Assignment 2.

1: Dialogue 2 Doing Business in Japan

a. Large Japanese firms are part of a business system. A business system is a methodical procedure or process, used as a delivery mechanism for providing specific goods and services to customers in a well-defined market (business dictionary). The Japanese business system is a very large and complex, society oriented model. Japanese awareness of their cultural heritage and values is key to the way they address their lives, their business attitudes and decision making. The Japanese have very different ways of conducting business meetings and making important business decisions from the U.S. Large Japanese firms make important decisions by the Nemawashi Consulting System. In Japanese culture Nemawashi is an informal process of quietly laying the foundation for some proposed change or project, by talking to the people concerned, gathering support and feedback. It is considered an important element in any major change, before formal steps are taken, and successful Nemawashi enables changes to be carried out with the consent of all sides. The word means preparing the soil for transplanting a tree from one area to another, so that it will live. Nemawashi in business is preparing peoples minds to accept an idea. Nemawashi is consensus building (resource system consulting). In Japan, before the formal meeting starts, participants have already drawn conclusions regarding information to be presented at the meeting. This system was developed to avoid discrepancies, and gain agreement from everyone in advance, when making a decision in a formal meeting. It is also to keep the relationship harmonious. Nemawashi is best used to let people of differing opinions have time to adjust their opinions. The U.S. typically uses the vertical system in making important decisions. The vertical system implies top-down decision making where downward communication consists primarily of orders for realization and upward communications consists of reports on performance and achievement. As a rule, the top manager makes a decision and passes this information down to lower levels. In this system once the information is received it is part of any employees job to follow these decisions. Nemawashi differs in that it is typical to have a bottom-up style where information flows from lower levels to higher ones, making managers of the middle position wield the greatest influence on making decisions. Furthermore, in contrast to the U.S. vertical system, a group decision is desired. Of vital importance to remember is that Nemawashi is used to allow the free flow of ideas between people who might never have the opportunity to speak publicly about a proposal. The advantages of using Nemawashi as opposed to the vertical U.S. system is that there is a huge group of people involved in the decision making process as opposed to one or a few. Also, it eliminates disagreement among people and makes for amendment and revisions of proposal

until there is a consensus as opposed to no consensus and just the downward passing of orders. It reduces mistakes and the tendency to overlook a number of aspects which can occur in the vertical system. It gives a great opportunity to utilize the full measure of knowledge and attainments of all employees to achieve a set goal as opposed to just the knowledge and attainments of the top manager or management. The greatest disadvantage of Nemawashi Consulting System is the protracted length of time to arrive at a decision/conclusion. Because the process can last weeks or months, decision making can take up a considerable amount of time and does not leave much room for situations when fast action or responses to emergencies are required (nemawashi-doing business). Another disadvantage is that it can be viewed as an undemocratic process because decisions are made behind the scenes as opposed to out in the open (resource systems consulting). Nemawashi can be advantageous in the Automotive Industry. In the case of Toyota, for example, the same process used to gain consensus with outside community groups in Arizona is used every day to get input, involvement, and agreement from a broad cross-section of the organization (nemawashi-doing business). Thus by including a variety of perspectives and experiences the final decision is reflective of a number of solutions and alternatives which is particularly beneficial in the early stages of product development in automobiles. It allows for the strengthening of ones final automotive product or proposal. On the other hand, Nemawashi can also be disadvantageous in the Automotive Industry. If an emergency or problem arises at the Toyota plant that needs immediate action, it may take weeks or months to get a response. Even though at first the lack of rapid response in a critical situation seems to be a disadvantage, it is actually an advantage because Japanese see a lack of immediate reaction as a benefit. This feature of Japanese psychology was shaped by the Wu Wei principle formulated by the ancient Chinese philosopher Lao Ji: By doing nothing you will do the greatest good (Arin, 2005). b. Since I am welcoming a Japanese delegation to the U.S. for my firm, I had to quickly research and learn Japanese Business and Social Etiquette. The Japanese are punctual people. I learned that in Japan business cards are essential and to bring plenty of business cards to the first meeting. I would have to present my business card (known as meishi) to all business persons. I practiced how to present my business card the correct way and how to receive their business card. I learned it is better to take responsibility for any mistakes I might make quickly and to apologize. I learned I should show respect to my counterparts by speaking and addressing all business colleagues in their sir names and never using their first names. I should add san to their last name to demonstrate a high level of respect. Since it is customary in Japan to bow as opposed to shake hands, I practiced how to bow and know to return a bow if I received one first. Women bow with their hands in front, on their laps while men bow with arms to their sides (voices.yahoo.com). Japanese use bowing to greet each other and express thanks. Since the group is more important than the individual in Japan, I learned I should not to praise one individual in front of the group nor single anyone out. Whether the meeting was to take place in

the home of Japanese business people or a restaurant, I know to take off my shoes and to carry a clean pair of slippers. I practice how to use chopsticks as a way of showing respect of the Japanese culture. I knew to take food from several shared plates on the table and place it on my own plate. To show the best manners, I know to clean my plate spotless, leaving nothing on it. Since the Japanese like things clean, I know not to blow my nose at the table. If the meeting takes place in a restaurant, so as to not be considered rude, I know to take a quick look at my change as opposed to counting my change. Since gift giving is very common, I know I will probably receive gifts, so I know to have gifts from my country handy and giftwrapped. I know to give the gift with both hands. Also, if we are in a formal setting I know not to open the gift in front of the giver. Interesting to note, tattoos are associated with Japanese gangs. All of this information allowed me to prepare for the meeting and to learn and practice what was necessary to decrease intercultural communication apprehension on both sides. I am now prepared for my meeting and prepared to turn this delegation into a business partner. As an added precaution, I plan to have an interpreter or a team member who is Japanese at the meeting to assist as needed. c. Advantages and Disadvantages of a Japanese Representative Office Setting up a business in Japan is a very complex process. Ordinarily, a foreign company enters the Japanese market using one of the following four corporate structures: (1) Representative Office, (2) Branch (in Japanese legally known as Gaikokugaisha no nihon ni okeru eigyousho (a business office of foreign company in Japan), (3) Corporation or (4) Limited Liability Partnership: LLP (Entering the Japanese Market). The quickest and least expensive way to establish a business in Japan is the Representative Office. The representative office is typically used when a foreign company wants to undertake market research or advertising in Japan prior to a more permanent commitment involved in a branch or subsidiary. (JETRO Fact Sheet). A foreign company can establish a presence in Japan as a Representative Office. But there are advantages and disadvantages to the Representative Office in Japan. Some advantage of the Representative Office as opposed to the other corporate structures are: easy to establish, no legal registration requirements, no shareholding requirement or restrictions since it is simply an extension of the parent company, not considered a permanent commitment, enables foreign companies to engage in full-scale business, no local management requirements under domestic law, not required to retain books or records, no statutory audit requirement, not subject to taxation. Additionally, the Representative Office can supply information to distributors, communicate prices and terms of sale and identify sales opportunities. Disadvantages of the Representative Office as opposed to the other corporate structures are: restrictions in the nature of activities it can carry out, restrictions in the number of employees, cannot engage in sales activities, cannot open a bank account, cannot lease real estate in its own name, only permitted to engage in limited activities, fully controlled by the parent company.

Doing business in Japan involves building relationships that are based on trust, compatibility and sincerity. Doing business in Japan is a personal thing; you will want to show that your concern is for the people with whom you are dealing, not simply monetary gain. The Japanese concept of honor is as important today as it was during the days of the shogun, and has been successfully adapted to modern Japanese business culture. Much of Japanese corporate business culture traces its origins back to the ancient bushido code, or the Warriors Way. The violent savagery of the early samurai was tempered and refined with the introduction of Buddhism to Japan starting in the 9th Century; bushido became the moral code that incorporated not only the mastery of martial arts, but frugality, loyalty, honesty, benevolence and a strict code of honor (voices.yahoo.com). The use of cross-cultural training for business experts is a measure to enhance the success of business operations abroad. In order to improve the outcomes, language, culture, and communication skills need to be learned in an integrated manner (Koldau, 1996, p.22)..

References

http://www.businessdictionary.com/definition/business-system.html http://ww.resourcesystemsconsutlting.com/nemawashi/leansigma supply chain http://voices.yahoo.com/nemawashi-doing-businesshttp://o-bic.net/e/setup/start/01.html http://www.jetro.go.jp/en/invest/setting_up/laws/sec Arin, O. (2005). JAPAN: Traditions and Foreign Policy. Retrieved February 12, 2012, from http://www.alexbattler.com/alexbattler.Japan.html. Koldau, C. (1996). Meaning of Cross-Cultural Differences in Establishing Relationships in Japanese-American Business Negotiations. Retrieved February 12, 2012, from http://www.smeal.psu.edu/isbm/database/documents/wp96/14-1996.pdf