INTERPACIFIC NETWORK CORPORATION - Doing Business in Japan? Then, do it right. Negotiating in Japan

Negotiating in Japan

Negotiations are inevitable and an essential part of executing your business strategy.In Japan, negotiations are simply different from how you might execute in the states.It is often difficult to identify and follow cultural clues which often lead executives from their original engagement to proposals which result in more interesting opportunities than one originally contemplated.

Often when a Japanese team produces a specification for a product or service, they develop one that may seem costly. Products developed for the Japanese market may seem over engineered.However, for a Japanese consumer, what seems over-specified, especially concerning quality and packaging may be the “standard” for success within their market. When companies have established sourcing models, their component, quality and packaging suppliers fit into the appropriate model. Often there is a gap between the price one hoped to pay and the quote you have received, through extensive communication and education between the Japanese supplier and their component manufacturers about the products specification or package, companies can deliver appropriate pricing, which in turn helps everyone achieve appropriate margins for the opportunity in question.

A seasoned Japanese negotiator must not only plan an appropriate negotiation strategy, they also have to identify ways to deliver an appropriate proposal quickly to avoid any issues, delivering a superior product for an appropriate price to market.

If you are a manufacturer and or supplier to a Japanese company, whose products may be sold to the Japanese consumer, then your company will be responsible for doing business in a Japanese way.Japanese companies performance requirements and expectations are very high when compared to markets around the world, which is why it is imperative for your company and suppliers to adapt to this style of doing business. Any change in packaging or coating that one might consider minor could be considered a major change for your Japanese partner, client or consumers.

Negotiations truly begin when all of the stakeholders agree about the current situation, which will help position the solution against the competition. Usually there are many reasons why competitors are successful throughout the Japanese market.Often the most important differentiators will go unseen unless you ask the appropriate questions in the appropriate manner to be successful throughout the industry, including the fail-safe indemnification process to be prepared and practiced in the industry to indemnify customers against losses and damages while protecting your own rights and risks.

Gathering InformationTo execute appropriately in Japan, one must collect all of the appropriate information about the market, suppliers, possible partners, etc to choose the “right” partners and execute well in Japan. One must also understand how to successfully participate in the preliminary negotiations, arrange everything on the front-end and identify important gestures with regards to other negotiator's affirmation or rejection of each subject. American companies often misunderstand the true meaning of the "ringi" process where every manager must come to agreement prior to moving ahead on any opportunity; it is not good enough to win over a senior managers trust and commitment, to be successful in Japan. Companies must arrange the appropriate relationship with every level of management throughout their partner or clients corporation.	Local Hiring in Japan If your company is considering establishing a Japanese corporation, hiring a team with some experiences and business connections with your current target or potential customers; this may provide a solid position within the Japanese marketplace for your company. However this is not as easy as it might be in other markets around the world. We can help companies that would like to establish a sales force, customer relationship management system, and or account management teams in Japan by helping you with the hiring process, attending interviews, negotiations, while providing assessment and analysis of the candidates during the process. INC will ensure that everything aligns appropriately to execute flawlessly as one builds their Japanese team. Especially when a candidate must be able to execute immediately as a negotiator both within Japan and the USA, it is important to seek an experienced hiring manager to assist in identifying the opportunities and pitfalls which each candidate brings to the table. Your advisor must understand the business environment in both countries and how culturally hiring the right individual will play a major role in the success of one’s Japanese business. Often US companies or organizations hire people who might be successful in the US but not in Japan. This is because American company HR departments lack the skills necessary to recruite the appropriate talent that will be successful in Japan. Too often American companies hire talent that has a limited understanding of the Japanese language and some experiences with the Japanese culture, but simply do NOT understand the nuances of doing business in Japan. As a point of information, just because someone speaks the Japanese language, they do not necessarily understand how to do business in Japan. Individuals who say they have experiences in Japan should not be automatically qualified to be successful in Japan over the long term. The ability to be successful both in the US and Japan is a highly specialized skill, and few can execute appropriately between the two cultures.
Negotiation Over Investment It is not easy or common for a Japanese company to make a decision to take investment from a foreign investor, however, in today’s culture these rare occurrences seem to be increasing, especially between large corporations. So, if the opportunity presents itself, and your company is in a position to offer an investment or loan to a Japanese company in order to develop the appropriate business connections and a strategic position of power within the Japanese market, the results if structured appropriately should return the initial partnership ten fold. Although one must still evaluate each and every opportunity individually before potential partnership, one must not ignore the opportunity that a true Japanese partner brings to the table. So be sure to send in somebody that can dig deep into each opportunity and thoroughly evaluate it based on only facts by eliminating all the assumptions you have on its strategic value, and balance it against its original value. As soon as you invest in a Japanese partner, it is important to nurture the relationship appropriately in the Japanese way because your objective of the investment will be completed by taking good care of the relationship after the investment unless the investment was made for a hostile acquisition. In order for a Japanese company to accept foreign investors, you may need to receive guidance from a governmental agency or hopefully another large Japanese corporation that is affiliated with the company in question. Because the Japanese culture normally fears uncertainties, and investment from a foreign company may be flagged by the government or at least regarded as a factor to destabilize the company's status quo, and it may require a complicated strategy to execute on.	Negotiation Process When one plans a negotiation strategy, one must truly understand who their clients are and the lay of the land both within the target organization and throughout the industry. If one’s target customer in Japan is a large corporation, especially a rapidly growing corporation, they may be involved in governmental or industry politics.It is important to understand each stakeholder’s motives and goals during the negotiating process to position everyone appropriately and put together a deal that works for all of them. In most cases, Japanese senior management teams are comprised of 3 or 4 people, their organizational structure is comprised of a President, Executive Vice President or Fukushacho, Senior Managing Director or Senmu Torishimariyaku, and Managing Director or Jomu Torishimariyaku. The president may be the individual who makes the final decision especially to opt out in most companies. Not so many obvious top-down orders to move new business ahead by the presidents. They would rather have their business unit leaders drive the business and make major decisions moving forward. Depending on the company's HR history, often the Executive Vice President, Senior Managing Director, and Managing Director are close to retirement age, or they may be in the final “show down” with their rivals to become the successor to the incumbent president of the company. When one does business with Japanese senior management teams, it is important to identify the political landscape of those companies to understand how best to position your company with the appropriate teams as quickly as possible to avoid any unforeseen land mines within the culture. This kind of structure and positioning is extremely difficult to understand and identify in the beginning of ones relationship, however it is imperative, as senior management teams are often replaced, to strategically plan your timing and political positioning within the accounts you are working with.
Negotiation with Top Management To negotiate directly with the executive management team of any Japanese company is not always easy due to typical Japanese organizational styles. Each company has its own decision making process, and therefore the negotiation process must vary depending on the company you are working with. Even when the executive management team has the power to make final decisions, they still have to work with middle management and their staff to garner their support. Most Japanese executive management teams do not make go, no go decisions alone. Unfortunately or fortunately, executive teams will often reject partnerships or new ideas if pressured to make decisions because it is easier to say no than yes. For all of these reasons, it is imperative to keep everyone on the same page, aligning all levels of management to move forward effectively.The only way to ensure this position is to communicate effectively and appropriately with everyone who plays a role in the process to ensure the success of the business.	Understanding Top Management To be successful in Japan, you must understand the vision of the top executive of your partner.It is just as important however to understand their political situation throughout the industry.You must understand pressures from competitors, political foes, government, and even family members, which is not an easy task for people who have no idea what it is like to be Japanese and a top executive of a Japanese company, and that is why we say experience leads to success in Japan.
Entertainment Strategic and appropriate entertaining is a powerful tool to develop true business connections and relationship between Japanese and American companies. These evenings also lay the groundwork for successful negotiations with both partners and clients at all levels.	Proposal Interpacific Network Corp will take a close look at each case and conduct a “quick” yet detailed research project to learn understand your company's possibilities in Japan. In phase one of our engagement, we will discuss your company's products and services with potential business partners, industry experts and professionals; while assessing the feasibility. We will then submit our proposal for your review. We will patiently discuss the best solution for your company that fits your priorities, overall strategy, needs, location and budget. To learn, please contact us at: info@interpacificnet.com.

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Negotiating in Japan

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