Japanese business myths or facts?

Japanese business myths or facts?

Several years ago, I met with an incredibly exciting e-commerce company in the US which, had they entered the Japanese market at that time, could now be earning tens of millions of dollars doing business in Japan. Their product, a digital catalog application, was perfect for the Japanese market and I had an extensive network of contacts whom I could have leveraged to make sure it succeeded. But at the last moment, that digital catalog company decided not to start business in Japan because of “……things we heard from a friend of a friend who said that the Japanese market is too risky and too expensive to enter……”. That company later ceased business……what a waste.

I have often heard foreign company executives say “……the Japanese market is too risky and too expensive to enter……”; it’s the most common of what I call the infamous myths of the Japanese market, that I first heard when in Japan for the first time in December 1991 for EDS Corporation. In those days ‘the myths’ were widely proliferated by so-called experts of the Japanese market, many of whom were expatriates or retired bilingual Japanese of questionable ability, but who often charged more per hour for their advice than some major international law firms charged for their senior attorneys. Even now, more than two decades later, those myths and horror stories continue to influence the decisions of companies and executives considering entering the Japanese market.

I have been fortunate, earned enough to pay for my day-to-day life, had a lot of fun, and met a lot of interesting people doing business in Japan since I moved here in January 1993. For me, doing business in Japan is so exciting, so obviously good for any company, regardless of its size, that I can’t understand why more companies don’t enter the Japanese market. Of course, I am fortunate to have the benefit of having succeeded in Japanese business for over two decades; that obviously changes my perspective.

Every market has its horror stories, but Japan, maybe in part because of its Far Eastern mystique, its complex and bewildering written and spoken language, and its previously astronomic property and consumer prices of the 1980s, seems to have more than its fair share. In truth, many of the myths of doing business in Japan started life as excuses made up by some of the bilingual consultants, managers, distributors, and agents involved in the first boom of foreign companies entering the Japanese market during Japan’s economic boom of the 1980s. That ‘bilingual mafia’ used the myths to hide their poor performance while they continued to charge inflated fees, commissions, salaries, and benefits packages.

The Japanese market has changed dramatically during the past two decades, but the myths have persisted. One explanation for their persistence might be because the many books written about doing business in Japan during Japan’s economic phenomenon in the 1980s, proliferated and legitimized the myths. After Japan’s bubble economy burst in the early 1990s, there was a long period of reduced interest in the Japanese market, and there were few new books written to dispel the myths.

Unfortunately, few foreign company executives truly understand doing business in Japan and even in the 2010s, much of the available information online in English about Japanese business is disjoint and out of date. Few foreign company executives can come to Japan and those that do can rarely spend enough time in Japan to become intimately aware of the realities of the Japanese market. Ultimately, the myths continue to influence perceptions of Japanese business and many foreign executives do not realize the golden opportunities their companies are missing.

So, what are these infamous myths?

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