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Doing Business in Japan

Anyone who has ever spent time doing business in Japan will tell you that it is a land of contrasts; technologically innovative and modern yet traditional and hierarchical. Japan boasts excellence in sectors as wide-ranging as finance, automotive, computing and pharmaceuticals and is viewed as a major global influence – even despite the recent economic rise of China and India. The county is deemed as ‘mostly free’ in terms of economic freedom, with businesses able to operate without the hindrance of excessive government controls. The nation also scores highly on the World Bank’s scale for ranking business ease.

However, despite the World Bank’s assessment economic challenges arise as the country faces a low-birth date, an aging population and lack of reform. It is important to note that steps taken through the Japanese government’s “Abenomics” policy, based upon the three key aspects of monetary easing, fiscal stimulus and structural reforms, have made a positive impact on deflation. Where the obstacles often lie when doing business in Japan is in communication misunderstandings.

Japanese business professionals often employ “coded speech” where what one publicly says and how they appear (tatemae) does not necessarily align with what one is thinking or what one means (honne). The result can be vague instructions and misinterpretation which is why it is strongly advisable to ask for clarification and remain patient.

Communication is often closely intertwined with culture and customs and taking the time to understand all three is imperative if you wish to do business successfully and sustainably in Japan. This is especially the case as, out of all the world’s business cultures, doing business in Japan is strongly relationship-driven. Consensus and cooperation are integral elements of Japanese business hierarchies and meetings. The concept of wa or harmony lies at the heart of business meetings, and it is not recommended to offer strong opinions or cause confrontation which might upset the balance of wa.

In order to maintain a sense of wa and build strong relationships, an understanding of Japanese culture is required. The World Business Culture website offers a wealth of information and tips on how to interpret Japanese culture and understand the business structures and economy to ensure you are well-prepared when doing business in Japan.