Trust: Doing Business In Japan

Trust: Doing Business In Japan

Trust is a big issue in Japan. The people we deal with in companies are salaried employees, who have probably been with that same company their whole career. They are primarily interested in gradually moving up inside the firm by making no mistakes. The best way of not making a mistake is to do nothing new or risky. 

Their aversion to risk precludes trying anything that might have a negative impact, even at the expense of denying the company business opportunities. There is little reward inside companies in Japan for risk taking and a big downside if things go wrong. So when we approach a Japanese company, we have to think about how we can take away the risk for the individual we are dealing with. It might be money back guarantees, warranties, escape clauses, etc. 

This attitude is summed up by the saying Japanese buyers "prefer the devil they know to the angel they don't know". By definition you are the angel they don't know, because you are offering a new product or service or an alternative to what they are using now. 

In the distribution system in Japan, there is a very complex food chain to work through. There are many layers and if you don't deliver, as you said you would, when you said you would, you endanger the whole interlocking food chain. No Japanese company want to see their distribution system set on fire by a new player, they don't know well. Therefore they are very conservative about introducing a new supplier. 

When you are competing in the marketplace with the big trading companies, they take the risk away by providing very long payment terms. They will have a higher price than what you can supply, but their offer is less risky. The company can land the product, sell it and then pay the trading company later. Your discounted price can't compete with that risk free arrangement. 

Deals rarely get done in one meeting in Japan, so expect multiple meetings. Things take a lot longer here because companies have to gain consensus internally, about making a change to their supply arrangements. It might take years in fact, before the buyer is comfortable to give you a try. 

This happens in my own training business here all the time. Companies we met four years ago, finally send one person to trial the training. It can drive you nuts, but this is how it is and if you want to play, then you have to pay. Western companies being driven by quarterly earnings and the stock price, have a hard time with Japanese long play time frames.

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About The Author

Dr. Greg Story: President, Dale Carnegie Training Japan

Author of Japan Sales Mastery, the Amazon #1 Bestseller on selling in Japan and the first book on the subject in the last thirty years.

In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.

A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, "THE Sales Japan series", THE Presentations Japan Series", he is a thought leader in the four critical areas for business people: leadership, communication, sales and presentations. Dr. Story is a popular keynote speaker, executive coach and trainer.

Since 1971, he has been a disciple of traditional Shitoryu Karate and is currently a 6th Dan. Bunbu Ryodo (文武両道-both pen & sword) is his mantra and he applies martial art philosophies and strategies to business.