Strict Cultural Mores
Japanese etiquette has strict protocols for many aspects of day-to-day business, covering everything from the correct way to handle business cards to where and how to put wasabi on your plate at meals. Even Japanese toilets can be confounding for foreigners, and it is easy to give offense without meaning to. The Japanese business community is tightly knit and built on relationships, so it is important to observe the cultural norms.
Red Tape and Taxes
While starting a business can be relatively simple, other aspects of doing business in Japan may not be as easy. Obtaining construction permits, for example, takes on average 197 days and requires at least 12 steps. Japan’s tax structures are complex and differ markedly from those of most other countries. Managing local taxes requires 14 different payments and can add up to more than 50 percent of net profits.
While most Japanese people understand English, most do not speak it well unless they have regular contact with English speakers. However, Japanese etiquette prevents people from admitting they don’t understand the conversation, which can make communication difficult. It is best to speak in simple terms and offer business materials in writing since most people understand writing better than conversation. Be careful of putting anything in writing that could be construed as a commitment, however, since the Japanese may consider even simple statements as binding agreements that will stay in effect forever.
Japan’s business structure is built on close relationships between companies that may go back for generations. Foreigners sometimes have a meeting with Japanese business people which seems to go well, and they hear a lot of “yeses” during it. However, saying yes is often merely a courtesy to avoid seeming rude or because the meeting participants do not wish to admit they don’t understand the conversation. It is unlikely that a new entrant to doing business in Japan will close a deal after one—or even several—meetings.
In addition, when doing business in Japan, most companies prefer local businesses to those at a distance. Ideally, they like their partners and suppliers to be within two hours of their facilities. That makes it imperative to have a local presence within all the major business districts, so many companies rely on a supply chain service partner to help.
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