DOING BUSINESS IN JAPAN
Anyone who has ever spent time doing business in Japan will tell you that it is a land of contrasts; technologically innovative and modern yet traditional and hierarchical. Japan boasts excellence in sectors as wide-ranging as finance, automotive, computing and pharmaceuticals and is viewed as a major global influence – even despite the recent economic rise of China and India. The county is deemed as ‘mostly free’ in terms of economic freedom, with businesses able to operate without the hindrance of excessive government controls. The nation also scores highly on the World Bank’s scale for ranking business ease.
However, despite the World Bank’s assessment economic challenges arise as the country faces a low-birth date, an ageing population and lack of reform. It is important to note that steps taken through the Japanese government’s “Abenomics” policy, based upon the three key aspects of monetary easing, fiscal stimulus and structural reforms, have made a positive impact on deflation. Where the obstacles often lie when doing business in Japan is in communication misunderstandings.
Japanese business professionals often employ “coded speech” where what one publicly says and how they appear (tatemae) does not necessarily align with what one is thinking or what one means (honne). The result can be vague instructions and misinterpretation which is why it is strongly advisable to ask for clarification and remain patient.
Communication is often closely intertwined with culture and customs and taking the time to understand all three is imperative if you wish to do business successfully and sustainably in Japan. This is especially the case as, out of all the world’s business cultures, doing business in Japan is strongly relationship-driven. Consensus and cooperation are integral elements of Japanese business hierarchies and meetings. The concept of wa or harmony lies at the heart of business meetings, and it is not recommended to offer strong opinions or cause confrontation which might upset the balance of wa.
In order to maintain a sense of wa and build strong relationships, an understanding of Japanese culture is required. The World Business Culture website offers a wealth of information and tips on how to interpret Japanese culture and understand the business structures and economy to ensure you are well-prepared when doing business in Japan.
Japan – a decades old paradox. Ultimately modern; completely traditional.
It has perplexed observers for decades as to how Japan can be so advanced in terms of technology and infrastructure whilst at the same time being wedded to traditional cultural approaches to all things corporate. Japanese companies are at the same time innovative and disruptive whilst retaining strong alignment to traditional hierarchical structures, risk aversion and detail obsession. How does Japan retain its position in the global economic league tables when it seems to stubbornly refuses to move with the latest corporate thinking?
The question continues to be asked as to whether it is really possible to do business in Japan as a foreign entity or are things so weighted against foreign entrants that it really isn’t worth the effort. The answer has to be a resounding ‘yes’ as many companies have entered the Japanese market and had great success. However, many companies have also failed to crack the Japanese market.
So what is the key to doing business in Japan in a successful and sustainable manner? At Global Business Culture we strongly believe that understanding Japanese business culture is the key to success. How can Japan be innovative and traditional? The answer is ‘culture’. How can Japanese companies retain strong alignment to hierarchy and remain efficient? The answer is ‘culture’.
Looking at Japanese business culture is not a ‘nice to do’ it’s a definite ‘need to do’. Take the time to really understand the key drivers of your Japanese colleagues, clients and other stakeholder and you will find the benefits obvious and immediate.
This country profile provides an overview of some of the key aspects of Japanese business culture in a concise, easy to follow-format. The document includes information on:
- Background to business
- Business Structures
- Management style
- Women in business
- Top tips