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Doing Business in Japan: The Devil is in the Detail

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Doing Business in Japan: The Devil is in the Detail article image

It has now been over four months since the tragic earthquake and tsunami here in Japan. Although the major business hubs, Tokyo and Osaka, were not directly impacted by the disasters and are back to business as usual, the story is very different in Japan’s northeast region where much of the major infrastructure was badly damaged and manufacturing has suffered substantial disruption. The twin disasters and the disruption they have entailed add a further layer of complexity for foreigners doing business in Japan. While cracking the Japanese market can appear a daunting task at first, Australian investors and exporters should not be perturbed as it is a rewarding market in which to expand, once you are established. As well as the obvious language differences, there are many more subtle nuances of business custom you need to understand when working in Japan. I moved to Tokyo full time in October 2010, to launch Travelex’s Corporate Payments business in the Japanese market and oversee our growth strategy in the Asian region. We recently signed a major deal with the Rakuten Group, the largest e-commerce company in Japan and one of the top ten e-commerce companies in the world, to provide international payments and foreign exchange capability to customers of the group’s online bank, Rakuten Bank. Finalising this partnership and launching our joint service provided me with a unique insight into the Japanese business culture; a culture that is process driven and details oriented. The Japanese culture is meticulous. Anyone wanting to undertake business here needs to understand that there are clear processes to follow and that these processes can seem onerous from an outsiders’ perspective. Take for example, the relatively simple act of buying a new mobile phone or renewing your driver’s license. In Australia, both are simple procedures. In Japan, it can take many hours due to the particular processes to be followed. Equally, there are long processes to overcome when doing business, so for Westerners who are accustomed to things moving quickly, learning to be patient is integral. Japanese executives use meetings differently than we might in Australia. While we would expect a meeting to conclude with consensus and solid resolutions, it can often take multiple meetings and lots of follow up questions to reach that point in Japan. The level of detail that would ordinarily satisfy an Australian client will typically be met with several rounds of follow up questioning, with each meeting being used to accumulate information. That’s why it is best to put things in writing, sending though important information ahead of time, so that the meeting has clarity and defined scope.

If preparing for a presentation in Australia, you would look for brevity for your slides, using simple headings or bullet points. In Japan, it pays to provide more detail on each slide so there is no ambiguity and to send your presentation ahead of time. This way, your Japanese counterpart will have time to prepare questions beforehand and negotiations can commence from the onset. Business relationships also take time and building rapport with clients takes a different route in Japan than in Australia. Relaxed networking or interactions are virtually unheard of until you have a well-established client/partner relationship. While you might use an offsite coffee or after work drinks to build relationships early on in Australia, this sort of informal activity at the early stages of a business relationship is almost non-existent in Japan. Rapport is built on trust, so relationships must be cultivated slowly and through formal business meetings. While you can still go down the formal route and invite the prospect to dinner at a restaurant, make sure you do this well in advance, as executives’ calendars are always full, even in the evenings where they will have business engagements after hours on most nights. When at dinner, or at any other formal meeting, it’s important to remember that office and restaurant tables in Japan are typically rectangular. In a business meeting or in a restaurant, you should always sit on the opposite side of the table from the Japanese business partner. It is rude to sit next to them, unless they invite you to which is rare. Dinner is a good way to start building rapport and once you have built this trust and barriers have been broken down, your business relationships will start to feel more like you are familiar with in Australia. When starting out in Japan, try to establish Japanese contacts who can shed invaluable light on some of the quirks of the culture. It is the little things like knowing to take off your shoes before entering someone’s house or how to give and receive a business card (holding it in both hands, bowing slightly) that can really make the difference about the way you are perceived. Another tip is that if you go out for dinner, under no circumstances should you fill up your own glass if it is empty. In Japanese culture, particularly when eating, you do not fill up your own glass. Your guest, the Japanese business partner, will do this for you; likewise if you see that their glass is getting low or empty, you should immediately fill up their glass for them. Your Japanese contacts should also be fluent in both Japanese and English. It is important to remember that although English is taught in schools, and most business people are able to read it, very few Japanese people are fluent English speakers. As such, almost all business meetings are conducted in Japanese. With this is mind, you need someone on the ground who has a good grasp of English, both written and spoken, as well as being fluent in Japanese so they can translate effectively. If presenting in English, it is important to speak slowly and clearly and to use simple vocabulary. It also pays to put everything in writing and to send materials before your meetings. This way, the executives can prepare questions and you can get things moving more quickly. Preparation for your meetings is critical in Japan, but it is also encouraged to research more widely than your competitors and be up to date on the general business outlook as well. Be aware that the current economic outlook and the economy are topical in Japan and almost everyone you meet talks about them. Understanding basic economic indicators like the strength of the Yen relative to the $US and other trading currencies, GDP numbers and retail trade figures will help you engage more meaningfully and develop relationships more quickly. With patience, a passion for detail and persistence, Australian businesses can find fantastic opportunities in the Land of the Rising Sun.

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