Japanese Business Culture – A Practical Guide

Posted By Jim Kersey

Many aspects of Japanese culture are globally recognized. And it’s true that the nation still continues to place a heavy emphasis on tradition in many aspects of everyday life. But how different is Japanese business culture really?

While it’s easy to become fixated on some of the more novel aspects of this subject, like the practice of bowing or the formal exchange of business cards, it’s important to dig a little deeper into what makes doing business in Japan so unique.

Why Learn About Japanese Business Culture?

  • Tap into Japan’s naturally relationship-oriented culture in the right way
  • Increase your effectiveness in negotiations and meetings
  • Avoid communication gaps
  • Reduce your “outsider” status
  • Prevent confusion and misunderstandings
  • Build stronger relationships with partners, colleagues, clients, and other business contacts
  • Boost your confidence in business settings
  • Feel more integrated into your new market

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Collectivism and Group Orientation

Overview of Tokyo as part of Japan market analysis potential investment locations

Japan’s geographical isolation from other countries for much of its history has played no small part in the way traditions and cultures have developed here. As a relatively homogeneous country where foreign residents represent less than 3% of the total population, many common values and ideas exist throughout most of society.

Adherence to certain ideas and behaviors have also been strengthened by an extremely standardized education system and strong family structures that play a key role in the socialization of pretty much all Japanese citizens. Unlike places with greater immigration and diversity, Japan, in some ways, is much less influenced by the spread of global trends.

Why does this matter to Japanese business culture?

  • Japanese people naturally have a greater shared context and knowledge base, which outsiders don’t have access to
  • Practices and approaches to business are more uniform across society, meaning structures and processes can sometimes become entrenched
  • There is a higher chance of symbiosis between multiple separate Japanese companies that form mutually beneficial relationships and rally together against outsiders

As a foreigner working in Japan, you may encounter situations where others will assume you have a higher level of understanding about a situation or topic than you actually do. This can result in communications that seem ambiguous or fragmented.

Alternatively, some might assume you have no contextual understanding at all and may communicate with you in a simpler way that might seem almost patronising.

HB Pro Tip: Communication will become easier as you build stronger connections with people and create your own shared understanding. However, having people on your team who can understand the local context and can translate the essential meaning to you can be priceless while you’re first setting up shop.

Hoftstede’s analysis of Japanese Culture

 

Source: Hofstede Insights Country Comparisons

Hierarchy

Building blocks symbolise hierarchy in Japanese business culture

Traditional hierarchies have been eroded in many cultures. New startups with disruptive power can now rival long-established companies through innovation and technology, and it’s much easier today for talented individuals to rise through the ranks within a company based on their individual qualities and skills alone.

However, hierarchy is still a prominent aspect of Japanese business culture, with many relationships and positions of status being founded on various systems of hierarchy. In these relationships, each person has certain expectations of the other and breaking away from the norm can be seen as subversive or rude.

For example, an older employee within a traditional Japanese company is more likely to be senior and therefore will command greater respect from those who are younger. Several rules and practices will be used to reflect this respect and maintain the status quo.

Equally, customers are always considered to have an elevated position in the customer-vendor dynamic. And it is partially because of this that Japan’s dedication to customer service is exceptionally high when compared with most developed nations.

HB Pro Tip: It’s generally expected that during interactions between separate companies, each side should put forward people of the same age and position during discussions.

Historical Influences

Tori gates representing historical influence on Japanese business culture

Shinto, Japan’s indigenous religion, promotes the preservation and maintenance of communities while encouraging followers to put the needs of the many over those of the individual.

Also, Confucianism and Buddhism are fundamental teachings in Japanese culture. Both systems promote the importance of hierarchies, the maintenance of relationships between individuals and society, and the existence of a kind of collective mentality.

HB Pro Tip: While you might be frustrated by hierarchies, remember that they also offer a number of benefits. They establish a clear chain of authority and therefore accountability for individuals and departments, and can help to provide structure to several large-scale organizational processes. Individuals who are lower down in the hierarchy can also benefit from the responsibilities of care assigned to people with higher positions, who should theoretically support the growth and welfare of those below them.

Formality

In Japan, there are right ways and wrong ways of doing things. And for foreigners, there’s some flexibility. But generally, it’s best to know the correct procedure when handling a number of processes and activities within the world of business.

A good approach to this is to always be clear about what you are doing and why you are doing it. If you plan on discussing important issues about your project with a partner or want to reach a conclusive decision with a client, make sure you forward plan a meeting with a detailed agenda and highlight the specific outcomes you want to achieve.

You may be used to making high-level decisions more spontaneously, with fewer people involved, and in a more casual setting, but in Japan where formality and procedure are incredibly important, this is less likely to happen.
Much relies on doing things in the appropriate way and at the appropriate time and, so be careful that trying to fast-track decisions and processes might seem rushed or unprofessional.

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Common Barriers when Doing Business in Japan

Candid photo of Japanese business culture in Japan

Although there’s been a significant improvement in English language capabilities in Japan, the average proficiency level among Japanese professionals still trails behind many other Asian countries like India, Singapore or the Philippines. Businesses also face a number of non-language related barriers.

Lengthy Approval Processes

Many Western working practices are focused on streamlining communications and workflows to increase overall efficiency. Decisions can often be made with the involvement of a small number of people, with individuals having greater authority and autonomy to make important calls on a number of issues.

In Japan, decisions can often take a lot longer to be made. It’s common for proposals to be circulated among many different departments, all the way up to the company managers and owners before a final sign-off is achieved — especially when it comes to important contractual agreements.

While being frustrating if you’re waiting for confirmation on something important, this kind of collective decision making does have a few benefits. The first is that ideas and proposals will be vetted by more people, drawing on a company’s combined experience and knowledge, and looking at a problem from all angles.

With more people being asked for their seal of approval, this can also help increase a sense of unity across an organization, promoting integration and a sense of togetherness.

HB Pro Tip: You can avoid your workflow reaching a bottleneck due to slow approvals by making sure your proposals are more comprehensive and polished at the time of submission. By identifying any gaps or challenges in advance, you can reduce the chance of time-consuming back-and-forths.

Information Sharing and Detail Overload

You may find it harder to get the information you need in Japan. Or, to put it another way, you may find that it’s delivered in a way different to what you’re used to.

On one hand, communications could appear vague and cryptic due to not enough detail. This could be a result of someone assuming you have a good working knowledge of the context that surrounds a specific process or activity, when you actually don’t.

Alternatively, you might find yourself being given a huge amount of information that drowns out the details you really need. This could be in the form of extensive background information or secondary knowledge that isn’t directly relevant to the issue at hand — more likely in situations where someone expects that you have very little shared understanding or context.

Over time, you should be able to develop a better shared understanding with your colleagues or Japanese business partners. This will help to avoid problems with information sharing.

Difficulty Perceiving Someone’s Opinion or Position

Colleagues represent difficulty perceiving someone’s position in Japanese business culture

It’s not just in Japan where someone’s behavior in a meeting or work-based interaction can differ from their true feelings. However, high levels of cordiality, politeness, and enthusiasm are sometimes confused with agreement or approval in Japan.

Similarly, top leaders can be quiet during your encounters with them, giving you the impression things aren’t going so well. However, they may just be calmly listening and waiting for a time to contribute once they have all the details they need — just be patient because it could take a while.

Here are a few tips:

  • Regularly following up on meetings with an email to clarify someone’s stance. Using bullet points or categorising your requests systematically can also help a lot.
  • Try to formalise your processes as much as possible and create predefined outcomes for specific meetings or activities.Consider when and where you conduct business. Certain situations will be more conducive to
  • receiving direct and honest feedback than others.
  • Don’t take negative criticism to heart. This does not always represent a negative attitude or dislike of you or your company. Criticism is often seen as an important route to improvement.
  • Recognize that individuals are not always capable of giving you answers or feedback immediately, especially when it will impact their whole company. Often, more people will need to be consulted before you receive a definitive answer.

HB Pro Tip: The Japanese have an expression “aisoo-warai” that can be translated as “polite laughter,” “diplomatic laughter” or even “fake laughter”. Some may laugh in cooperation with you as a means of showing friendliness or openness. Others may laugh because they don’t fully understand the English being spoken and may laugh to indicate confusion or embarrassment. Not taking this as an insult is important, and when in doubt, clarify your meaning for the listener.

Important Business Etiquette Rules

Exchanging of cards in Japanese business culture

 

Saving face / losing face Causing someone to lose face is ill-advised. Disputes or confrontations in Japan are largely avoided. And while you might be used to conducting heated debates with your colleagues, be mindful that raised voices, or language that is too direct or bullish, can appear overly-confrontational or even aggressive in Japan.
Dress suitably It’s usually safer to lean towards more formal attire here, especially during first-encounters. This varies in each industry, with it being less important to dress formally in more creative sectors, but as appearance and presentation is an important part of Japanese society, dressing too casually might seem like you’re not 100% committed.
Bowing The issue of bowing isn’t as intense as you might have heard, but getting it right can help you establish stronger connections. Here’s a crash course:

  • Leave space between you and the person in front of you (to stop your heads bumping when bowing)
  • Keep your back straight 
  • Don’t maintain eye contact 
  • Bow deeper for more formal and first encounters
  • Don’t try to bow and shake hands at the same time
  • Feel free to shake hands instead if necessary (you probably won’t be the first non-Japanese person someone has encountered)
Be punctual Being late, missing deliveries, or making too many last-minute schedule changes can erode your reputation quite quickly in all cultures. And this can be seen as incredibly disrespectful in Japanese business culture. If you need to make changes, be clear on the reasons.
Giving and receiving gifts There are many important holidays and gift-giving seasons in Japan. Some of these are occasions where business colleagues and associates choose to share presents with each other — a perfect way to build stronger bonds in the corporate world. 

When gifting, keep the following in mind.   

  • Always wrap your gift before giving it
  • Give your gift at the end of a meeting (not the start)
  • Don’t expect gifts to be opened immediately, as this is usually done in private 
  • Favour quality and practicality over extravagance when it comes to choosing gifts
Exchanging business cards Cards are usually exchanged during introductions, before a meeting or during the early stages of one, and can be a good way of keeping track of people’s names and positions. A few best practice are:

  • Carry enough business cards for each person you are meeting
  • Invest in a smart business card holder to make them easily accessible and more presentable 
  • Turn your card towards the receiver
  • Extend your business card with both hands while offering a small bow
  • Hold it by the top corners without covering any names or logos
  • When you receive someone’s card, accept it with both hands
  • Read over the card with interest
Humour Being enthusiastic and generally jovial during your encounters with Japanese colleagues, clients, and any else you encounter when doing business in Japan is a good thing. Just be careful you don’t overstep the mark with jokes that fall flat. Some may simply be too confusing for people to understand, while others may actually be culturally inappropriate.

HB Pro Tip: Being non-Japanese, there’s much less pressure on you to conform to all business etiquettes, but knowing just a little about how to conduct business in Japan the “right” way will help you to make a great impression.
Being late, missing deliveries, or making too many last-minute schedule changes can erode your reputation quickly.

Best Practices and Survival Tips

Colleagues socialising with beer as part of Japanese business culture

Avoid being too direct Pushing people for commitment or answers before they’re ready can break relationships. Be respectful of formal processes and traditions. Patience and understanding can go a long way when establishing a strong relationship with new partners or contacts in Japan.
Compromise In a largely relationship-based society, it’s normal for things to start small and grow over time. Winning trust can often mean making compromises, such as handling smaller tasks and projects before you are trusted to handle more extensive responsibilities.
Embrace the social side of Japanese business Strong business relations can be built outside of the office too. While formal meetings and interactions are often more formulaic, there is a strong social element in Japanese corporate culture, with bonds built over food and drink, either at the home of a colleague or client, or at a bar or restaurant. These are vital opportunities to build trust.
Seek a local intermediary Having someone to introduce you to new Japanese contacts can help to lay the groundwork for mutual understanding. Equally, working with a local partner or support team can take away some of the cultural burdens of running operations completely by yourself.

HB Pro Tip: It’s more common for Japanese people to remain silent when faced with conflict during meetings, which could be the result of a disagreement. However, Japanese people may also be more inclined not to say anything if they are not confident that they can give you a completely accurate repsonse in English, whether this is due to information gaps or a lack of confidence. In these situations, don’t try to push for feedback and instead follow up after meetings for more clarity.

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How to Run a Successful Meeting in Japan

Japanese manager running meeting in Japanese business culture

You’ll likely face plenty of meetings in the initial phase of a Japanese business relationship. This is necessary to establish trust and reputation for both parties. In truth, the purpose of some meetings may be simply to strengthen cohesion between two companies rather than to achieve any specific goals. Below are a few best practices for meetings in Japan:

  • Create and submit an agenda if you are the one running a meeting
  • Set meetings and agendas well in advance so people have enough time to prepare
  • Come with a printed agenda and important documents for each person in the meeting room
  • At the start of meetings, clearly state what the objectives are and make the appropriate introductions during first encounters
  • Always keep meeting notes and follow up with participants afterwards to confirm everyone is on the same page
  • Follow logical turn-taking principles and give people the time to express themselves in full
  • If people are not ready to respond, don’t push them for an answer or feedback, simply make a note to follow up in the future
  • When the meeting is finished, summarise the results of the meeting and record any necessary next steps
  • Use visual aids, presentations or flip-charts whenever you can to simplify complex information
  • Be aware of hierarchies within organizations and try to address questions of high or low importance to the right people
  • Arm yourself with a few bilingual speakers to help translate meaning or guide the conversation in the right direction

HB Pro Tip: You might find that people are reluctant to talk during meetings. This could be because the Japanese place a great deal of importance on delivering “full” answers and hold more personal responsibility for the quality and accuracy of what they say. Combined with the task for speaking in another language, this can prevent someone from contributing freely to discussions. If you feel like you’ve come away with less than what you’d hoped, just follow up directly with people on-to-one and give them a chance to offer their take on things after the meeting.

Japanese Language and Communication Gaps

Team overcoming communication gaps as part of Japanese business culture

When conducting business between cultures, there are many areas for possible misinterpretation or confusion. This is natural. If you’re not actually able to speak Japanese yourself and must rely on your counterpart’s English skills, be patient and accommodating when handling communication gaps.

Sometimes, expressions used by Japanese people may have a different actual meaning in English. For example, a Japanese person’s efforts to make their statement more polite or indirect out of respect could actually make their words seem more evasive, vague, or inconclusive.

The word “maybe” is often used to soften statements and make them less forceful. For instance saying: “maybe you can help me with the proposal” is an effort to avoid being demanding or confrontational language, rather than to suggest indecisiveness or hesitancy.

Also, the literal meaning of words can often have a different impact when used in conversation. Most Japanese people are more proficient at writing than speaking, so you could encounter a few strange word choices here and there.

Learn How to Avoid Embarrassing Japanese Translation Mistakes

Final Reflections

Indeed, there are some notable differences between Western and Japanese business cultures that may add to the difficulty of breaking into this fascinating and exciting market. Yet, Japan is a country with considerable business opportunities and a great choice for many organizations looking to expand their international presence.

In a country famed for its hospitality, accommodation, and respect for hierarchies, you’ll be faced with a great deal of warmth, good feeling and a willingness to build strong, long-term relationships. And just as you are reading a guide on Japanese business culture now, consider that many Japanese individuals might also be reading similar content about the enigma of Western culture. Understanding and patience will go a long way.

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