Business relation ships in japan

                                                       Conflict Negotiations
                                                               (final paper)
                                                     Moscow State University
                                                     (International College)

                       BUSINESS RELATIONSHIPS IN JAPAN

       Business  relationships  in  Japan  are  characterized  by  a   well-
structured hierarchy and a strong emphasis on nurturing  personal  contacts.
Generally, they are built up over long periods  of  time  or  are  based  on
common roots, such as birthplace, school  or  college.  Also,  an  unusually
strong emphasis is placed on social activities to  strengthen  ties.  It  is
not surprising, therefore, that those looking in from the  outside  may  see
the Japanese business world as comparatively hard to break  into.  In  fact,
there are many different kinds of business  relationships,  but  most  share
two features - they have been built up slowly and carefully, and  much  time
is spent in keeping them up to date.
      Business relationships in Japan are part of an ever-broadening  circle
that starts within the company (uchi - inside, or"us"),  and  moves  towards
the outside (soto)  to  include  related  companies,  industry  or  business
organizations, and the like.
      Most Japanese companies have a  series  of  very  close  relationships
with a number of other companies  that  provide  them  with  support  and  a
multitude of services. It has been traditional practice  for  a  company  to
hold shares in these "related" companies, a practice which  has  given  rise
to a high proportion of corporate cross-share holdings in  Japan.  This  has
been a show of faith on the part of one company towards  another,  and  also
has been useful in providing companies with a core of  stable  and  friendly
shareholders.
      When dealing with a Japanese company, it is important to be  aware  of
the  existence  and  nature  of  some  of  these  close  relationships,   in
particular those with banks and trading companies. Understanding  these  can
help to define the nature of the company and the way it  does  business,  as
well as its positioning in the Japanese business world. It  should  also  be
understood that there is a constant flow  of  information  between  Japanese
enterprises and their banks and  trading  companies.  Unless  the  need  for
confidentiality is  made  very  clear,  these  may  soon  be  aware  of  any
negotiations in which the company is involved.
      Larger corporate groupings are becoming more familiar to  non-Japanese
business circles. These groupings are  known  as  keiretsu,  and  some  have
their roots in the large pre-World  War  II  conglomerates.  Accusations  of
keiretsu favouritism overriding more  attractive  outside  offers  sometimes
are levelled at Japanese companies. When asked  about  this  practice  by  a
foreign businessman, the president of a large Japanese  electronics  company
replied: "It's like going to the tailor your father went to. He may be  more
expensive than the competition and perhaps even not the  best,  but  he  has
served your family well for many years and you feel duty bound to  remain  a
faithful customer." There is a tendency in Japanese business  to  be  guided
by the familiar and human considerations,  and  thus  it  is  important  for
anyone wishing to do business in Japan to go a major  part  of  the  way  in
establishing a communications network and a real presence.

                  Business Negotiations & Meeting Etiquette

      Face to face contact is essential in conducting business. It  is  more
effective to initiate contact  through  a  personal  visit  (set  up  by  an
introduction through an intermediary) than through  correspondence.  Initial
contacts are usually formal meetings between top executives;  more  detailed
negotiations may be  carried  out  later  by  those  who  will  be  directly
involved. During the first meeting, you get acquainted and communicate  your
broad interests; you size each  other  up  and  make  decisions  on  whether
ongoing discussions are worthwhile. At this point you should not  spell  out
details or expect to do any negotiating.
      Exchange business cards (meishi) at the beginning of the meeting.  The
traditional greeting is the bow. Many Japanese  businessmen  who  deal  with
foreign companies also use the handshake. If you bow, then  you  should  bow
as low and as long as the other person,  to  signify  your  humility.  First
names are not usually used in a business context. In Japan, the family  name
is given last, as in English.  You  should  address  Yoshi  Takeda  as  "Mr.
Takeda" or "Takeda-san." Expect to go  through  an  interpreter  unless  you
learn  otherwise.  If  meeting   high-ranking   government   officials,   an
interpreter is always used even if they can speak English  fluently  because
customarily, they refrain from speaking foreign languages in  public.  Other
businessmen may speak some English but may not be adequate  for  undertaking
business negotiations.
Exchanging meishi
      Conservative dress is common for both men and women  in  public.  Most
Japanese  professionals  wear  Western-style  dress  (European   more   than
American), although during the hot summer months,  men  often  do  not  wear
suit jackets.
      Concern about how others perceive you  pervades  business  and  social
communication in Japan. Since saving and losing face are so  important,  you
should avoid confrontation or embarrassing situations.  A  distributor  that
cannot follow up on a promise made to a customer loses face and  may  suffer
damages to its reputation. Remember, if you are  supplying  distributors  in
Japan, to deliver on time (especially if they are samples) or  else  face  a
long chain of lost faces and apologies. An error or delayed  shipment,  even
if it is not your fault, may  damage  your  company's  reputation  with  the
Japanese company you are dealing with as  well  as  all  the  companies  and
customers that Japanese company does business  with.  Following  through  on
promises and agreements, both oral and written, is of utmost importance  and
when you cannot do this you will have to swallow your  pride  and  apologize
profusely until you are forgiven.  This  is  all  part  of  common  business
practice and you may see  business  people  (including  top  executives)  on
their knees apologizing. When in Japan be ready to include this  as  a  part
(hopefully not regular part) of your own business practice.
       Nonverbal communications - gestures, nuances, inferences -  are  very
important in  signaling  intentions.  "No"  is  seldom  said  directly,  and
rejection is always stated indirectly. Remember that the Japanese hai  means
"Yes, I understand you" rather than "Yes, I agree with  you."  The  Japanese
will sit in silence for some time - it is a way to reflect on what has  been
said. Early business and social contacts  are  characterized  by  politeness
and formality.
      The Japanese like to launch  new  products  or  take  other  important
initiatives on "lucky days." The luckiest day, called  the  «taian»,  occurs
about every six days. Your Japanese counterpart will probably want to  delay
a major announcement until the  next  «taian».  Japanese  calendars  usually
indicate these days.
      The presentation of a new  product  is  traditionally  followed  by  a
reception with the product on display; an omiyage,  or  gift,  is  given  to
each attendee. This adds to the overall cost of the event.
      Japan epitomizes the rule "Make a friend,  then  make  a  sale."  When
selling to or negotiating  with  the  Japanese,  do  not  rush  things.  the
Japanese prefer a ritual of getting to know you, deciding whether they  want
to do business with you at all, instead of putting proposals on  the  table,
and seeing whether agreement is possible within a broad framework.
      The Japanese prefer  to  close  with  a  broad  agreement  and  mutual
understanding, preceded by thorough discussion of each  side's  expectations
and goals. If they decide they want to do business, they will negotiate  the
details with you later.
      A Japanese negotiator cannot give a prompt answer  during  an  initial
discussion. No commitment can be made until the group or groups  he  or  she
represents  reach  a  consensus.  Do  not  expect   an   immediate   answer.
Negotiations may take an extended period.
      Japanese executives  emphasize  good  faith  over  legal,  contractual
safeguards. They are not in the  habit  of  negotiating  detailed  contracts
that cover all contingencies. However, Japanese managers who are  accustomed
to Western business dealings are familiar with  more  structured  contracts.
In case of disputes, the Japanese prefer resolving issues out  of  court  on
basis of the quality of the business relationship.
      A Japanese partner or  customer  will  usually  prefer  to  develop  a
business relationship in stages, with a limited initial agreement  that,  if
successful, is gradually extended into a broader,  more  binding  agreement.
So once you make a commitment, expect it to be  for  a  long  time.  If  you
break it, your reputation will be affected and everyone will  know.  It  may
be difficult to find another Japanese partner after this happens.


                                   Sources
     1. Internet (Alta Vista, Lycos)
     2. Boye D Mente «Business guide to Japan. Opening doors... and closing
        deals!»,1998