The Things You Need to Know When Doing Business in Japan

Japan is a leading center for innovation, with its highly attractive business and living environment – making it one of the ideal locations to grow business in. As a survey by the Ministry of Economy, Trade, and Industry (METI) demonstrates – Japan has a stellar reputation among Western and Asian companies which are attracted to its Research and Development (R&D) capabilities and advancements and well-developed laws (i.e. intellectual property rights).

However, despite that companies are continuously pulled to Japan’s shores because of a number of reasons, and while it ranks as the world’s third largest economy; when it comes to ease of doing business, it lies in the 114th place – making the country quite difficult to penetrate.

For many businesses, particularly the Westerners’, the Japanese culture and their ways of doing business are often quite difficult to understand. It’s like trying to read emoticons not knowing what they mean – you are never really sure what’s going on in business meetings and negotiations and there is always that hesitation to ask questions because you might not get a straight answer or no answer at all.

Often times, the perhaps-most-asked-question, “why is business in Japan so difficult?” demonstrates the challenges faced by firms. However, rather than discussing the pitfalls of entering the Japanese market, it is better to consider the following tips of the things you should bear in mind when doing business in Japan.

Do your research.

Now, this might be a very obvious thing to do when establishing businesses anywhere. But when entering the Japanese market, there is no winging – conducting significant market research in Japan before launching your service is very crucial as it is one of the primary keys of creating a winning market entry strategy.

One of the important things to conduct research about is understanding the Japanese consumer behavior. According to Nicolaos E. Synodinos – in his paper “Understanding Japanese consumers: Some important underlying factors” published in the 2001 Japanese Psychological Research – understanding the “critical factors is a necessary, although not sufficient, condition for the development of theoretical frameworks of Japanese consumer behavior.” Moreover, he added that pinpointing the important factors that affect Japanese consumption can broaden one’s understanding of consumer behavior, in general.

Create a digital presence.

Japan has the reputation of being technologically advanced. This means that they are very much aware and can easily adapt to the modern technological changes, particularly the social media. One of the most popularly used social media platform in Japan today is Instagram.

While the rest of the world use these applications merely for entertainment, the Japanese people understand that there is more to using them than just sharing photos, they utilize them as tools to share experiences.

Grab the opportunity to create a well-thought-out digital strategy and web presence. This will not only capture consumers’ interests and attention but will demonstrate that you are serious about being successful and most importantly, will create legitimacy.

According to an article written by Gary Mcrae, there are three critical points to consider when creating a Japanese website: always use a native Japanese copywriter, make sure that the owner or the CEO of the business is on the website, and always remember to put the FAQ page as it will help build trust among the inquisitive Japanese consumer.

Learn the Japanese business etiquette.

Aside from having a competitive mindset, the Japanese put a high level of value on etiquette and the different protocol during business affairs. And because this holds true to foreigners as well, though the Japanese are generally forgiving to foreign partners as long as they show respect and effort to understand the Japanese culture, it is important that you learn even the basics.

While it holds true that the nature and make-up of market in Japan is quite different from the rest of the world and thereby “has been characterized as an enigma to most foreign observers”, analysts believe that in terms of quality of growth, its rivals – particularly China which has a love-hate relationship with Japan (over issues such as world war, Nanjing massacre, and territorial disputes) and overtook Japan in 2010 to become the world’s second-largest economy – still lag Japan.