Challenges of Doing Business in Japan

Matthew MacLachlan

31 Mar 2010

With one of the largest economies in the world, Japan has seen an explosion in the increase of foreign business investment since WWII. Doing business in Japan offers innumerable benefits for international organisations, however there are a number of key cultural challenges that create friction and misunderstanding as well as sizable direct and indirect costs to the organisation if overlooked.

Cross cultural awareness training programmes such as Doing Business in Japan increase organisations’ awareness of the cultural challenges and ensure that those involved are fully equipped with strategies for benefiting from these differences. The following are six of the key cultural concepts international organisations can sometimes find challenging when setting up or doing business in Japan.

Rules and Etiquette – Japan’s low tolerance of uncertainty has created a society which adheres closely to rules and regulations. Evidence of this is visible in low crime rates, trains that you could set your watch by and high levels of conformity in behaviour. Etiquette penetrates every aspect of society and is evident even in ordinary circumstances. Aspects of etiquette include an extensive vocabulary and grammar for polite conversation, codified practices for gift giving and receiving and principles for bowing and exchanging name cards.

Hierarchy – A strong hierarchical system still exists in Japan with respect, responsibility and authority being rewarded based on age, status and experience. When communicating with Japanese, it is wise to pay attention to the protection of “kao” or “face.” Face is closely linked with personal pride and forms the basis of an individual’s social status and reputation. Damaging face through overt confrontation or criticism shakes the foundation of Japanese hierarchy and can be disastrous for business relationships in Japan.

Gender roles – Although women are fast gaining more visibility in the work place, the role of “salaryman” (office worker) is still male dominated. Women’s social participation is reflected and influenced by the Japanese language which diverges into a more polite and formal style of speech when utilised by women.

Harmony – As a country that values sentiments of collectivism over those of individualism, Japanese tend to place a significant emphasis on loyalty towards the group. It is still common for companies to provide life-long employment to individuals who, in return, devote long hours and often sacrifice personal gain for communal good. When doing business in Japan it is important to recognise that praising or prioritising any one individual over others is likely to be embarrassing and will not further business goals.

Concepts of Time – Japan is a monochronic culture with a long-term orientation towards time. In other words, people tend to think linearly and prioritise depending on importance. Attitudes towards punctuality are strict. When doing business in Japan, being early or on time for all appointments, regardless or their formality, is a show of respect and therefore any event of being late requires forewarning and an apology. Furthermore long term time orientation translates to values in Japan that include persistence and ordering relationships by status.

Communication Style – Understanding the communication style in Japan is one of the biggest challenges of doing business in Japan. Japanese have a preference for indirect, high context communication. In other words, Japanese often imply and infer rather than verbalise directly and they place a high importance on the impact of body language, paraverbal features, relationships, emotion and other non-verbal communication. Japanese will rarely say ‘no’. As a result, international organisations doing business in Japan are often left confused and struggle to achieve their business objectives.

Recognising the cultural differences which exist when doing business in Japan is only the first step. International organisations must also understand the reasons behind them to develop strategies to effectively cope with these cultural challenges. A cross cultural awareness training programme like Doing Business in Japan programme will help the organisation turn challenges into benefits and maximise the immense opportunities that doing business in Japan presents. Furthermore, it will contribute towards the development of an interculturally competent workforce, a huge advantage in this fiercely competitive global world.

 



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