Doing Business in Japan

In researching the Nemawashi consulting system I found that Nemawashi is the Japanese consensus building approach. The literal translation into English is “wrapping around the roots”. I discovered that Nemawashi is about working together to create clear and implementable goals by agreement of all involved parties. Some advantages of this system are: it allows everyone to be accountable instead of 1 person, or a select few. It allows a clear understanding amongst all parties. Everyone knows what is to be done and why. An individual is bound to support an initiative in which they helped to develop. Makes everyone accountable and builds a sense of ownership. Another advantage is that all parties are in consensus from the start, as to what the goal is; which in turn, reduces time which would have been spent in meetings. That time can instead be spent on designing/implementing the product or idea.
Implementing Nemawashi practices in American business could be difficult due to the differences in the American business culture. The Nemawashi process often happens in a casual setting such as dinner or a sporting event. Unlike us Americans, this is the time in which the Japanese use to discuss business ideas and strategies. Research states, this is the time in which the Japanese feel more comfortable in which to speak freely on difficult topics. By time the actual meeting takes place 80% of the decision making process is complete. Now this can pose a problem if the remaining 20% do not come to a consensus. In such a situation, it’s back to the drawing board. Coming to a consensus can last weeks or months. The company should plan an adequate amount of time for the decision-making process. Americans have difficulty grasping this concept as we are so accustomed to meeting settings in which we brain storm ideas or listen to the proposed ideas of others. We can spend a considerable amount of time in meetings while data is shared, stats are reviewed and eventually a decision is made. As compared to a Japanese meeting, which is pretty quiet and calm, the data is presented, agreed upon then the meeting is over. All parties involved already knew what to expect.
In order for Americans to implement a system of Nemawashi they would need to learn how to conduct business issues on an informal level. The system has proven to work with several Japanese companies including Toyota. Nemawashi is one of Toyota Way’s 14 principles, part of management’s philosophy.
In welcoming a Japanese delegate I would need to prepare by researching Japanese business etiquette to learn acceptable greetings and business conduct as to not disrespect the potential client in any way. I would also get either an interpreter or hire someone fluent in both English and Japanese to my team so there would be no language barrier between us in the initial meet and greet or in the future. I wouldn’t want to anything to jeopardize a future business relationship. My main focus would be finding out as much information as I can about Japanese business etiquette dos and don’ts and follow them accordingly. I would try to find out information about the delegate. His interests and dislikes and appease to his likings. I would try to find out his interests and plan to either meet or take him to a place that I know he would enjoy. Make the trip memorable for him.

In compared to other business establishments in Japan, a Japanese representative office is very easy to set up and there is no registration necessary. Costs are deductible from the company’s headquarters’ and a representative office is not subject to Japanese income tax. The diagram below shows the activities of a representative office. A representative office cannot have any bank accounts in their name and they are not allowed to sell any products, goods, services or anything for that matter! In order for a business to do anything other than what is listed below, they would have to establish a branch or a Japanese corporate unit.

In my opinion a company will only benefit in having a representative entity in Japan if they can afford to fund an office that won’t be bringing in any income. If a company can afford to do this, than this is a great opportunity to collect as much info as possible. This time can be used to get their name known within the community, time to survey their potential audience base and can end up saving the company money in the long run. This approach would give them the upper hand of going in already knowing what their target market wants and desires are. The representative would be a short term fix until the company

References
Fetters, Michael D. Nemawashi essential for conducting research in Japan. Social Science & Medicine, Aug 1, 1995, Vol. 41, Issue 3

Howard, Nigel. The Really Important Difference Between Japanese and Western Management. Management International Review, Jan 1, 1981, Vol. 21, Issue 3

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