Doing Business In Japan

INTRODUCTION:

Geography and Population

Japan is located in north eastern Asia between the North Pacific and the Sea of Japan. The
area of Japan is 377,873 KM
2
, approximately equivalent to Switzerland and Germany
combined or slightly smaller than California. Japan comprises four major islands,
surrounded by more than 4,000 islands.

Japans population is more than 126 million. Most Japanese reside in thickly populated
urban areas. Tokyo is the capital city of Japan.

Legal System

It is in a framework of a parliamentary representative democratic monarchy, where the
PM of Japan is head of the government and of a multi-party system. The government
exercises the executive power. Legislative power is vested in both the two chambers of
parliament and the government - the House of Councillors and the Diet with the House of
Representatives. The Judiciary is independent of the legislature and the executive. In
academic studies, Japan is usually considered a constitutional monarchy.

Communications

Internal and external communications and transportation are excellent. The telephone
direct dialling system gives instantaneous international communication from both fixed
and mobile units.

Language and Currency

Only one official language spoken in Japan is Japanese. However, many Japanese are able
to understand English to a certain extent since English is the foreign language that
everyone must learn as part of compulsory education. The currency used is Japanese Yen
(JPY).

Major Exports and Imports

Major trading partners are, for exports, the United States of America, and several countries
in Asia, such as China, South Korea, Taiwan and Hong Kong, for imports, China, the United
States of America, Saudi Arabia, UAE, Australia and so on.

Major trading items are, for exports, cars, electric devices, machinery for imports, natural
resources, such as oil, iron ore and foods etc..

Advantages of Investing in Japan

Japan is the centre of new trends and creativity and is a coveted testing ground for new
products. Today, more number of companies around the globe are partnering with
Japanese companies to develop products & services, create innovative technologies, and
conduct Research & Development projects.

Japan is an enormous market, one of the worlds largest in terms of economic scale. The
scale of the economy of the countrys individual regions rivals that of some countries.

Japans industries are competitive globally, and, as can be seen in the automotive sector,
the nations industrial structure is broad-based, with a large number of smaller companies
functioning to support the world heavy weights. For foreign firms, Japan is not just an
attractive market, in all of its sectors, Japan offers foreign firms extensive opportunities.

As the East Asian market grows quickly, the economic integration between countries in the
region continues to strengthen. Japan is becoming ever more important for companies
from around the world as a location for regional headquarters and R&D bases to support
their push into Asia.

Programs & Support to Promote Investment into Japan

Foreign capitalized firms operating in Japan are eligible to borrow loans from
government-affiliated financial institutions for the purpose of acquiring land, buildings,
machinery and equipment, and for research and development.

To improve the administration procedure for investment, each ministry or institution
related to investment has established a single contact point, which can indicate the
division in charge of a particular procedure.

Many local governments provide firms that set up operations in their regions with local tax
abatements or exemptions, subsidies, and other incentives.

Import Control

The Government levies customs duties on some goods entering Japan. Customs clearance
must be obtained to import any goods. On certain goods, there are import and quarantine
controls.



Exchange Control

The vast majority of industries have been liberalized and opened up for foreign direct
investment. Such investment is treated as foreign direct investment in Japan under the
Foreign Exchange and Foreign Trade Law and differentiated from financial and portfolio
investment. In principle, the submission of ex post facto notification to the Minister of
Finance and the Minister(s) with authority over a particular industry is sufficient.
Source of Finance

Japan is a major international financial center with a deregulated environment attracting
the cream of the worlds financial institutions, offering a complete range of competitive
financial services. Japan is a member of the World Bank and the Asian Development Bank.

OVERALL EASE OF DOING BUSINESS


Source: Doing Business database
[1]


Source: Doing Business database
[1]


KEY AREAS FOR CONSIDERATION

Group Orientation

Team-work, altruism and group cohesiveness are the areas very much stressed in the
Japanese society. Social group defines the individual identity. Therefore, when conducting
business with Japan, the stress will be on self-discipline and compromise.

Hierarchy

An individual's position in a group and in a society is classified by hierarchical structures.
Status is decided by several factors such as employment, age, family background etc. The
hierarchical system says that those of higher status should be given due respect. When
conducting business in Japan one should be aware of this hierarchy and adapt the behaviour
suitably.

Respect

To maintain harmony in the society and to preserve the clarity of hierarchical structure,
respecting others acts as a main social lubricant. Behaviour, language, body language,
etiquette and other subtle forms of non-verbal communication can be used to convey
respect.

Meeting & Greeting

In Japanese interactions, there is an increased sense of formality. Your suitability with
regard to doing business would be assessed during the first meeting; therefore a sense of
professionalism should always be maintained.

An integral part of the Japanese society is the bow. It's used when meeting, to show
gratitude, getting attention, as an apology or to express sympathy. Whilst conducting
business in Japan as a Westerner, you won't be expected to bow. You would most probably
be welcomed with a handshake along with a slight head nod.

Introduction should be your full name and then your company name. It is essential to use
appropriate titles when addressing a person, therefore always establish other individual's
position.

When doing business in Japan, the exchanging of business cards plays a significant role. The
business card is seen as representing the person, so this should be treated with respect.
Make sure you have ample cards before travelling to Japan and have one side of the card
translated into Japanese. Also, include on it your position within the company.

When exchanging, present your card with either two hands or the right hand alone. Make
sure that the Japanese side is up. Also, see to it that there is no hurdle between the
recipient and you such as a chair, table or plant. Always use two hands when accepting as
this shows deference.

Building Relationships

Three factors trustworthiness, sincerity and compatibility determine a good rapport with
a Japanese client or colleague. Trustworthiness implies the faith you put in to shield from
loss face. Sincerity implies that you are understanding, compromising and want to do
business on a personal front. Compatibility is attained when you are seen to be concerned
about the well being of the company, the personal relationship and not just concentrating
on financial gains.

Communication

The importance in Japanese culture on preserving harmony has developed such that it
allows very indistinguishable forms of expression. Avoiding explicit or direct statements one
is less likely to cause offense is the rationale behind this.

Clarify meanings and try to find further information when conducting business in Japan. The
reason for this is that the Japanese are implicit communicators. They assume that the
listener knows about the subject very well and minimises the information relayed assuming
that the listener would understand from implication.

Meetings & Negotiations

In a meeting one would always deal with a group rather than an individual. Each attendee
present there will have a particular expertise, so make sure to either bring assistance or you
are confident enough to deal with all the queries you might receive.

The most senior employee should be greeted first and then the rest in the decreasing order
of their ranks. The senior employee would be there usually as a company's ceremonial
representative. It is the lesser ranking attendees who usually do the negotiating or talking.

Meetings typically happen for one of the following 3 reasons - to exchange information,
build rapport or confirm decisions made previously. Decisions are rarely taken in a meeting.

Building rapport should be the first priority if this is yet to be built. It is important to build
relationships with the senior figures as well as all the lower ranked ones. The reason is that
group consensus is important when deciding on any kind of proposal.

The people in Japan are very detail-orientated; so one can expect a lot of questions and that
too repeated in various ways. Failure to answer the questions will look unprofessional. Try
to bring as much details as possible in writing about the company, product, service or
proposal.

The Japanese like dealing with sincere, quiet and compromising persons. Extroverts are
usually seen as arrogant and brash. In the initial stages of negotiations, remain indirect,
humble and non-threatening. Don't disagree openly; don't put individuals on the spot and
always speak diplomatically when conducting business. Hold off concessions until the very
end of proceedings, else your integrity would be questioned.


COMMENTS

The examples mentioned above help us with a few considerations one should make when
doing business in Japan. Cross-cultural awareness in areas like business protocol, meeting
etiquette and approaches to conducting business are ways to maximize the potential.


References:
1) http://www.doingbusiness.org/data/exploreeconomies/japan/#