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A Guide to Doing Business with Japan

Modern day Japan has evolved to be an interesting society with very unique values, colourful customs and intriguing traditions. Anyone who wants to build a global business must include Japan in the business plan. This brings up all the possible challenges, rising out of cultural barriers and communication gaps.

Some of the western firms find it very challenging and difficult to succeed in Japanese markets, due to the following reasons
- Japanese customers have very different tastes compared to the west
- Japan's market size warrants substantial upfront investments, increasing the overall business risk
- Very strong local competition will make it very tough for a new company
- A very thorough market analysis and business strategy is highly essential.
- Management methods and thinking need a drastic change to succeed in Japan.

Some of the areas where a new entrant needs to prepare are business culture, protocol, etiquette and negotiation. Japanese society places great importance on teamwork, cohesiveness and belonging to a group. Entrepreneurs and new business seeking to make a mark in the Japanese market will need to demonstrate compromise and self-discipline. Japanese society is built on deeply rooted hierarchical systems and factors like age, family background, company relations and reputation play a crucial role in determining one's individual status with the Japanese. Demonstrating respect is a very important social lubricant and is conveyed through both verbal and non-verbal communication.

Japanese interactions are highly formal and even the exchange of business cards has to be carried out in a specific manner. One should exchange and accept business cards with both hands. Bowing is a part of Japanese society and is a tradition that must be followed by those seeking to do business with the Japan. Introductions and the usage of correct designations are also very important.

Business relationships are built in Japan based on sincerity, trust and compatibility. The Japanese are implicit communicators and it may be necessary to reconfirm their meaning should anything be unclear. There is also an important code of etiquette to be maintained while speaking. Usually when the Japanese pause during a conversation, it indicates that they are thinking. One should never interrupt during these periods of silence.

One of the most important decisions for a new company is selecting the top management. Here, business acumen and cultural compatibility is more important than language abilities. In Japan, business meetings have their own pecking order and are usually attended by a team. The Japanese are highly detail oriented and it should be expected that many questions will be asked concerning both the deal in question and the company. The junior staff may negotiate but the decision is always based on consensus. One should be very diplomatic, withholding concessions until the end, when dealing with the Japanese.

These are some of the market and culture related challenges that entrepreneurs may face while doing business in Japan.