredients it or crumple it, and do not write materials, with just the key points and technical data on it in the other person’s presence. translated into Japanese, will be – Outline of manufacturing Your own meishi should be more impressive than poorly- facilities and production-related presented in a similar respectful produced and poorly-translated data fashion. materials in Japanese. There are, however, no hard-and-fast rules on – Corporate profile giving a this, and you should take advice. history of your company and its achievements, including business The materials you hand over at the in other comparable world meetings will be studied and markets such as Germany and discussed at internal company the USA meetings as part of the consensus- building process referred to above. – Details of any previous dealings If they include colour visuals such you have had with Japan5 as photographs, charts and graphs, so much the better; videos3 and computerised presentations (eg on (CD-ROMS) can also be very effective. 3 If presenting videos to companies in Japan, remember that Japan uses the NTSC system, not the British PAL system. VHS is the most common 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 do not hide any information which is anyway likely to become known, otherwise it will damage your reputation to truth and reliability.
  8. 8. GETTING STARTED 9 Price will often be the last issue to Making contact effect an introduction to a be considered, especially when colleague in Japan. Or, he or she selling industrial goods. Japanese All this presupposes that you have may suggest alternative contacts companies are far more interested established contact with suitable for you to approach, and make the in your company ethos, and interested Japanese companies, necessary introductions. manufacturing methods, and are planning to meet them, in Japan or elsewhere. But how do Similarly, you could get a colleague technology and the reliability of the working in a similar or supply chain. It is only once you identify and approach such companies in the first place? complementary sector to yours to questions such as these have been make an introduction to their resolved that the subject of price is Japanese companies are not Japanese business contacts. discussed. However, great reliance is responsive to "cold calling" and placed on price stability, and rarely respond to direct approaches Other ways of meeting and getting regular customers expect discounts from unknown people or to know some Japanese companies of up to 20 per cent on list prices. companies. While trade directories before you go to Japan would may help you to identify suitable include: companies to approach, simply – Attending seminars and similar writing to them to introduce events organised by UK Trade & yourself and your company is Investment, local Chambers of unlikely to produce a response. Commerce, Business Links etc. Because of the importance which is This is an excellent way of placed on relationships, it is always learning more about Japan and much better to secure an meeting Japanese business introduction to your target people, some of whom may be company through a third party. able to make some introductions Reference has already been made to for you. the services of the Japan Unit of – Attending international trade UK Trade & Investment. They can fairs in your product sector, help you to identify suitable either in Japan or in other companies and can effect countries where Japanese buyers introductions for you, working in may be present as exhibitors or close partnership with UKTI visitors. However, do not expect colleagues based in Japan. to get firm orders at these You can also make use of the many events: the Japanese mostly use Japanese companies which have them for research and offices and factories in the UK. A information-gathering, not for telephone call to the appropriate buying. Be pro-active in person in the London office of a following up any contacts you Japanese trading company or make at such events, and call on department store, for example, with them when you go to Japan. a request for a meeting, is much Even if they are not themselves more likely to be effective (and right for your company, they easier) than a similar approach may be able to introduce you to would be in Japan. If there is others who are. interest, the person in London will
  9. 9. Doing Business in Japan 10 The Japanese Despite these changes, a number of business practices which developed Legal requirements distribution systems under the more cumbersome While there are now very few The Japanese distribution system is distribution system remain, and restrictions on what may be traditionally long and complicated, British companies – especially those imported into Japan, there are – with many middlemen between the selling consumer goods – need to as in any country – regulations on manufacturer/importer and the be aware of them. The main ones standards for consumer protection. consumer or end-user. This has are: There are also some prohibited inevitably had the effect of raising imports. The main categories of – Providing long-term credit prohibited or regulated products are prices. More recently, however, the system has become somewhat less – Accepting orders for small lots listed below. Always check to see complex, under the pressure of or swift response to orders (since whether there is legislation covering foreign retailers such as Toys R Us floor space is often limited) your products (the Japan Unit can and increasing consumer demand – Allocating dedicated sales staff advise on this).6 for lower-priced quality products. to accept orders and give advice Department stores and on product range and store supermarkets, in particular, have management Prohibited imports adopted simplified distribution – Rewards for reaching sales Live animals; fake famous brand systems and are increasingly buying targets (eg travel vouchers or goods and pirated products; direct from manufacturers. Similarly, concert tickets). counterfeit, forged and imitation an increasing number of small and currency; stocks and bonds; plants medium-sized wholesalers and stipulated under the Plant retailers have started to import their Quarantine Law; arms and own goods in an attempt to reduce ammunition and drugs. their costs. Imports subject to consumer protection legislation: electrical goods, gas appliances, automobiles, foodstuffs, food additives, pharmaceuticals and cosmetics. 6 Information on Japanese customs tariffs and clearance procedures can also be obtained from JETRO London
  10. 10. 3 WORKING WITH THE JAPANESE WORKING WITH THE JAPANESE 11 Meetings – Because of Japan’s age-based promotion system, the oldest – The Japanese always seek to avoid confrontation, so open As we have already indicated, your person in the room will usually disagreement should be avoided. initial meetings in Japan are an be the senior one. Note how the Be aware that a silent response important part of the relationship- others defer to him, and do the to a point of issue during a building process. How you present same. However, he may well meeting can mean unspoken yourself and your company in these take little part in the discussion, disagreement or opposition. Do early stages can make the and will leave his junior not press the point: take not, difference between success and colleagues to do most of the and move on. failure in the Japanese market. talking.7 – If the meeting is being Much has been written and said on – At the start of the meeting, you conducted in English, without the conduct of meetings with will exchange business cards the use of an outside interpreter, Japanese, but the advice can be (meishi), as described previously. be aware that the person doing reduced to a few simple rules; Do this with due respect and all the talking – the best English – Remember that, at this stage, formality. During the meeting, it speaker – may not be the most the meeting is for the parties to is useful to spread the cards out important person there or the get to know one another and to (discreetly) in front of you, so one you most need to convince. exchange information; it is not that you identify each person on – Blowing your nose in public is the start of negotiations. the Japanese side. considered impolite in Japan, so Nevertheless, be careful not to – Prepare a short opening avoid doing so during meetings concede here anything that may statement beforehand, which (or elsewhere). If you must, wipe be important to you later on. can deliver once the you nose discreetly and quietly – Meetings are generally held in introductions have been made. with a tissue. separate meetings rooms, both This need say no more than that – Do not slump back in the chair, in people’s offices. The hosts you are grateful to your hosts or cross your legs; sit upright and visitors usually face one for giving up the time to meet and look attentive. another across the table. (This is you, how pleased you are to be also true when entertaining or in Japan, etc. It is also useful to – The Japanese keep their being entertained in Japan.) have a more substantive emotions in check, especially in statement ready to use when business, and expect others to – Do not be surprised if you are do the same. Do not under any outnumbered by your Japanese the initial pleasantries are over. This should outline why you are circumstances show anger or hosts, some of whom may say irritation. This will diminish you nothing and seem to play little meeting the company and what you hope to achieve. Be low- in their eyes and suggest that part in the proceedings. This is you are an unreliable business usual in Japan, and is part of key: don’t be boastful about yourself, your products/services partner. the consensus-building process. or your company. Confine yourself to a few key points at this stage, and don’t seek, or expect, a substantive response. 7 Hierarchy within companies is still very important in Japan. At a meeting with outsiders, Japanese managers will not contradict one another – especially senior to them – not engage in debate amongst themselves as often happens at Western-style meetings. If they have contrary opinions, they will save them for later resolution within the company.
  11. 11. Doing Business in Japan 12 – Keep an eye on the clock, and Communication – Be prepared to repeat what you try not to over-run your allotted have said in a different way, to time, especially at initial Much communication between make sure you have been meetings – both for your hosts’ Japanese is indirect, implicit rather understood. sake, and to avoid being late for than explicit, and non-verbal. Added to the difficulties of the – Use less eye contact than would your next appointment. be normal in a meeting with Japanese language itself and the – At the end of the meeting, lack of English ability on the part Westerners. agree with your hosts what the of many Japanese, this makes it – The Japanese do not find next steps are – who will do hard to be sure in Japan that you silence embarrassing, and it what, when etc. Even if this is have correctly understood what is gives them time to collect their no more than an agreement to being said (or not said) and that thoughts and give considered meet again, be sure who is to you yourself have been correctly responses. Avoid the temptation take the initiative. understood. to fill in by talking (or, even – When is it time to leave, repeat The guidance which follows is worse, by making unnecessarily your thanks to the senior person intended primarily for meetings, concessions). present and express the hope but is applicable in your other – Don’t monopolise the that you will stay in touch (or business and social dealings in conversation. Remember that whatever has been agreed). Japan. the point of the meeting is to – If you have gifts, this is the time – Do not take nods or repeated get information as well as to to hand them over. "yes" (or hai in Japanese) to give it. Allow your Japanese mean agreement with what you hosts time to respond, and listen are proposing. This merely to what they saying. Let them indicates that they are hearing finish what they are saying, and and noting what you say, not don’t interrupt. When you necessarily agreeing with it. answer their questions, stick to the point. – Direct negative expressions like "no" are rarely used: but for a – The Japanese have a good sense Japanese to say that something of humour. If the meeting is is "difficult" is tantamount to a going well, humour will often negative reply. come naturally out of the conversation, but don’t force it. – When speaking in English, be Funny stories and jokes are clear, and concise; speak more usually un-translatable, slowly than usual; do not use linguistically or culturally. complicated sentence structures, Sarcasm and facetiousness are double negatives et ("not not understood. inconsiderable"), double questions (eg "You do, don’t you?), or rhetorical questions; avoid colloquialisms and slang; and avoid jargon unless your Japanese hosts area in the same business and you can be sure they will understand it.
  12. 12. WORKING WITH THE JAPANESE 13 Interpreters – Speak to your Japanese hosts, not to the interpreter (eg "What Written It is a delicate decision whether or do you think?", not "Ask Mr communications not to take a professional Suzuki what he thinks.") Because of the importance attached interpreter to the meeting, to personal relationships, the especially initial meetings when you – Ensure that the interpreter, and your Japanese host, have Japanese prefer face-to-face do not know one another. Taking contacts where possible – though an interpreter might offend if the finished what they have to say before continuing the of course in dealing with company prides itself on its staff’s companies outside Japan, written English abilities; not taking one discussion. forms of communication will be might render a meeting totally – After the meeting, take time to unavoidable. The preferred form of unless if there is no English-speaker de-brief your interpreter on written communication is the fax, available. It is best to take advice, what he/she thought went on at followed, increasingly by e-mail. perhaps from whoever introduced the meeting. They can give you Letters are best reserved for you to the Japanese company in a "cultural" interpretation, substantive, formal the first place. They may be able to including non-verbal signals. communications. make enquiries on your behalf. If They can also advise you if, for you set up the meeting yourself, example, a phrase which, when When communicating with a there is no harm in asking the translated into English, seems Japanese company in writing, apply company directly. If in doubt, err like a positive response, actually the rules shown above as on the side of caution and take an means that the Japanese side appropriate. Use simple words and interpreter. are not interested. The phrases and short, uncomplicated interpreter – especially if you sentences. For those unused to using interpreters: use the same one for a series of Because of the preference for the meetings or visits – can be a spoken word, the Japanese often – Meet the interpreter for 30 useful ally. seem slow to respond to written minutes or so (at least) before communications and are reluctant your meeting to brief him or to initiative correspondence. (more often) her on your Japanese companies do not usually, company, the company you are for example, send progress reports meeting, what you plan to say to tell you what is happening, or and what you want to achieve. send interim replies. The view Go through any unusual words usually is, if there is nothing much or technical terms that may to say, say nothing. While this can come up in the meeting. be frustrating, a lack of a written – When speaking through an communication should not interpreter, speak clearly and necessarily be viewed as a lack of slowly, stopping every minute or interest. But it is well to keep up so to give the interpreter a the flow of correspondence from chance to put your points your side, within reason, so that across. Speak in "paragraphs", contract is not lost. not single sentences or phrases. Numbers are best written down for clarity.
  13. 13. Doing Business in Japan 14 Telephones respond positively: it’s a good opportunity to get to know your – For initial meetings, a simple corporate gift is sufficient – Because of the danger of Japanese hosts better, and to perhaps branded goods with misunderstanding, linguistically and understand more about Japan. your company logo. Overly culturally, the use of the telephone expensive or lavish gifts might should be confined to simple – If you are the host at a formal event, be ready to say a few cause embarrassment, as they matters, such as personal greetings have to be reciprocated.8 Be or meeting arrangements etc and words of welcome at an appropriate point. If you are aware that Japanese government even then a fax or e-mail officials are now banned from confirmation is advisable. being entertained, you will be expected to respond. accepting gifts (or entertainment) of more than – Problems sometimes arise when nominal value. Japanese etiquette first meeting a Japanese person Again, observance of some simple over whether to how to bow or – The suffix – san is added after rules will help ease relationships in shake hands. At the start, Japanese names to mean Mr, Japan. These are not complicated, especially in business Mrs, Miss or Ms. Within a and in many cases represent no relationships, it is better to company, people are known by more than good sense and good shake hands. If you bow, a slight their name and job-title e.g. manners. inclination of the head and Suzuki-bucho for Mr Suzuki, the shoulders is sufficient. Whether Department Head. When – Punctuality is a cardinal virtue speaking in English, however, Mr in Japan. Try to arrive at least bowing or shaking hands, do it decisively to avoid embarrassing (or Mrs/Miss/Ms) Suzuki is 10 minutes early for any preferable. Never use – san meeting or social occasion. confusion. when referring to yourself at When giving a lunch or dinner, – The giving of gifts is a high- your company colleagues. or if you are the host at a developed art form in Japan. Japanese should not be reception in Japan, be at the The manner of giving the gift is addressed by their first names venue at least 15 minutes as important as the gift itself. unless they invite you do so. before the starting time to be Gifts should be neatly wrapped ready to greet your guests. (your hotel in Japan can usually Japanese have a habit of do this for you), and presented But finally, remember the advice in arriving early. with some ceremony and the Foreword: don’t be – Apart from after-hours drinking humility. If you receive a gift, do overwhelmed by the need to abide in night clubs or bars, not unwrap it immediately by the minutiae of Japanese social entertaining tends to be rather without asking the host’s etiquette. Just do your best. formal. Business entertaining is permission. If you do unwrap it, always down in hotels or try to take the paper off neatly, restaurants, and an invitation to without tearing it. a Japanese private home is a rare honour. If you are invited out, for a drink or a meal, try to 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 duplicate gifts.
  14. 14. 4 WINNING THE BUSINESS WINNING THE BUSINESS 15 HAVING SATISFACTORILY NEGOTIATED YOUR FIRST VISIT TO JAPAN, HOW DO YOU FOLLOW UP, MAINTAIN CONTACT AND, HOPEFULLY, WIN THE BUSINESS? CIRCUMSTANCES WILL OBVIOUSLY VARY FROM COMPANY TO COMPANY, AND SECTOR TO SECTOR, AND IT IS NOT USEFUL TO BE TOO PRESCRIPTIVE AT THIS STAGE. THE FOLLOWING POINTS ARE DESIGNED TO PROVIDE A FRAMEWORK FOR ACTION. Following up the visit Repeat visits If your core team does not include your chief executive or someone of On your return, write to all the key In view of the Japanese preference equivalent stature, it is important contacts you have met to thank for face-to-face communications, that he or she should go to Japan them for their time. While this is you need to be prepared to make a at appropriate times – for example, intended primarily as a courtesy, number of repeat visits to Japan to to sign key agreements – so as to the opportunity can be taken to push the business forward, however demonstrate your company’s full refer to – and confirm – any slow progress may seem. How often commitment to the Japan Unit. agreements that were reached on this needs to be done will depend future action by either party. on individual circumstances, but if Set in train any action to which you are serious about Japan – and you have committed yourself during want to show the Japanese that Choosing the right the visit – providing additional you are serious about Japan – you partner information, making contacts, etc. should be thinking in terms of one visit every six to 12 months at Your initial or subsequent visits will Given the likely delays on the hopefully have identified several Japanese side, ensure that you fulfil least. As the pace of the discussions (hopefully) increases, it may need companies, which seem interested your part of the bargain as quickly and suitable. Only you can decide as you can. You need to keep the to be more often than that. which one is best for you, but you momentum, and the relationship, Who should go? Because of the may want to talk to some of the going. importance placed on personal experts (e.g. in the Japan Unit) relationships, it would obviously be before making a decision. counter-productive to send an ever- changing array of company representatives. There should be a core team, maybe consisting of only one or two people in a small company, who should participate in all visits wherever possible.9 9 As the negotiations move into the discussion of technical points, more expert-to-expert contact may be required, but the core team should always be in the background to provide continuity and hold the relationship together.
  15. 15. Doing Business in Japan 16 Beyond that, there are two general – In Japan, as much importance is – When quoting prices for goods, points to make: placed on the negotiations that it is best to quote the f.o.b. – Do not jump at the first led up to the signing of the price or yen equivalent prices, company, which shows an contract as on the contract rather than the ex-factory price. interest. There is no harm, itself. The contract is a symbolic This makes it simpler for within reason, in keeping several document, confirming an Japanese companies to calculate candidates in the running until existing relationship. If there is how much a product can be a final decision is made. But in disagreement about the sold for in Japan. Ensure that that case, to avoid accusations contract, it’s sign that there is there is agreement on the of bad faith (which could something wrong in the exchange rate to be used, and damage your reputation in the relationship. who will bear transaction costs market-place), each company – Some parts of a deal (e.g. on and exchange rate risk. needs to be aware that it is only after-sales service, or a – The actual point of delivery of one of several options you are commitment not to raise prices goods can cause confusion. pursuing. for a given period of time) may Most Japanese companies – Do not be tempted to sign up be taken as read since they are consider delivery to the loading with a company just because part of normal Japanese port or specified airline as actual they have a fluent English- business practice, and may not delivery. However, you may be speaker with whom you can be written into the contract. asked to provide a guarantee in communicate easily. While this is Make sure that you and your case there is a delay in an undoubted advantage, the more prospective business partner unloading at a sea point within important point is how well the have the same understanding of Japan. To avoid confusion, it is company knows your market what is being agreed. best to confirm exactly when, and can communicate with your – Once the contract is signed, the during the passage to Japan, potential Japanese customers. Japanese will feel themselves delivery is considered to have bound by the relationship of taken place. trust which it signifies, rather – Since business in Japan is Negotiating the than the formal agreement – conducted on the basis of and will expect you to do the mutual trust between the contract same. If disagreements arises, parties, there may be no written It is neither possible nor the Japanese will expect them contract at all. You must judge appropriate to offer comprehensive to be resolved by discussion and whether to accept this situation, guidance here on negotiating mutual agreement, not by but it is probably wiser in most contracts with the Japanese. You reference to the precise wording cases to insist, politely, on some will need to take expert advice on of the contract. Similarly, even form of written agreement, this when the times comes. matters clearly set down in a however simple. However, some general points can contract may be altered by be made: subsequent agreement between the parties concerned. – Remember all the guidance given so far on how to deal with the Japanese. It will apply equally, or some so, in contract negotiations.
  16. 16. 5 MAINTAINING THE RELATIONSHIP MAINTAINING THE RELATIONSHIP 17 YOU HAVE SUCCESSFULLY NEGOTIATED YOUR CONTRACT WITH YOUR JAPANESE PARTNERS, AND BUSINESS IS STARTING TO FLOW. THIS IS NOT, THOUGH, THE TIME TO PUT THE RELATIONSHIP ON HOLD. THE JAPANESE NEED TO BE CONSTANTLY REASSURED OF YOUR CONTINUED COMMITMENT TO THEM AND TO THE MARKET. Delivery, quality and Within industry, most Japanese manufacturers order parts and To cover themselves, many Japanese firms will start doing reliability materials to fit in exactly with their business with foreign companies on By far the most important aspect of production schedules (the Just-in- a small scale, gradually expanding this continued commitment is that Time, or Kanban, system). Delays in their orders once they have you should fulfil your side of the delivery can severely disrupt confidence in the other party’s contract, as the Japanese interprets production lines. This is why ability to deliver. it. This means, above all, that you Japanese manufacturers are quite Those companies, which provide deliver the goods or services precise about when they need services or technology rather than promised reliably, on time and to goods to be delivered, even physical goods, need to be no less the approved quality (which, in specifying the time of day in some punctilious in meeting their Japan, means nothing less than the cases. obligations regarding time, quality highest quality). No amount of Consumers and industrial customers and reliability. relationship-building activities will alike are very particular about be effective if these simple criteria quality and will not buy are not met. substandard products, no matter On-time delivery is not just a what their price. Japanese importers matter of convenience. There are will often return a shipment of important cultural reasons for this products if it is judge to be fastidiousness. One is that the substandard. Zero tolerance means seasons in Japan each have a zero tolerance. distinct flavour and many products Reliability too is important in are distributed only at set times maintaining stable business during the year. Thus, delays in the relationships. It is this emphasis on delivery of consumer goods can reliability that has caused Japanese mean that sales suffer and they companies to use predominantly may even become unsaleable, domestic products in the past, even especially those needed for the if prices were higher. You have to twice-yearly gift-giving seasons convince your Japanese partner (New Year and mid-Summer). that you are no less reliable than a domestic supplier.
  17. 17. Doing Business in Japan 18 Keeping in touch While "dropping" on your Japanese partners 6,000 miles away is clearly If it all goes wrong… In Britain, business calls on a client not practical, you too need to If, despite all your efforts and are rarely made without a specific ensure that you remain visible and despite taking the best advice purpose in mind, and rarely without in touch. Maintain your visiting available, the relationship does go an appointment. In Japan, suppliers programme even if things seem to wrong, you need to extricate make regular calls on their clients, be going well (and even more if yourself as amicably as possible. A even when there is nothing specific they seem to be going badly). messy and acrimonious separation to discuss. This regular exchange of Invite your Japanese partners to will damage your reputation in the information helps achieve a deeper Britain to see your company in market place, and will make it hard, understanding of each party’s views action, or arrange to meet in third if not impossible, to establish new and ambitions, forestalls problems countries, e.g. at trade fairs. relationships with new partners. and builds on the spirit of co- Exchange Christmas or New It is very rare for business disputes prosperity as partners. Such Year Cards. to end up in court in Japan, and if relationships experience fewer they do they take years to settle. problems and minimal complaints. Often the relationship can be maintained by doing personal This is not a realistic option if you favours, for example helping the want to stay and be successful in Japanese chief executive’s son or the market. It is better to cut your daughter to find a language school losses with as much good grace as in Britain, or asking for a Japanese possible, and start again. colleague’s help in arranging However, by keeping your Japanese a Japanese home-stay for a relationships in good order, as British friend. suggested here, you make it much less likely that you will be faced with this situation. Even in the worst case, you should have been forewarned of potential problems, and been able to resolve them before the relationship breaks down.
  18. 18. 6 SOURCES OF HELP AND ADVICE SOURCES OF HELP AND ADVICE 19 Organisations Japan External Trade Organisation Business Links The Japan External Trade A regional network of business Organisation (JETRO) is Japan’s support organisations in England, Japan Unit, semi-government trade promotion UK Trade & Investment providing advice and access to organisation, which provides help government support, including the Japan Unit offers a wide range of for exporters to Japan. It produces delivery of export trade services. help, advice and practical support a number of publications and Business Links have International in doing business with Japan, in videos on the Japanese market, Trade Advisers whose role is to help partnership with the British including sector-specific market exporters in their area. To find your Embassy in Tokyo and the British reports. These are available from local business link, see our website Consulate-General in Osaka, the JETRO’s London office, which has a ( British Consulate in Nagoya and well-stocked reference library. There al/local.shtml) the British Trade Promotion office are also programmes to introduce in Fukuoka. selected exporters and potential Exporters in Scotland should investors to the Japanese market. contact Scottish Trade International Japan Unit, UK Trade & Investment on 0141 248 2700 5th Floor, Kingsgate House JETRO operates Business Support (www.scottishdevelopmentinternatio 66-74 Victoria Street Centres in Tokyo, Osaka and other London SW1E 6SW major Japanese cities. These provide free short-term office In Wales, contact Welsh Trade Tel: 020 7215 4253 International on 029 2082 5097 Fax: 020 7215 4500 accommodation and support services to visiting foreign business ( executives. In Northern Ireland, contact Invest JETRO London, Leconfield House Northern Ireland: Export Promoters Curzon Street ( The Export Promoters work within London W1J 5HZ Japan Unit. They are experience Tel: 020 7470 4700 industry experts seconded from the Fax: 020 7491 7570 UK Trade & Investment private sector to provide a business Information and Library perspective on developments in Japan. They can provide general Centre advice on doing business in Japan, A free self-service reference library and on specific market sectors. for exporters is located at the UK Trade & Investment Headquarters at Kingsgate House, containing statistical and market information on Japan and other countries. If you are unable to visit the library, research can be undertaken on your behalf by a professional researcher at a cost of £40 (+VAT) per half hour. Opening hours: Monday – Friday 9:00am – 5:30pm Tel: 020 7215 5006 Email:
  19. 19. Doing Business in Japan 20 Practical Assistance – Export Marketing Research Services (EMRS) Helping you visit Japan The British Chambers of – and bringing Japan to – Overseas Market Introduction Commerce (BCC) run an export you Services (OMIS) marketing research service, on This is a report produced to behalf of UK Trade & your requirements by UK Trade Investment, for companies with – Trade missions to Japan & Investment staff in Japan. fewer than 500 employers. Trade missions are an excellent These can include market Professional researchers advise way to visit the Japanese information, assessment of on how to carry out marketing market, especially for potential local representatives, research for Japan (and other newcomers, who benefit from customised local contact lists, export markets) and help draw the advice and support of more market assessments for your up specifications for work to experienced participants. Grant product, and advice on how to be carried out by your in-house support is available when approach the market. Initial staff or by a professional travelling as part of a sponsored briefs should be submitted via consultant. Grants for up to mission. Full details of your local Business Link. 50 per cent of the costs forthcoming missions are are available. available from the Japan Unit. – UK Trade & Investment Sales Industry organisations interested Lead Service Export Marketing Research in taking missions to Japan This free service automatically Scheme should telephone 020 7215 sends details of export The British Chambers of 4253. opportunities by e-mail to Commerce participating UK companies. 4 Westwood House – Programme arranging service Information is given on specific Westwood Business Park If you are visiting Japan, staff at export enquiries, as well as COVENTRY the British Embassy in Tokyo details of tenders, joint ventures, CV4 8HS and the British Consulate- multilateral agency projects and General in Osaka can arrange Tel: 024 7669 4484 early notice of potential programmes for you to visit Fax: 024 7669 5844 projects. Information is also Japanese companies relevant to given on market-specific seminars your business, and make the all- and similar events. See the UK important introductions for you. Trade & Investment website at Contact your nearest Business for Link for information. information on how to register.
  20. 20. SOURCES OF HELP AND ADVICE 21 – Meeting Japanese buyers in – JETRO Export to Japan Study British Industry Centre Britain Programme UK Trade & Investment have a JETRO invites selected foreign The centre provides low – cost number of programmes to invite company representatives to office accommodation and support Japanese buyers to the UK to Japan to take part in group services for British companies newly meet potential suppliers in visits to give them a first-hand establishing themselves in Japan. specified market sectors. In understanding of the market addition, there are events to and to make business contacts. Contact in Japan bring together British suppliers Contact JETRO London (address and Japanese company above) Yokohama Business Park West representatives based in the UK Tower – Japan Industry Insight 11th Floor or elsewhere in Europe. Contact Training Programme the Japan Unit for details of 134 Godo-cho, Hodogaya-ku, The EU-Japan Centre for Yokohama 240-0005, Japan forthcoming events. Industrial Co-operation runs – Seminars in the UK short training programmes in Tel: 00 81 45 334 1300 Working with Industry bodies – Japan for senior manager. Fax: 00 81 45 334 1301 e.g. Business Links, Chambers of Grants are available to help Commerce, Trade Associations – SMEs to take part. Contact in the UK the Japan Unit arranges Tel: +81 (3) 3221 6161 conferences, seminars and Mr Robin Sloan Fax +81 (3) 3221 6226 workshops on the opportunities Adviser – Investment in Japan for trade and investment in Japan Unit, UK Trade & Investment Japan. These are especially – Executive Training Programme 5th Floor, Kingsgate House, 66-74 useful before you travel to in Japan (ETP) Victoria Street, London SW1E 6SW Japan. Contact the Japan Unit This EU-funded programme Tel: 020 7215 4253 to be kept informed of their offers managers of European Fax: 020 7215 4500 events programmes. companies the opportunity to spend 12 months’ in Japan – Exhibitions and Seminars in learning the Japanese language Japan and culture, followed by six The Japan Unit supports British months’ placement with a companies taking part in Japanese company. international trade fairs and seminars in Japan. Tel: 0870 070 8000 Fax: 020 8335 7000 Email: 10 A separate booklet on the British Industry Centre is available from Japan Unit
  21. 21. Doing Business in Japan 22
  22. 22. The pulp used in this document is totally chlorine free and fully recyclable and biodegradable Published DD/MM/YYYY by UK Trade & Investment. © Crown Copyright URN000000000000