Business relationships in Japan are characterized by a well-structured hierarchy and a strong emphasis on nurturing personal contacts. Generally, they are built up over long periods of time or are based on common roots, such as birthplace, school or college. Also, an unusually strong emphasis is placed on social activities to strengthen ties. It is not surprising, therefore, that those looking in from the outside may see the Japanese business world as comparatively hard to break into. In fact, there are many different kinds of business relationships, but most share two features - they have been built up slowly and carefully, and much time is spent in keeping them up to date.
Business relationships in Japan are part of an ever-broadening circle that starts within the company (uchi - inside, or"us"), and moves towards the outside (soto) to include related companies, industry or business organizations, and the like.
Most Japanese companies have a series of very close relationships with a number of other companies that provide them with support and a multitude of services. It has been traditional practice for a company to hold shares in these "related" companies, a practice which has given rise to a high proportion of corporate cross-share holdings in Japan. This has been a show of faith on the part of one company towards another, and also has been useful in providing companies with a core of stable and friendly shareholders.
When dealing with a Japanese company, it is important to be aware of the existence and nature of some of these close relationships, in particular those with banks and trading companies. Understanding these can help to define the nature of the company and the way it does business, as well as its positioning in the Japanese business world. It should also be understood that there is a constant flow of information between Japanese enterprises and their banks and trading companies. Unless the need for confidentiality is made very clear, these may soon be aware of any negotiations in which the company is involved.
Larger corporate groupings are becoming more familiar to non-Japanese business circles. These groupings are known as keiretsu, and some have their roots in the large pre-World War II conglomerates. Accusations of keiretsu favouritism overriding more attractive outside offers sometimes are levelled at Japanese companies. When asked about this practice by a foreign businessman, the president of a large Japanese electronics company replied: "It's like going to the tailor your father went to. He may be more expensive than the competition and perhaps even not the best, but he has served your family well for many years and you feel duty bound to remain a faithful customer." There is a tendency in Japanese business to be guided by the familiar and human considerations, and thus it is important for anyone wishing to do business in Japan to go a major part of the way in establishing a communications network and a real presence.
Business Negotiations & Meeting Etiquette
Face to face contact is essential in conducting business. It is more effective to initiate contact through a personal visit (set up by an introduction through an intermediary) than through correspondence. Initial contacts are usually formal meetings between top executives; more detailed negotiations may be carried out later by those who will be directly involved. During the first meeting, you get acquainted and communicate your broad interests; you size each other up and make decisions on whether ongoing discussions are worthwhile. At this point you should not spell out details or expect to do any negotiating.
Exchange business cards (meishi) at the beginning of the meeting. The traditional greeting is the bow. Many Japanese businessmen who deal with foreign companies also use the handshake. If you bow, then you should bow as low and as long as the other person, to signify your humility. First names are not usually used in a business context. In Japan, the family name is given last, as in English. You should address Yoshi Takeda as "Mr. Takeda" or "Takeda-san." Expect to go through an interpreter unless you learn otherwise. If meeting high-ranking government officials, an interpreter is always used even if they can speak English fluently because customarily, they refrain from speaking foreign languages in public. Other businessmen may speak some English but may not be adequate for undertaking business negotiations.
Conservative dress is common for both men and women in public. Most Japanese professionals wear Western-style dress (European more than American), although during the hot summer months, men often do not wear suit jackets.