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Japanese Business Customs

An understanding of Japanese business and social practices is useful, if not required, in establishing and maintaining successful relationships for doing business in Japan.  Indifference to local business practices can indicate a lack of commitment on the part of the exporter, and may lead to misunderstandings and bad feelings, which could result in the loss of business opportunities.  One should not assume that because meetings and correspondence are carried out in English that Western social and business norms apply.

Japanese society is complex, structured, hierarchical and group-oriented.  It places strong emphasis on maintaining harmony and avoiding direct confrontation.  Japanese religious practice tends to be socially oriented and selective rather than a matter of deep personal commitment; ethics tend to be situational.  In building relationships (which often precede a first-time sale or an agreement) one should emphasize trust, confidence, loyalty and commitment for the long term.

Group decision-making is important in Japan and has been generally described as a “bottom up” exercise rather than “top down.”  Family businesses founded since WWII and smaller second-tier firms are exceptions to this rule.  However, even in the large family firms, where decisions are made at the top, the process is usually managed so that company members have a sense of participation.  This type of group decision making tends to be slower.  Recognizing that it takes a longer time to cultivate business relationships in Japan than in the United States, U.S. business executives should not expect to make a deal in just a few days.  Consistent follow-up is vital.  Likewise, U.S. business people should recognize the importance of working with the staff level of their Japanese counterparts and not exclusively with the executive level.

Gift giving is expected on many business occasions in Japan.  Regional U.S. gifts or company-logo gifts are appropriate.  Quality is important, but the gift does not have to be expensive.  The packaging of the gift is as important as the gift itself and should be done professionally.  In Japan, sets of four are considered unlucky (the number four is pronounced the same as the word for death).  Gifts that can be shared among a group are appropriate.

Business travelers to Japan should make sure to bring a large supply of business cards (with their title) when they come to Japan; printing bilingual cards is a nice touch.  Business cards are exchanged to formalize the introduction process and establish the status of the parties relative to each other.  Japanese bow when greeting each other but will expect to shake hands with foreign executives.  A slight bow in acknowledgment of a Japanese bow is appreciated.  Japanese executives deal on a last name basis in business relationships, and initial business and social contacts are characterized by politeness and formality.

Business travelers visiting a Japanese firm for the first time should be accompanied by an interpreter or bilingual assistant.  Many Japanese executives and decision-makers do not speak English, although many of them can greet visitors in English and read English product literature relevant to their business or industry expertise.  Generally speaking, Japanese are weaker at hearing and speaking English, and more adept at reading and writing.  Thus, the Japanese side in a business meeting generally expects a visitor to bring an interpreter if they are serious about doing business.  Although the cost for hiring an interpreter can be very high ($400 to $900 per day depending on class), bringing along an interpreter shows that a visiting firm is serious about seeking to market their products/services in Japan.

The first visit to a Japanese firm generally serves as a courtesy call to introduce U.S. executives and their company, and also allows the U.S. side to begin to evaluate a target company and its executives as potential business partners.  A request to meet only with English speaking staff can mean missing the opportunity to become acquainted with higher-ranking executives.

A written contract, even if less detailed than a contract between two U.S. companies, is essential to meet legal, tax, customs and accounting requirements.  Contractual commitments are perceived as representing long-term relationships so the terms and conditions, for example whether to grant exclusive rights, should be considered carefully.

Japan's travel infrastructure is on a par with that of the United States.  All business and tourist traveler services are available.  For additional information on traveling to Japan, contact the Japan National Tourist Organization (JNTO) in New York at:  tel: (212) 757-5640; fax: (212) 307-6754, or visit JNTO’s website at http://www.jnto.go.jp.