Running head: BUSINESS IN JAPAN

The Cultural Aspects of Doing Business in Japan
Jane Doe
Saint Leo University

TABLE OF CONTENTS

Abstract………………………………………………………………………………………3
Introduction……………………………………………………….………………………….4
Why do businesses globalize?.....……………………………………………………………4
Doing Business in Japan……………………………………………………………………..5
Understanding Japan’s business culture……………………………..………………………5
Setting up in Japan…………………………………………………………………………..6
Meeting and Greeting……………………………………………………………………….7
Religious Considerations……………………………………………………………………8
Customs and Courtesies……………………………………………………………………..8
Conclusion…………………………………………………………………………………...9
References………………………………………………………………………………….10

Abstract
Many business owners today have been making their way abroad in hopes to expand their production and keeping up with recent trends of globalization. The differed cultural aspects of a foreign country should be greatly considered when trying to build a strong professional relationship with business associates from the host country. Doing extensive research and understanding their different business cultures are the first step a company should take before taking a major leap in a foreign soil. Japan has recently been the country of choice for Western entrepreneurs to invest and expand their business ventures. The Japanese economy has become more diverse because of their size and structure of companies, producing a complex web of inter-locking relationships between small and large businesses. Trying to adapt to a new culture can pose many challenges however, learning the customs and traditions of Japan can ensure a smooth transition for both the American business owner and the host nation country.

Cultural Aspects of Doing Business in Japan Doing business abroad seems to be the trend in today’s society as a means to keep current with globalization, making cross-border business deals easier than ever. However, deals are jeopardized when Americans who may be unaware of their country’s customs and culture offend foreign associates. When doing business in Japan, it is important to understand the Japanese business culture in advance. Setting up in a foreign country can be very challenging especially for Westerners who’s presence alone may be unwelcomed. To ensure success, companies must identify and adapt to the differed social situations and business customs traditional in Japan. In addition, managers need to sustain a deliberate business management strategy in relation to the cultural considerations of the host country.
Why do businesses globalize? Recently, companies have been expanding their operations overseas through globalization. Global corporations improve their home station trademark and operate as essentially stateless entities on a global scale thus opening doors to increase producers and consumers. Globalization allows countries to build a special relationship with each other in addition to exchanging goods, monies, and innovative ideas faster and cheaper. Consumers also benefit from globalization since products become cheaper and easily available. However, with any business decision, one must take in consideration the disadvantages associated with globalization. Unemployment will most likely occur in developed countries when firms decide to move their shops elsewhere in hopes for cheap labor. Outsourcing is a common reason entrepreneurs chose to do business abroad because you can hire twice as much employees in foreign countries for a third of the price it would cost to maintain employees in the U.S. Environmental issues may also arise when companies decide to build factories in less developed countries because their environmental laws may not be as strict as they are in the U.S.
Doing Business in Japan
So why do companies choose to do business in Japan? Maybe because of their economic powerhouse, which represents a huge market for Americans. They have a large population of 127 million, with one third concentrated in the Tokyo area. “Savvy observers agree that an active engagement with the Japanese market remains critical to the success of American businesses, both big and small alike, as well as to the US states seeking trade and investment with Japan,” (www.export.gov/japan). Recent natural disasters such as the 9.0 magnitude earthquake and tsunami, which devastated the northeast of Japan’s mainland, have not interrupted Japanese companies from doing business. In fact, their trade increased in 2011 than 2010. Currently, Japan is the world’s third largest economy having a GDP of $5.9 trillion. They are the fourth largest export market for US goods, and the second largest foreign investor in the U.S. with more than $250 billion invested. In 2011, the Japanese currency called “yen” increased significantly against the U.S. dollar resulting in a 15 year high of 75.86 yen to the U.S. dollar. This made American goods and services more affordable than ever before to Japanese buyers.
Understanding Japan’s Business Culture The Japanese business culture is different from what you would see in the U.S. or Europe. “Certain aspects of Japan’s business culture, especially the very stable long-term relationships resulting from the conservative Japanese send loyalty to trusted partners, can be very beneficial for those foreign companies that understand how to swim with the cultural tide as opposed to vainly struggling against it,” (www.venturejapan.com). When arriving to the Japan for the first time, the Japanese people meet their guest with the utmost hospitality. They take pride in being a service-oriented country since service seems to be the pillar of Japanese business culture. In the U.S. or Europe, service comes with a fee but in Japan there is no tipping, as customer service is part of their job. Japan is heavily influenced by the Western Pop Culture America has to offer. American music, videos, and film bombard Japan and are readily consumed by the masses. This exposure may be the closest thing the Japanese people have to Western Society. Therefore, Japan is always open to invite American entrepreneurs to set up shop in their country giving them a piece of the Western culture.
Setting up in Japan Although setting up a business in Japan may be challenging, the end result is far more rewarding. Not only is it difficult enough to start a business in general, but also in Japan, other considerations such as the language barriers and foreign business customs make it twice as much harder. Naturally, a foreigner may come up with an idea other locals may have not thought of making it easy to differentiate a business by adding a Western touch. First and foremost, entrepreneurs and managers need to learn the language. A working level understanding of the Japanese language is important to prevent being dependent on translators, which can be a huge handicap to business owners. Speaking the language may not be the only physical barrier managers must overcome, certain products may not sell depending on what the culture demands. Common sense may not be obvious to local staff and vice versa. Thus, managers should take time to fully understand both customer demands and staff since a good local manager is instrumental to the success of a company.
The process to set up a company in Japan is bureaucratic and tedious. Recently, the cost to open a business has fallen significantly since the Government tends to promote entrepreneurship. “A joint stock company (Kabushiki Kaisha or KK) is the best company structure to adopt and the KK only needs a share capita of one yen initially,” (injapan.gaijinpot.com). Major companies such as Sony and Toyota are KKs, thus the KK status is important when competing with other Japanese companies. As a rule of thumb, when opening up a business in a foreign country, ensure you have deep pockets to cover any offset expenses initially especially since there are limited sources of funding available to entrepreneurs. In Japan, banks are less likely to lend money to businesses that have less than a two-year track record. However, the government does offer loans and guarantees to start businesses, which are done through various financial institutions.
Meeting and Greeting The Japanese are very reliant on first impressions, which is why greetings are considered to be of utmost importance; politeness is taken very seriously. “A person with energy and vigor that is delivered loud and proud will positively create a good impression whereas a lazy greeting and the act of just leaving without any notice is considered disdainful,” (konnichiha-japan.com). When using Japanese greetings such as “ohahyo guzaimau” meaning good morning, or “konnichiwa” meaning good day, it is custom to accompany a bow. Bowing in Japan is an essential part of Japanese culture and is equivalent to a handshake Americans are used to. Foreigners are not expected to keep up with a bow, however a simple handshake and nod to the head is acceptable.
Commonly, Japanese interaction maintains a high sense of formality, which is why managers must get it right the first time to build rapport with their Japanese counterparts. It is customary to say your full name followed by the company you work for when introducing yourself. When addressing someone, ensure proper titles are used to establish position and relationship. Exchanging business cards is a vital ending post introduction; therefore business owners should have well designed cards (preferably written in Japanese) as this represents the person and their company. Japanese culture consists of offering and receiving the card with both hands. Under no circumstances should a person receiving a business cared fidget or play with the card as this reflects major disrespect from the giver.
Religious Considerations Two major religions practiced in Japan are Shinto and Buddhism. They have co-existed for centuries complementing each other to certain degree. Japanese people may either consider themselves Buddhist, Shintoist, or even both. Surprisingly, religion is does not play a major role in the everyday life of the Japanese people. They typically practice religious rituals during major ceremonies such as birth, weddings, and funerals. In addition, expect Japanese people to engage in religious tradition when visiting shrines or temples during New Year or participating in local festivals known as matsuri, which are religion based.
Customs and Courtesies As a business owners in Japan, learning and applying their unique customs is crucial to building a strong relationship with the Japanese people. There are many differences between the American and Japanese culture. Being frank and direct are common traits in the U.S. but is highly frowned upon in Japan, as they are more conservative. When engaging in conversation, private lives are sensitive topics and mostly kept private therefore it is best to talk about neutral subjects. Do not express anger and aggression since these traits are equated with losing face in Japan. First names are not used casually and last names with “san” attached to it are more appropriate in social situations. Punctuality is highly important in Japan so attending meetings on time if not early can leave a lasting impression. Eating in public and public display of affection is considered taboo and is unacceptable especially among the older Japanese people. In respect to the host nation country, foreigners should apply a modest dress code. In the U.S., it is normal to go anywhere in shorts, t-shirts, and sandals. In Japan, it is customary to dress for the occasion with modest skin coverage. When attending a business meeting, it is highly customary to wear dark suits and a tie to maintain a conservative approach. “Appearance is vitally important in Japan and people are often judged on the way they are dressed,” (worldbusinessculture.com). Business meals form a foundation of commercial life in Japan and should be treated as an essential facet of the all-important relationship building process. So when invited by business associates for lunch or dinner, it is highly encouraged to accept the invitation. Traditionally, the person who initiated the invite will pay for the bill, offering to pay is considered offensive. When entering a traditional Japanese restaurant, shoes should be removed and sometimes customers may have to sit on the floor.
When a foreigner makes an important decision to do business in Japan, it is crucial to learn the different cultural aspects, which may be the driving force to a company’s success. Whether keeping up recent trends of globalization or simply wishing to expand production and profit, entrepreneurs will be challenged initially when trying to adapt to a different culture. Japan’s resources and population make the country a perfect choice for westerners to open business ventures. When in doubt, just remember the Japanese culture is based on politeness, conservativeness, and punctuality. Understanding the business culture along with the unique customs and courtesies will not only make life easier for foreigners, but will also give the Japanese people a peace of mind that we are willing to adapt to their culture while investing our products in their country.

References http://export.gov/japan/doingbusinessinjapan/index.asp http://www.venturejapan.com/japanese-business-culture.htm http://www.jetro.go.jp/en/invest/setting_up/laws/section1/page3.html http://injapan.gaijinpot.com/work/starting-a-business-work/2010/05/19/is-it-more-difficult-for-foreigners-to-start-a-business-in-japan/
http://www.konnichiha-japan.com/meeting-and-greeting.html