Building Relationships in Japan
Japanese business culture is renowned for its unique blend of tradition and innovation, precision, and politeness. One of the central pillars that underpin the success of Japanese companies is the art of relationship building. In Japan, forging and maintaining strong interpersonal connections is not just a nicety but an essential aspect of doing business. Understanding the importance of relationship building in Japanese business culture can significantly impact success in this dynamic market.
Harmony and Mutual Trust in Japanese Business Culture
Relationship building in Japanese business culture is deeply rooted in the concept of harmony. Achieving harmony and mutual trust in business relationships is vital. It goes beyond mere transactions and is based on a genuine, long-term commitment to collaboration and mutual growth. Maintaining harmony means resolving conflicts amicably and finding solutions that benefit all parties involved, fostering trust over time.
Saving Face and Reputation in Japan
The concept of “face saving,” is of paramount importance in business interactions. It involves preserving one’s own and the other party’s dignity and reputation. Businesspeople in Japan are cautious not to cause embarrassment or humiliation to their counterparts. They strive to save face, even in challenging situations, as losing face can have lasting negative consequences for relationships and business prospects.
Japanese Loyalty and Commitment
Japanese businesses value loyalty and commitment among their employees, partners, and customers. Loyalty to one’s employer or business partner is expected and reciprocated. This loyalty fosters a sense of security and stability in relationships, ensuring the continuity of business ventures. In return, it can lead to increased commitment and dedication from all parties involved.
Building Relationships in Japan
In Japanese business culture, relationships are nurtured over time. This long-term perspective often involves numerous meetings, social gatherings, and conversations before a deal is struck or a partnership is formalised. This approach allows for a deep understanding of the other party’s needs, preferences, and expectations, ensuring that the business relationship is mutually beneficial.
Consensus Decision-Making in Japan
Japanese business culture prioritises consensus decision-making. This practice involves consulting with all relevant parties and seeking unanimous agreement before proceeding with a business decision. It aligns with the value of harmony, as decisions made in isolation can disrupt the equilibrium of a business relationship.
Local Representation in Japan
A local representative/partner who has experience of doing business in Japan can be invaluable as they will be able to read between the lines of the behaviour and language used by your Japanese counterparts and interpret them for you to minimise your chances of misunderstanding and miscommunication. Learn more about the importance of local representation from our podcast discussion with Bango.
Communication and Etiquette in Japan
Politeness, formalities, and etiquette are significant in Japanese business culture. Addressing people with the appropriate honorific titles and using the right expressions of gratitude and respect in both written and spoken communication are crucial. These etiquettes are not empty rituals but demonstrate a sincere commitment to maintaining respectful and amicable relationships. See our article here on Japanese Business Etiquette.
Patience and support in the Japanese Market
The pace of decision-making in Japan is generally much slower compared to other international markets. Patience and repeated follow-up are typically required to successfully close a deal. However, once the Japanese have decided to do business with you, things can then move very quickly.
Global Adaptation in Japan
While Japanese business culture has its unique customs and practices, it is essential to recognise that the world of international business is dynamic and diverse. Japanese companies have become increasingly global, adapting to different cultural norms and practices while still preserving the core principles of relationship building that are deeply ingrained in their culture.
The importance of relationship building in Japanese business culture cannot be overstated. It serves as the foundation for successful, enduring business partnerships and contributes to the overall economic strength of Japan. Businesses that understand and respect the nuances of Japanese relationship-building practices are more likely to thrive in this competitive and highly structured market. By embracing the values of harmony, trust, loyalty, and commitment, and by mastering the art of communication and etiquette, one can navigate the intricate web of Japanese business relationships and harness their potential for mutual growth and prosperity.
What is Keiretsu?
Japanese companies have traditionally operated within informal business groups known as Keiretsu.
A Keiretsu is a group of companies with interlocking business relationships and shareholdings.
The member companies own small portions of the shares in each other’s companies, centred on a core bank; this system helps insulate each company from stock market fluctuations and takeover attempts, thus enabling long-term planning in innovative projects.
The structure has been admired for building relationships between buyer and supplier, decreasing the traditional adversarial relationship.
Keiretsu relationships are often seen as long-term and pass beyond purely business relationships into social and personal connections.
The Keiretsu structure has conditioned Japanese companies to only do business with member companies. However, high levels of merger and acquisition activity in Japan in recent years brought about by challenging economic conditions caused a slight decrease in the influence of the Keiretsu.
In today’s Japan, you will find both competitive bidding and cases where traditional business relationships take priority over achieving the best price. Therefore, we advise UK companies to research and understand the Keiretsu structure in their targeted business sector or industry and construct their business plan accordingly.
Last updated November 2023: Steve Crane OBE
Questions about doing business in Japan?