For Westerners, Negotiating with Japanese can be seen as a daunting task. Failures are often just linked to cultural misunderstandings. No need to read a dozen books to be well prepared! Japanese executives will understand that you might not master all the codes of their business world. Still, with just a little bit of work and common sense, it can be relatively easy to integrate the main differences and the how-to and to increase the chances of success dramatically. The fundamental principles come from the Japanese business mindset that we will explore in these ten steps to success when negotiating in Japan.
1. Socialize and make a first good impression
In Japan, maybe more than anywhere else in the world, you never get a second chance to make a first good impression. You primarily do business with somebody you trust and should always envisage a long term relationship. In Japan, being introduced to Japanese executives is often an excellent way to smoothen the first steps and start conducting business on a positive note. The Japanese Trade Organisation (JETRO) is the organization devoted to helping Japanese companies or foreign ones do international business. They can also help in establishing the first contacts between companies or consultants. Before negotiating, it is essential to understand and know each other on a more personal level. Chit chats about Japan and the Japanese culture are an excellent way to break ice start building trust.
2. Be Patient
In Asia, in general, and in Japan especially, the time has a different course, and rushing a negotiation process is the best way to reach a point of no return and ruin a potentially mutually fruitful business deal. Business negotiations in Japan take time. That’s a fact! This is mostly due to the collective decision-making process and to the need to reach a consensus between the different parties involved. In the Western business world, the final decision is often in the hands of the top executives only or the board of directors. In Japan, all of the departments involved will give their opinion. It might be regarded as a cumbersome process, but ultimately, everybody will approve the deal, and it will carry a lot of weight for future relationships!
3. Silence is Gold
When seated at the negotiation table, an extended period of silence can be a good sign. Westerners often dislike staying silent and will often try to fill the void. In Japan, silence can be used either for avoiding to have to say “No,” but it can also mean that your counterparts are just carefully thinking and weighing the different options. Do not try to break these periods of silence! Politely wait for the other party to talk again. Japanese have a proverb “iwanu ga hana” that can be translated as “A mouth causes problems.” So during the negotiation, don’t say too much. Your silence might be more helpful and meaningful than a long speech.
4. Prepare meticulously
To be thoroughly prepared is one of the key points to achieve a successful negotiation. Not only should you know the technical characteristics of your products, but it will also be highly regarded to know a lot about the Japanese company you are expecting to do business with. Knowing a bit about the curriculum of your executive counterparts can also help to break the ice and improve the chances of success. When presenting a product, it is also essential to show a sample and not only a picture or a catalog.
5. Pay attention to details
Japanese are very detail-oriented. Do not exaggerate your claims to impress the other side. They will most certainly investigate them. It could be very embarrassing and even may ruin the trust that has been built. Be well prepared, do not hide anything, and be ready to answer all of the technical questions they may have! If you do not have all of them on the top of your head, politely explain that you will investigate and will come back to them with the answers.
6. Give and Take
Negotiating with Japanese should always be regarded as a give and take process. Negotiating is not a fight in Japan! There is not a winner and a loser. In Japan, negotiating is a zero sum game and both parties will benefit. To ensure mutually profitable and long-lasting business relationships, be flexible, and always try to reach a consensus. Remember that setting a business deal in Japan should be approved by all of the parties and departments involved. Never make one of your counterparts, “Lose Face.” It would be regarded as a cardinal offense and will close the chances of setting up a deal.
7. Respect social etiquette
In Japan, in general, and in companies especially, the etiquette is paramount. Even if conducting business in Japan is a bit more relaxed than it used to be, etiquette should still be followed. It starts with the exchange of business cards…with two hands. Take time to look at the business cards of your counterparts and put it in front of you on the table. The worse will be quickly put it in your pocket and forget about it. We have all heard of bowing in Japan. It is necessary and is a sign of respect, but there is no need to exaggerate it. When dealing with Foreigners, the Japanese will welcome a handshake as well. Just avoid touching your potential partners too much. Even if this is quite common in the Western world to hug and pat somebody’s shoulder. In Japan, this will be received as a bit too casual….At least during formal meetings. During the famous “Nomikai” or drinking parties that may follow a long business meeting, just be yourself and relax! In the meeting room, the seating arrangement is very codified. Do not grab the first empty chair! As a guest, always sit in front of the door with the most senior person seating in the middle and the most senior executives nearby. In Japan, it is also critically important to respect the elderly within an organization.
8. Be prepared for the long run
Negotiating with Japanese takes time and can be frustrating. Throughout the negotiation, remain friendly, professional, patient, and persistent. You should never allow issues during the negotiation process to end up in personal conflicts. Delays will occur, making patience extremely important if you want to get anywhere in Japan. Negotiations in Japan do take a long time. Always consider them as a marathon and not as a sprint. Several reasons will explain the time needed to finalize a deal. Expect negotiations to be much longer that with westerners e long and to move at a very slow pace, with immense attention given to details Relationship building, information gathering, bargaining, and decision making all take considerable time.
9. Do not show your emotions and act aggressively
It is assumed that Emotional intelligence doesn’t translate well across borders. When negotiating in Japan, do not be aggressive and show your feelings! Losing your temper will be the cardinal mistake and will probably be the end of your business relationships. Always act calmly and professionally. Negotiating with Japanese can be frustrating for westerners, but it is dramatically important to restrain your emotions and not to cause embarrassment to the other party. The concept of “Face” is fundamental in Japan. Causing discomfort to another person can be disastrous for business negotiations. If you have to deal with an unpleasant topic with someone, never do so in public and always convey your message with diplomacy and in a way that will maintain the other’s “Face.” Latin people use to emphasize words with gestures. In Japan, this might not be well received to “talk with your hands” and bump on the table with your fist. Always keep a professional attitude! Business is a serious thing, and your potential Japanese partners will appreciate your seriousness.
10. Celebrate and Socialize
Signing a contract is a crucial moment in Japan and should be considered as such. Do it a formal way and do attend the party that will follow. It will be a formal event and be prepared to give a speech and do recognize the contribution of the different parties involved. Gifts can be exchanged to reinforce the relationship again and acknowledge appreciation. As a general rule, in Japan, Business dinners and entertainment are essential as they help to build strong relationships. Refusing to participate in these social events may be regarded as a negative signal. So even if you are not a night bird, we strongly encourage you to participate in these social gatherings that may be used to gather information and ultimately strengthen your negotiating position.
At Hashi Consulting, we help you conduct negotiations the proper way. We will take care of the interpretation to avoid any misunderstanding and will brief you on the best strategies to be successful when negotiating. Patience is critical, but ultimately, you will not regret the time spent as your relationships with a Japanese company will always be thought for the long run. Negotiating with Japanese is not easy but very rewarding and deserves to be understood. If you want to know more, we encourage you to read this classic article published in the Harvard Business Review in 1970 but that is still relevant today.