Category Archives: Japan

What Does the New Japanese Consumer Mean to Your Supply Chain?

Editor’s Note: Today’s post is a collaboration between the doctor and Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

Japan is a strange little country. (If you don’t believe me, just watch this excellent video on Japan – The Strange Country form Kenichi on Fast Company. [Japanese Version Only at Present, but the Infographics are quite compelling on their own.]) Japan has always had a quirky consumer, who would spend ten times what an item was worth if it had a highly sought after designer logo and then subsist on udon [Japanese noodles] for a month because [s]he spent almost every yen she had on the overpriced cellphone or designer purse. Because of my fascination with the culture that loves to embrace almost contradictory extremes in its quirkiness, I was naturally drawn to a recent article on “the new Japanese consumer” in a recent edition of the McKinsey Quarterly.

In particular, I found the second sentence of the first paragraph to be quite remarkable, especially considering the evolution of the Japanese consumer over the last 30 years: celebrated for their willingness to pay for quality and convenience and usually uninterested in cheaper products, Japanese consumers are now flocking to discount and online retailers. Furthermore, the paragraph ended with a bang, noting that workers are even packing their own lunches, sparking the nickname bento-danshi, or “box-lunch man”. It’s been the sarariman, or “salaryman”, for years and years. That’s quite a shift. And then the article goes on to say that almost half of consumers are spending more time at home as the new sugomori, or “chicks in the nest”, which is remarkable for a culture where the sarariman would spend 12 hours a day in the office, then go for dinner and drinks with his colleagues, then go home for a few hours of family time and rest before repeating the cycle.

So what does this mean to your supply chain? This is where Dick Locke, Sourcing Innovation’s resident expert on Global Trade, chimes in.

By itself, not much.

 

Consumer behavior or other private behavior is less important than work-related behavior. Some of the more atypical Japanese work related behaviors are:

  • High on ‘uncertainty avoidance’.Manufacturing has never been very flexible because long forecast cycles are built into the system.
  • Fairly low (for an Asian country) on ‘power distance’.In spite of all the bowing, decisions tend to be made after multiple level discussions and consensus building.
  • Constant communication with coworkers… which can last long into the night.

The result of this and other behaviors has been a somewhat inflexible manufacturing process accompanied by highly precise conformance to shipping schedules and quality.

These behaviors are based on values, and values change much more slowly than manners, shopping habits and style of dress.

What would be a sign that the new consumer values are affecting the workplace? One would be a more adventuresome sourcing behavior at your supplier. Fifteen years ago companies tended to buy primarily from members of their own keiritstu, a family of companies with common ownership by the same bank. (There’s a story that’s probably loosely based on truth: A Japanese sales person was asked what market share of a product his company has. He replied “100%.” The questioner pressed on: What are your sales to Mitsubishi? The answer was “Mitsubishi isn’t in our market”.)

Look for more attention to getting the best suppliers regardless of ownership … or even nationality. This is problematic. Japanese don’t work well with other Asians because of Japan’s history of invading most of them.

Also, watch for signs of communication breaking down. Karaoke bars and nightclubs provided an important locale for communicating with co-workers when at-work communication was difficult. Based on the trends in the article, you should sell your stock in karaoke bars.

 

And finally look for recognition that flexibility is important.

So basically, this article is of high importance if you are selling in Japan. Buying there? Not so much, but keep it in mind.

Thanks, Dick. (Global Supply Training)

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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 and Global Supply Training.

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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