Benefits of Doing Business in Japan

Matthew MacLachlan

12 Apr 2010

Towards the end of the 19th Century, Japan rapidly embraced western technological influences to become a centre of creativity and development. Following its defeat in WWII, Japan experienced tremendous economic expansion and growth and swiftly became the world’s most successful exporter.

JETRO – Japan External Trade Organisation reports that an increasing number of companies around the world are partnering with Japanese companies to develop products and services, create innovative technologies and create R&D projects. To this day, Japan remains one of the world’s leading industrial powers making doing business in Japan an excellent location for international companies. Some of the key benefits of doing business in Japan are outlined below.

Gateway to the Asian market
Not only does Japan offer a captive audience of 127 million citizens, it also offers an exciting yet stable business market open to trade and foreign investment. Globally competitive, especially in the fields of environment, healthcare, IT and automotives, Japan’s huge economy already boasts an established base of the world’s top companies. Doing business in Japan also has the added benefit of working in the showroom for the rest of Asia.

Highly educated workforce
The presence of over 600 universities in Japan means that university education is all but taken for granted. A result of this is a workplace where education is prized as an important quality. Prestigious university graduates are often given access to the most sought after jobs due to certain university names still being held in high regard. Other vital and valued qualities include experience, leadership, openness to new ideas and being hard working and personable. When doing business in Japan, foreign employees will often encounter high levels of expertise, knowledge and attention to detail.

Discerning consumers/customers
A highly educated and affluent population results in discerning consumers. The level of household expenditure, which is among the highest in developed nations, illustrates how Japan can act as a brilliant testing ground for new products. Lars Petersson, President and CEO of Ikea Japan states, “Japanese customers are very well educated, so they understand the difference between a product that’s high performance and low-cost, rather than the opposite.”

Strong work ethic
Japan is a predominantly collective society which places a huge emphasis on the group, meaning that each individual often feels a strong sense of belonging and responsibility towards their work place. Leadership is important, and a competent, hard working and personable superior is expected to be willing to sacrifice his personal time in order to listen to his staff and even tend to their personal matters. When doing business in Japan it is important to remember to address and consider the group rather than the individual. Existing relationships are valued so there is certainly worth spending time developing them initially.

Dedicated employees
In the Japanese corporate world, loyalty and cooperation are valued over aggressiveness and competitiveness. Japanese tend to take pride in their jobs and work long hours to demonstrate their dedication in hopes increasing their status in the company. This group of reliable employees, willing to work long shifts over unusual hours, is a huge benefit for international organisations doing business in Japan.

International organisations can profit immensely from the above benefits of doing business in Japan. Harnessing these benefits comes with the need to navigate the geographic, linguistic and cultural diversity of Japanese society. This requires a comprehensive understanding of Japanese business and social culture on all levels. International organisations employing people in Japan or working with Japanese on a regular basis should therefore have a series of Working Effectively with the Japanese programmes to ensure they develop the skills to successfully deal with the many cultural differences.