Doing business in Japan information
by Venture Japan
I have managed front-line sales companies in Japan for the past 13 years, during which time I and my team have met with, presented to, negotiated with and successfully closed millions of dollars of sales with most of Japan's household name companies, including: Fujitsu, Honda, Hitachi Shipbuilders, Mazda, Mitsubishi, Nippon Steel, Nissan, Panasonic, Sharp, Sony, Toshiba and Toyota. Success has usually come from doing the same things our Japanese competitors do, i.e. traveling around Japan to visit customer sites, getting to understand customers and what they are trying to achieve, understanding how our products and services can solve customers' requirements, delivering on our commitments and helping customers quickly integrate our products into their systems.
Doing all the above things and gradually building your own store pf personal trust with a customer, is one of two primary ways to drive in a wedge and create a niche. The other way is to form an 'alliance of convenience' with one of their existing suppliers and seed your product into the customer using that supplier as a distribution channel. The main difference between the two routes is probably the longevity and profitability of the outcome. The former route takes more time, personal commitment and devotion by you and your Japanese office team but that effort will be respected by the customer, who will ultimately reward you with its loyalty. The latter route requires that you either accept an indefinite loss of revenue (potentially a substantial 50% - 70% loss!) to your partner or, once your product has permeated the customer, cut the partnership and try to then go it alone. Many Japanese customers would see that as betrayal (of the their trusted partner) and as with the US software company noted in the section on direct sales in Japan may well blacklist you. Still, the second route is often used by Japanese companies if they find themselves in a 'follow-the-leader' technology situation (and need to buy time to develop their own product) so it is possible to do it successfully although it requires tremendous cultural sensitivity.
Assuming you do the above things, which is emulating the way Japanese companies do business, then you can do as I have successfully done which is to leverage your 'foreign-ness' and to break through and eventually dominate your market by pushing for results.
A Japanese company and Japanese salespeople are pretty much bound by Japan's business culture and customs and will not be forgiven for breaking the rules - they do not typically push for results but instead wait for results to naturally occur. Executives of foreign companies are allowed a lot more flexibility in matters of corporate protocol and business etiquette because most Japanese do not expect foreigners to understand the intricacies of Japanese business customs and tolerate far more directness when dealing with them. I do not suggest that you deliberately disregard Japanese business etiquette and customs or try to bulldoze your way to success, but if you are sensitive to the Japanese you deal with, you can push the envelope of usual Japanese business customs and etiquette to help them and you in ways that Japanese executives cannot or will not.
In the section on recruiting a Japanese company President, I suggested that the ideal solution may be to recruit an expatriate executive for the position thereby eliminating cultural differences at the executive level. While there are differing opinions on this subject (especially from head hunters looking for the larger commissions they will get on a Japanese executive's salary) in the past 13 years I have noted many areas of Japanese business where a foreign company executive who understands Japanese business culture can do things (and require his/her staff to do things) that many Japanese executives would be reluctant to do - especially in the area of driving business forward against apparent objection.
A key fact to understand about Japanese companies is that they are typically far more internally regulated and disciplined than their foreign counterparts. This is often frustrating for foreign executives, especially executives of fast moving startups in the US, because it can often seem to take a month or more for a Japanese company to make a decision which a US company would make in half a day. But once you understand that aspect of Japanese companies and Japanese business culture, you can often use it to gain an advantage when competing with a Japanese company in the domestic market. I have often won corporate business from much larger Japanese competitors because while the competitor's salesman was going through a lengthy internal approval process before providing a bid, I and my team were daily in front of the customer understanding their needs and demonstrating beyond doubt that we could help them. By the time the competitor would make their bid we had moved the playing-field and often even signed a deal!
In many situations a sensitive foreign company executive can very quickly 'cut to the chase' (or help one of his/her Japanese salespeople do it) without alienating the buyer, here are just a few:
When selling to Japanese corporations, remember the way that Tanaka-san, our salaryman in the previous section on understanding the Japanese salaryman, and his colleagues think and interact - otherwise you may fruitlessly try for months to close a sale when a different approach, using a different champion within the target company, could achieve results within weeks. In my experience with Japan's large companies, the person you first contact is very rarely the person you will sell to - very often though he/she will know someone in a different division or office who may well be the perfect customer profile for you. By utilizing such referrals you can quickly build a very valuable network of contacts within a major company just as Japanese salespeople do. Some of my most successful sales in the Japanese corporate markets resulted after several internal referrals within a prospect company,
Remember also that a large number of Japanese businesspeople, especially middle-managers, are very averse to risk. The Japanese business culture, especially in large companies, is unforgiving of those who fail. Expect to have to continually convince and reassure a buyer of your company's ability to deliver and of the quality of your product or service. If a buyer says "No" then make sensitive efforts to find out why - very often he/she may want to do business with you but has reservations, or their manager has reservations, because it is perceived that dealing with a foreign company is too risky.
A final reminder - I am not advocating that you ignore Japanese business etiquette and definitely advise you against trying to bulldoze your way to success doing business in Japan. If you deal tactfully and sensitively with Japanese people, yet stay focused on your objective, are honest and ethical and are backed by an honest and ethical company with good products and services, you will without doubt succeed here.
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