Foreign executives selling in Japan
In the previous section on Japanese corporate sales and customer loyalty, we noted the strength of the bonds of loyalty between Japanese customers and suppliers and that in my experience, the secret to your company’s success selling to Japanese corporations is to copy the way Japanese companies sell and support, while leveraging that it is not Japanese. Copying the way Japanese salespeople work, gradually building your own store of direct personal and corporate trust with a prospect or customer, is one of two main ways to penetrate a major account. The second way is to ally with one of the prospect’s 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, more personal commitment, and more devotion, but the customer will see and appreciate the effort and ultimately reward you as a trusted loyal supplier for the long-term. The latter route, allying with an existing supplier, forces your company to lose 50% – 70% of revenue to the partner indefinitely or, once the customer relies on your product, cut the partnership and try to go it alone. Be warned though that many Japanese customers will see such a parting of ways as betrayal of their trusted supplier and, as with the US software company noted in the section about how to set up a sales office in Japan, may well blacklist your company. Even so, Japanese companies do use alliances 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 succeed doing it, but it needs excellent cultural sensitivity.
In my experience, a mix of the above two sales routes, direct and through distributors, is most successful in the short-term, but in the long-term, it’s the first route, directly dealing with customers and prospects, that creates the greater success. I have managed Japanese subsidiaries selling to Japanese corporations for more than two decades, during which time I and my team have met with, presented to, negotiated with, and successfully closed millions of dollars of sales with many of Japan’s household name companies, including: Fujitsu, Honda, Hitachi Shipbuilders, Mazda, Mitsubishi, Central Japan Highways, Nippon Steel, Nissan, Panasonic, Sharp, Sony, Takenaka Construction, Toshiba, Toyota, and Zuken. We succeed by doing the same things our Japanese competitors do: traveling around Japan by train going to and from customer sites, getting to understand our customers and what they are trying to do, understanding how we need to change our products and services to solve the customers’ requirements, building trust by delivering on our commitments, and helping the customer quickly integrate our products into their processes. But we also do one thing that our Japanese competitors cannot and that we mentioned above; we leverage me, the foreign executive who has lived in Japan for more than two decades. Read on……
Assuming your company’s Japanese subsidiary does the things described above to emulate the way Japanese companies do business, you personally (assuming you are a non-Japanese executive doing business in Japan) can also do as I have successfully done; leverage that you are foreign to break through and eventually dominate your company’s market by pushing for results.
Japanese business culture and customs limit how fast a Japanese company’s salespeople can proceed; they know that prospects and customers might not forgive them if they break the rules. To an extent, Japanese companies and salespeople do not push for results but wait for results to happen, but foreign executives are often allowed a lot more flexibility in matters of corporate protocol and business etiquette. Why? Simply because most Japanese do not expect foreigners to understand the intricacies of Japanese business customs and thus often tolerate far more directness when dealing with them. I do not suggest that any foreign executive deliberately disregards Japanese business etiquette and customs, nor tries to bulldozer his or her way to success, but if sensitive to the Japanese he or she deals with, he or she can push the envelope of usual Japanese business customs and etiquette in ways that Japanese executives cannot or will not.
In the section on recruiting a Japanese company President, we noted that one solution for the key position might be hiring a foreign executive already living in Japan, thus eliminating cultural differences at the executive level. There are differing opinions on this (especially from recruiting agencies looking for the larger commission they can earn on an expensive Japanese executive salary) but in the past two decades I have seen many examples of a foreign company executive who understands Japanese business culture, doing things, and demanding that his or her staff do things, that many Japanese executives are reluctant to do. This is especially the case when needing to drive a sale forward to outmaneuver a competitor.
Japanese companies are generally far more internally regulated and rigid than their foreign counterparts. This is often frustrating for foreign executives, especially executives of fast-moving startups in the US, because it often takes a month or more for a Japanese company to agree a decision that a US company would make in half a day. But the same internal regulation and rigidity often applies to your Japanese competitors, so if you understand this aspect of Japanese companies and Japanese business culture, you can use it to 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 salesperson 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 could make his or her internally approved bid, we had moved the playing-field and often even signed a deal.
In many situations, a sensitive foreign executive can very quickly ‘cut to the chase’, or help one of his or her Japanese salespeople do so, without alienating the buyer, here are just a few:
- Many Japanese are reluctant to telephone to speak directly with a senior manager or executive of a major Japanese corporation until after having met face to face. If you make that call, you may well get a warm reception.
- Many Japanese are very uncomfortable handling major sales meetings unaccompanied and will defer a meeting for several weeks to avoid attending alone. Many US and Europeans prefer one-on-one ‘get the job done’ meetings and should gently push for an early meeting date as opposed to the ‘wait for the team’ date.
- A Japanese will often accept “No” or “I will think about it” as a final answer. I rarely accept those as final answers and have often done some of my most profitable sales with customers who had originally said “No”. This again needs very good sensitivity to Japanese business culture if you’re to make the right judgment.
- Many Japanese working for a small company such as your Japanese subsidiary, might initially tend to suffer a sense of inferiority and might not want to try to arrange meetings with executives of larger Japanese companies. If I want to meet with Fujitsu, I will pick up the phone and call the President irrespective of the size of my company. I call this the ‘pinball technique’ because even though I might not get to speak with Fujitsu’s President, I will tumble through the upper levels until I get a different high-ranking executive on the line.
- A Japanese will almost never go ‘over the head’ of the buyer to clinch a deal. As a foreigner you can do so, but you need sensitivity if you don’t want to irretrievably alienate the buyer.
The goal is not to break Japanese corporate business protocol or etiquette, but just to bend it to your advantage. You must always be very sensitive how you deal with all Japanese people, because if you earn a bad reputation in the Japanese market, it will stay with you for many years.
When selling to Japanese corporations, consider the way that Tanaka-san, our salaryman in the section on understanding the Japanese salaryman, and his colleagues think and interact; if not you may try for months to close a sale when a different approach, using a different champion within the prospect company, might achieve results within weeks. In my experience with Japan’s large corporations, the person you first contact is very rarely the person you will sell to, but very often he or she will know someone in a different division who might be the perfect customer. By utilizing such internal 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 to Japanese corporations result after several internal referrals within a prospect company.
Also, consider that many Japanese businesspeople, especially middle-managers, are very conservative and averse to risk. The Japanese business culture, especially in large companies still dominated by seniority-based promotion and pay, is unforgiving of managers who fail. Expect to need to continually reassure a buyer of your company’s ability to deliver and especially of your product or service quality. If a buyer says “No”, make sensitive efforts to find out why, because often he or she may want to do business with your company but has reservations, or their manager has reservations, because they perceive that dealing with a foreign company or its recently established Japanese subsidiary is too risky.
I am not advocating that you ignore Japanese business etiquette, neither am I suggesting you try to bulldozer your way to success doing business in Japan. If you deal tactfully and sensitively with Japanese people, stay focused on your business goal, are honest and ethical, and your company is honest and ethical with excellent products and services, you will without doubt succeed doing business in Japan.