Japanese Business Negotiations- Tips, Strategy, and Culture

Denver’s inaugural direct commercial flight to Tokyo happened on June 10. Politicians and business leaders predict it’ll mean easier travel to Japan, which means more investment and greater cooperation. Now what?

It’s obvious. Companies in both cities will find greater accessibility and interest in working across borders. Colorado is becoming a more viable alternative to other U.S. cities for Japanese companies to enter the U.S. market. Colorado has “put its money where its mouth is,” and not just talked about the Japanese market, but ponied up the political support and the raw dollars.

People in Colorado with no experience with Japan will need to get savvy about the country. So let’s begin.
The greeting “konnichiwa” is used to say “good day.” This translation is considered literal. But it really isn’t. “Wa” is used to express harmony. Harmony is one of the most important cultural aspects in Japanese society. “Konbanwa” would be “good evening.”

It’s the concept of wa that permeates many Japanese behaviors. For example, there’s no word in Japanese for “yes” or “no.” The Japanese word “Hai” often is mistaken for “yes” in English, but a better translation might be “that’s right.” The opposite word in Japanese, “iye” (ieeyeah), might better be translated as “that’s wrong.”
Why is there no word for yes and no? It has do with the Japanese view on harmony. Finite concepts such as “no” can be seen as confrontational. One can imagine how negotiators get irritated and confused when they pitch Japanese firms and keep hearing “yes, yes, yes” — but no deal is consummated. In this case, “yes” means “I’ve heard you” not “I agree with you.” A traditional Japanese negotiator will be thorough but noncommittal.

An American software company wrote up a contract (which was agreed upon) with a Japanese firm, but the latter sent back a changed contract with no warning. This naturally prolonged the negotiations. The Americans quickly got upset, assuming Japanese were unethical. The Americans felt the Japanese slipped in some contract changes, and did so secretly, hoping the Americans wouldn’t notice. The U.S. firm felt the Japanese should put their concerns out directly, openly and verbally.
What went wrong here?
First, the Americans ignored the concept of wa. Rewriting the contract was less confrontational then an awkward phone call or meeting, in the Japanese mindset.
Second, the U.S. firm felt that a contract comes at the end of a negotiating process. Japanese firms often see a contract as an outline, a basis for negotiation. “First a contract, then a negotiation” goes an old Asian adage.

Third, the writing and rewriting of a contract upset the U.S. firm about the delays the Japanese were causing.
This brings up an enormous cultural difference: the concept of time. The Japanese, being long-term-oriented, were in no rush to get through the contract negotiations. The U.S. “time is money” attitude conflicted with the Japanese view that negotiations don’t necessarily have a beginning and an end, that they’re constant and continuous.
The concept of time is our biggest cultural stumbling block. Too often we have heard American firms complain about how long Japanese negotiations take. But in Asia, patient negotiators are the best negotiators.

The Denver-Tokyo direct flight to Japan took 27 years of negotiations to finalize. Tom Clark, CEO of the Metro Denver Economic Development Corp., has been to Japan 13 times in the past seven years. While Japan opens an extraordinary opportunity for Colorado firms, Clark cautions that “Our companies are not going go on a couple of business trips and make deals. It is going to take a great deal of time.”

The meticulous way Japanese negotiate often frustrates U.S. companies. Americans tend to finalize a deal and make changes when necessary. Japanese firms tend to try to work out all of the conflict (that can be predicted) and finalize a deal after more time has elapsed (and as mentioned, the signed contract doesn’t mean the deal is finalized).
But being meticulous also is time-consuming. Once again, the extreme thoroughness can mean that each negotiation can be more time consuming, require more preparation and need greater detail in following up. When Clark mentioned to his Japanese hosts that he’s been to Japan every six months for the last seven years, his counterpart responded, “You actually didn’t come twice in 2007.”

Last, every American negotiator who works in Japan will tell stories of long nights out with their hosts, elaborate banquets, and that their Japanese counterparts asked personal questions about careers and family.

This is because of the relationship aspect of Japanese culture. They want to get to know the people, not just hear about what you’re selling. And that takes time.