Overcoming Cultural Differences in International Trade with Japan

Today’s post, which is partially based on materials from Dick Locke’s seminars on International Purchasing, is edited by Dick Locke, Sourcing Innovation contributor and President of Global Procurement Group.

This post is going to examine some of the cultural differences that you may encounter (as an American or Canadian Sourcing / Procurement Professional) if you are doing business with Japan. We start by discussing each of the eight key cultural considerations outlined in our introductory post and then highlight a few other points that you should be aware of.

As per our initial post, this discussion is high-level and general in nature and, as Dick Locke points out in his classic text on Global Supply Management, while it is too easy to stereotype a country, individuals in each country will vary from the stereotype. You need to take time to get to know the people you will be dealing with because their behavior may be nothing like the usual behavior of the country in which they reside and there is always a chance that you might run into people who are trained to act like you … while in your presence.

The first thing you need to know is that culturally, the Japanese are very different from anyone else. They were historically isolated, crowded by geography, and their language is pretty much its own language group, despite the fact that they have three alphabets (kanji, hiragana, and katakana). Furthermore, the beginning of Tokogawa rule in 1603 marked the beginning of 250 years of almost complete isolation, until 1853 when Commodore Matthew Perry arrived.

  • Power Distance
    In a word, moderate. There is a defined hierarchy, and no decision can be made with approval from the top, but those approvals generally aren’t made until a consensus decision has been reached at the lower levels of the organization and pushed up to the top for approval. You see, in Japan, your Japanese counterparts represent their company, which is part of their group, which represents Japan, which is represented by their companies … and it is all part of a very complicated social structure that, to be frank, the Japanese do not expect anyone who isn’t from Japan (from birth) to understand. However, their hierarchical structure insists on exaggerated respect for the senior negotiator, and they expect you to give your senior negotiator the same level of deference.
  • Uncertainty Avoidance
    In a nutshell, very high. The Japanese don’t like uncertainty.
  • Individualism
    Despite the apparently strong need for the younger generation in the big cities like Tokyo and Osaka to display their individuality through dress, electronic gadgets, and a very distinct (night) life (style), individualism in Japan is low compared to most countries in the world. The Japanese social structure is to encourage you to be (mutually) dependent on those around you from birth, and that carries over into the younger generation who, despite their apparent pursuit of individuality, always belong to a group of like-minded individuals as well as their family.
  • Polychronic vs. Monochronic Time
    From a business perspective, both apply. The Japanese are punctual to a tee, and you can set your watch by their trains, and even though they will always keep to a meeting schedule, they will hardly ever commit to a “we need a decision by …” request. They have a strong belief that you should always take whatever time is needed to get it right, and that solidarity in agreement is a must. Negotiations will be finished when they are finished, not before.
  • Personal / Impersonal
    Generally speaking, the Japanese are a very shy and private people who are uneasy around foreigners. They are often thought to be a very serious people as well because smiles can be few and far between, but you have to remember that, to the Japanese, Happiness hides behind a straight face. However, in business, the rules change, and they can be very aggressive. Also, possibly due to their generally lower tolerance for alcohol, and the fact that alcohol serves as a release valve for pressure in their society, they can be very loud and boisterous in business-related social functions, at least amongst other Japanese or those who have been accepted into uchi where the workplace group is concerned. (This will not happen quickly, or easily, if it even happens at all. You will need to appropriate their culture, language and social hierarchy as well as they believe any non-Japanese person can to even have a chance.)
  • Buyer / Seller Rank
    In Japan, the buyer always outranks the seller. That being said, they will only do business with you if you respect their strict rules on social and business conduct. (If you do not, they will politely end the negotiations, and you will never hear from them again.) Also, the Japanese do have a propensity for entering into business relationships that require mutual obligations. It’s not like guanxi in China, where you will get a generous “gift” in exchange for a future favor, but you will be expected to fully hold up your end of the bargain if you ever want to do business with them, or any company in their group, again.
  • Importance of Harmony
    Harmony is a fundamental foundation of their web society which is based on a great interdependence among all members of a group and an abundance of moral and social obligations, both vertically and horizontally. The only other country where harmony is as important is China. In Japan, meetings are not about decisions, information gathering, or even understanding … they are about creating harmony between two groups.
  • Importance of Face
    The importance of face is also extremely high and a part of their social fabric. It is so vital that everyone’s face must be protected at all costs that they have developed a very ambiguous language based largely on impersonal verbs that allow for multiple interpretations of a sentence and make it very difficult to understand who is being referred to. Their natural speech patterns enhance politeness while increasing vagueness … and allow anyone to be absolved of possible blame, which allows everyone to save face. Thus, you must never assign blame (especially to them) or hurt their feelings if you want the negotiations to go well.

The Japanese find face-to-face negotiations with foreigners difficult. They generally negotiate in teams where each member has a different speciality and reason for being there. They are primarily there to gather information to bring back to head office and to build harmony between two potential business partners. You need to observe protocol, be patient, and avoid bluntness in this process, or they may suddenly, albeit very politely, break off negotiations. Also, many of the decisions and agreements, especially on points, will occur during social interaction between meetings. When invited, you will need to take part in these interactions if you want to build harmony and move the process forward.

Finally, as I strongly recommended in my first post, if you plan to start doing business with any new international country, including Japan, you should do a thorough job on your homework. You can start with:

  • Dick Locke’s course on the Basics of Smart International Procurement (which is offered through Next Level Purchasing and counts towards the SPSM2 certification or ISM Continuing Education Hours), or
  • a customized seminar from Dick Locke’s Global Procurement Group. Dick Locke and his associates each have decades of experience doing business with over two dozen countries, including the fifteen biggest importers and exporters to and from the United States, and Japan. A single day with an expert like Dick Locke could save you months of headaches.

Again, a big thank you to Dick Locke for serving as editor for this special series of posts and providing some up-to-date materials and information for the purpose of this series.

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