Best Business Practices for Negotiating Deals in Japan

 

Words by Emily Smith

Understanding Japanese business culture is crucial for building successful partnerships and staying ahead in global innovation trends. yet2 has an office in Tokyo, Japan for this very reason, and supports clients in navigating deals with Japanese companies to further their innovation goals. Learn more about a recent Innovation Tour in Japan we did for a client here.

Here are some best practices (and potential pitfalls to avoid) to navigate the complexities and nuances of Japanese business etiquette effectively.

*Note, this is just the tip of the iceberg and there are more in-depth practices to be aware of in order to be successful in landing a deal with the Japanese, but we wanted to offer you a high-level insight to the differences in culture.

 

1. Build Etiquette, Build Trust

Etiquette is the cornerstone of trust in Japan. Here are key points to consider:

– Business Cards & Introductions: When you receive a card, take a moment to study it carefully before putting it away. This shows respect and appreciation for the person you are dealing with. Also, never write on a business card.

– Hierarchy and Respect: Bushidō is a moral code concerning samurai attitudes, behavior and lifestyle, formalized in the Edo period. The social and economic organizations of Japan still employ Bushido traits such as loyalty, honor, honesty, respect, benevolence, courage, and rectitude.

Don’t call a person by their first name unless they have asked you to do so. Use appropriate honorifics such as “San” (Mr./Ms.) for addressing individuals, and “Sama” for customers or when you want to show even greater respect. It’s always last_name-san.

However, don’t use –san with your own name, or for names of others in your company when talking about them to others. Bowing is also a sign of respect – when meeting, when leaving, and when apologizing. 

 

2. Honor Relationships Over the Task

Japanese culture places a high value on relationships. Building a strong, respectful relationship is often considered more important than the immediate task at hand, often this factors in above price and product. To foster this:

– Avoid Putting Someone on the Spot: Causing someone to lose face can damage the relationship irreparably. Always be considerate and avoid direct confrontation in meetings. Case in point, an example was a case where a Director was surprised by questions received out of the blue. He did not know the answers as his staff oversaw the details. His inability to answer caused him to lose face.

– Send Written Materials Ahead of Time: This allows your Japanese counterparts to review and prepare their thoughts, ensuring a more productive discussion and not catching them off guard.

 

3. Understanding Communication Nuances

Communication in Japan is often indirect. Here are some key points:

– Avoiding ‘No’: The Japanese rarely say ‘no’ directly. A ‘yes’ or ‘hai’, means I hear you, I understand. It might only mean they are listening, not that they agree. Don’t assume that they are in agreement if they say this. Pay close attention to body language and subtle cues. This will often give more information than spoken words.

– Handling Disagreements: Conflicts and disagreements are typically avoided in meetings. This means you might not get an immediate commitment or a clear rejection. Be patient and look for indirect signs of consensus.

 

4. Patience is Crucial

Securing a commitment can take time. The decision-making process in Japan is often deliberate and slow. Here are some best practices:

– Slow Responses: Understand that slow responses and unbalanced asks can kill the deal. Be patient and avoid pressing for quick decisions. yet2 has a list of strategies to implement that can respectfully move a deal forward without offending.

– Avoiding Pushiness: Pushing on cost profiles or other sensitive topics early in the deal can be inappropriate and counterproductive. yet2 has seen firsthand how asking these questions early in the process can stop talks altogether.

An example is that LargeCompany hired yet2 to gather non-confidential information on a Probiotic Start-up. It was key for strategic reasons that LargeCompany’s identity be kept anonymous.  

On LargeCompany ’s behalf, yet2 approached a SmallCompany anonymously, asking for public information on their Probiotics technology.

SmallCompany’s response was: “I’m not able to provide you with any information on our Probiotics as they are a Proprietary Technology. I wish you all the best.”

 yet2 gets through to the Operations Manager responsible for partnerships. With the LargeCompany’s permission, yet2 shares that the potential application is around premium products, which turns out to be a key nuance for SmallCompany. They are now interested in partnering.

Sharing interest with SmallCompanies in Japan may be necessary to overcome hurdles and keep conversations moving forward.

 

5. Accelerating Decision-Making

To expedite the decision-making process, involve key audiences early but don’t press for an immediate decision:

– Learn from Missteps: Understand common missteps, such as being too aggressive or not respecting the decision-making hierarchy. Decision making in Japan is consensual vs top-down.

Mid-level managers agree before taking the plan to higher level managers, and the Group is more important than the individual.

By following these best practices, you can navigate the complexities of Japanese business culture and build strong, lasting business relationships. Remember, patience, respect, and clear communication are your best tools for success in the Japanese market.

To gain more insights on yet2’s most impactful learnings around negotiation process, tactics, and tools for Japanese business, as well as what we have identified as top process barriers to deals, reach out to us here.

Here’s feedback we received for a recent training on Japanese business culture to prepare our LargeCompany client:

“Everything has been going smoothly. The training really helped us show up well and be good hosts. The team appreciated the training and it helped us tremendously.”

For more insights on navigating global business cultures successfully, download our free eBook Unlocking Impact from Open Innovation here.

 

 

Image by Pawel Janiak on Unsplash