          
          
          
                    BUSINESS CUSTOMS AND PRACTICES
          
          An understanding of and sensitivity to Japanese business 
          and social practices is of great importance in establishing 
          and maintaining strong and successful business 
          relationships in Japan.  Many Americans may assume that 
          because meetings and correspondence are carried out in 
          English, Western rules apply.  While Japanese business 
          executives do not expect foreigners to be fully 
          knowledgeable about all business and social customs, you 
          will find that accommodation to such customs and practices 
          is well worth the effort.  Remember, you are not just 
          trying to sell your product, but also the image of your 
          company and, to a large degree, yourself.  Showing 
          understanding and sensitivity will only help in your 
          efforts to succeed in Japan and will demonstrate to your 
          potential customers your seriousness about the market.
          
          Japanese business executives place considerable emphasis on 
          face-to-face contact.  A personal call on a potential 
          business partner based on an introduction will be more 
          effective than initiating contact by a letter or a fax.  
          The "cold approach" is definitely not the best approach in 
          Japan.  Time and time again, American firms that make such 
          overtures find that the Japanese companies they have 
          contacted do not reply.  Rather, an introduction by an 
          intermediary who holds significant status is of tremendous 
          assistance in establishing business contacts and cannot be 
          overemphasized.
          
          Initial contacts between Japanese firms are usually formal 
          and made at the executive level, while more detailed 
          negotiations are often carried out at the working level.  
          The main purpose of a first meeting is to get acquainted, 
          establish the broad interest of the calling party, and 
          allow both sides an opportunity to access each other to 
          determine whether or not more substantive discussions are 
          desirable.  Do not expect to have a contract signed by the 
          time you leave the first meeting. Remember, the objective 
          of your first few meetings is to establish rapport and 
          trust between the two parties.  A futile attempt to 
          pressure your potential partner into a contract will only 
          alienate.
          
          Business cards (meishi) are exchanged extensively in Japan 
          and serve as a useful reference and record of contacts.  
          The exchange of business cards, usually at the start of a 
          meeting, helps to formalize the introduction process and 
          establishes the status of the parties relative to each 
          other and their place of business.  You should attempt to 
          familiarize yourself with the etiquette of exchanging 
          cards, as well as other Japanese social practices.  The 
          traditional Japanese greeting is the bow, although most 
          Japanese dealing with foreign business executives will 
          expect to shake hands.  A nod of the head or slight bow by 
          a foreigner in acknowledgement of a Japanese bow is 
          appreciated.  Japanese business executives do not normally 
          deal on a first name basis in business relationships, and 
          initial business and social contacts are characterized by 
          politeness and formality.
          
          One source of confusion in business communication may come 
          from the Japanese language itself. The word "hai" means yes 
          in Japanese but its usage varies.  "Hai" is often used to 
          mean "yes, I understand what you said" rather than "yes, I 
          agree."  It is usually safer to assume that a Japanese 
          person is not making a decision but instead is 
          acknowledging and understanding what has been said. Also, 
          the Japanese language is less precise than English and 
          allows the Japanese to be deliberately vague.  The concept 
          of saving or losing face is an important one, and the 
          Japanese are able to avoid confrontation, embarrassing 
          situations, and direct rejection by their use of indirect 
          language.
          
          The Japanese rely heavily on nonverbal communication.  They 
          tend to look to nuances, inferences, and signals to convey 
          intent.  Thus, while American negotiators are inclined to 
          focus on tactics and press for agreement as a negotiating 
          objective, the Japanese side prefers to probe, feel out the 
          other party, and be relatively certain of the other side's 
          position before putting forward a proposal on which both 
          sides can agree.
          
          Interpreters are widely used in business meetings between 
          Japanese and foreign firms.  While many Japanese business 
          executives speak some English, the use of a good 
          interpreter can avoid miscommunication.  The effective use 
          of an interpreter requires preparation, including the 
          thorough briefing of the interpreter in advance on the 
          background of the meeting, and on any technical aspects 
          which may be covered in particular.  Using an interpreter 
          efficiently can make or break a potential business deal.  
          Always bring your own interpreter, even if the Japanese 
          side is supplying one and even if the Japanese side speaks 
          English as well.  Try to always use the same interpreter. 
          Have the interpreter debrief you after the meeting on 
          his/her impression of nonverbal signals and the mood of the 
          meeting, and conversation among members of the Japanese 
          side.  After a meeting (or trade show, if applicable), go 
          through the business cards and other information that you 
          have collected.  Have the interpreter translate the cards 
          not already translated and clarify those that are, 
          especially titles.  Get the interpreter's impression on who 
          is in charge, whether the people you have met have the 
          ability to make decisions, and what the next move of the 
          Japanese side may be.  Speak slowly and clearly, avoid 
          idioms or slang that may be difficult to translate, and 
          look at your Japanese counterparts, not the interpreter, 
          when speaking.
          
          The group decision-making process which is universal in 
          Japan may make it impossible to receive a prompt response.  
          The Japanese negotiator represents a group, and until 
          internal agreement has been reached on issues under 
          discussion, no commitment can be made.  For this reason, 
          you should not expect an immediate answer, but should 
          recognize that negotiations normally extend over a long 
          period of time.  It takes a longer time to cultivate 
          business relationships in Japan than in the United States.  
          American business executives coming to Japan expecting to 
          settle their business in just a few days often depart in 
          frustration, having made no progress.
          
          The Japanese approach business negotiations in a tentative 
          manner, developing a relationship in stages:  first, a 
          limited arrangement; then, if the relationship is mutually 
          satisfactory, it may be expanded into a broader, more 
          binding agreement.  Since Japanese are accustomed to 
          international business dealings, the foreign preference for 
          more formal and structured contractual obligations is 
          recognized.  Therefore, contracts have become a universally 
          accepted practice in foreign trade.  However, Japanese 
          business executives emphasize good faith over legal 
          safeguards in business relationships and have little 
          confidence in detailed contracts which attempt to cover all 
          possible contingencies.
          
          The Japanese preference is for broad agreements and mutual 
          understanding, so that when problems arise they can be 
          handled flexibly on a case-by-case basis.  Thus, 
          discussions with Japanese entities should be comprehensive.  
          Before entering into a contractual agreement, both sides 
          should thoroughly and openly discuss the arrangement and 
          their expectations to avoid misunderstandings later.  
          Japanese prefer the security of long-term, reliable, and 
          exclusive business arrangements.  Once a commitment is 
          made, it is for the long term, and it becomes quite 
          difficult to break an agreement and find a new Japanese 
          business partner.
          
          Although all forms of payment are in general use in 
          international transactions, an irrevocable letter of credit 
          payable on sight is the most common form of settlement.  
          Deferred payments in transactions with U.S.  firms are 
          comparatively rare.  With Japan, trade settlements are 
          customarily done on the basis of promissory notes, 
          typically 60 to 120 days, and banks will provide short-term 
          financing through discounting and rollover of notes.
          
          In the instance of a commercial dispute settlement, the 
          Japanese legal system tends to be slower and more 
          cumbersome than its U.S. counterpart.  In general, Japanese 
          companies are more apt to seek out-of-court dispute 
          settlements and avoid judicial proceedings.
          
          The following are typical Japanese negotiating tactics:
          
          (1) The Japanese usually respond to the other party's 
              proposal -- rather than taking the initiative.
          
          (2) The Japanese tend to single out specific elements and 
              negotiate one element at a time -- rather than 
              packaging a deal.
          
          (3) The Japanese tend to maintain a relatively quiet 
              response mode at meetings after stating their official 
              position.  They usually allow the other party enough 
              maneuverability in order for the other party to keep 
              giving bit by bit.
          
          (4) Once a concession is made, it becomes the new baseline 
              (without a counter-concession on their part) and they 
              move on to the next item.  Their strategy usually is to 
              keep whittling away one concession at a time.
          
          (5) The Japanese use time and patience to wear down their 
              opponent -- consciously planning on long, drawn out 
              periods of successive meetings.
          
          (6) The Japanese negotiating team never has the authority 
              to commit in a "give and take" type approach.  They are 
              usually only authorized to receive offers and 
              communicate prior authorized consensus positions.
          
          (7) The Japanese tend to use the "bad guy" ploy 
              extensively, that is, constantly referring to other 
              organizations such as government agencies/authorities 
              concerning requirements or required concessions.
          
          How to respond:
          
          (1) Do not expect rapid progress.
          
          (2) Learn to be quiet and accept long pauses in 
              discussions.  Out wait the Japanese until they respond 
              constructively to your last proposal.
          
          (3) Do not make successive individual concessions -- insist 
              on a package deal.
          
          (4) Do not make a follow-on proposal with further 
              concessions until the Japanese respond to the current 
              proposal with concessions on their part.  Set an agenda 
              for the next meeting accordingly.
          
          (5) Do not fall for the "cultural differences" ploy.  Be 
              polite but direct.  You can expect the Japanese to 
              understand Western business practices and culture.  
              They should be prepared to compromise and accommodate 
              on those issues which you identify as vital and 
              absolutely essential.  However, you should likewise 
              show an appreciation of Japanese culture.  This will 
              help facilitate negotiations.
          
          (6) Keep records on concessions by both parties.
          
          (7) Have a fluent Japanese speaker present at negotiations 
              to preclude private discussions during meetings and to 
              insure the translations are accurate.
          
          (8) Negotiate from a position of strength and confidence.  
              The Japanese do not respond positively to real or 
              perceived weakness, nor do they respond to idle threats 
              and intimidation.
          
          
          
