Tips on how to close a business deal with a Japanese company

Tips on how to close a business deal with a Japanese company

What kind of image do you have about Japanese business? A lot of people find it difficult to do business because there is a lot of business etiquette and the decision-making process is time consuming. Also, online communications may create more miscommunication.

It is true that there are various business rules in Japan, but many of them are not explicitly stated, and many of them are based on unspoken common understandings.

However, it is said that in many cases, Japanese businesses are able to establish long-term relationships with peace of mind because of the strict adherence to deadlines for payments, orders, and deliveries.

This article will introduce some of the business characteristics of Japan that foreigners seeking to enter the Japanese market often encounter and how to deal with them.

Characteristic 1  The decision process takes time.

Basically, in Japanese business, there is a tendency not to make final decisions during business negotiations. This is because decisions are made only when people in higher positions, not the person in charge, agree on them.

Especially in large companies, there is a uniquely Japanese business style of approval decision-making process called “Ringi “, which means passing around a proposal for approval to all managers (mainly upper management) in the firm who are affected by an impending decision. Ringi-sho (an approval letter) contains the details of the business meeting and a description of the product or service to be purchased.

In Japan, there is a strong belief that the organization makes decisions, rather than giving the person in charge the authority to make decisions. This way, even if the person in charge suddenly retires or is transferred, for example, the new person in charge can continue to work on the project as long as the decision is made by the organization. In many cases, however, it takes a great deal of time to finish circulating Ringi-sho and make a final decision.

So how do you deal with this problem?

 Solution 1: Ask who the decision-maker is and have them attend the meeting.

Basically, the most efficient way is to have the final decision maker participate in the business meeting. Even if they have to circulate Ringi-sho after the business meeting, if the final decision-maker thinks “Yes” during the business meeting, the Ringi(approval) will be just a formality and the deal is likely to be concluded quickly.

However, it is a little tricky to ask the supervisor of the person in charge to be present. This is because the person in charge is often recognized as the person responsible for participating in the business meeting, and tends not to want to bother having his or her boss participate.

In this case, you can say to the person in charge, “I think it would be troublesome for XX-san (the name of the person in charge) to explain the situation to your bosses later. I will explain it to them together if you don’t mind,” If you mention the advantage of saving the time and effort of explaining to their supervisors, which is tedious for them, they may agree to your request.

 Solution 2: Prepare the contents of Ringi-sho

Although the format of Ringi-sho differs depending on each organization, the following information is approximately required.

-Details to be approved if purchasing goods (Name of the goods, name of the company, specifications, date of purchase, etc.)

-The reason for the request (purpose, significance, etc.)

-The benefits and effects if the proposal (Ringi) is approved

-Risks and disadvantages that may arise if the Ringi is not approved.

-Amount of money

In order not to cause trouble for the person in charge of preparing the Ringi-sho, sending the above information in advance by e-mail may help the Ringi-sho to be prepared more quickly and circulated within the company. Alternatively, it is also a good idea to ask the person in charge in advance what kind of contents are required in the Ringi-sho.

For reference, please check out Ringi-sho sample”

Characteristic 2  Japanese people often say “We will consider it”

Japanese people don’t like to say “Yes” or “No” during business negotiations. However, the phrase “We will consider it” is often used. This is because, as mentioned in Characteristic 1, they take time in the decision-making process and do not want to make any decisions on the spot.

If you hear “We will consider it,” try asking as follows.

 Solution 1: Ask about the level of consideration.

If all you hear is “We’ll consider it,” you don’t know whether to say yes or no. So, even if it’s just from the perspective of the person in charge, ask him or her about the likelihood of closing the deal at this stage. If it seems quite low at that point, ask, “Then what can we do to increase the likelihood?” and have another discussion.

If the person in charge has almost reached a decision in your favor, it is important to get him/her on your side and set up a place to negotiate again with their boss.

 Solution 2: Always ask when the consideration will be completed.

Japanese people have a tendency to be vague about things, so if you are told “We will consider it,” be sure to ask for a final decision date.

If you don’t, you may well find that it was forgotten about without being given a higher priority to consider it. If they don’t tell you the decision date, then you can set it for them. When you do, it would be good to have a clear reason why you are setting that date as the final decision date. For example, if they make a decision by this date, a discount rate will be applied.

Characteristic 3  Japanese people often nod their heads during business negotiations, but it does not necessarily mean they agree.

Japanese people have a tendency to avoid controversy, so they tend to nod their heads and listen to what is being said until the end, even if it is significant. There are a surprising number of cases in which people mistakenly believe that because they are nodding, they have been fully understood and agreed to, and the business meeting ends up being unsuccessful. In such cases, you should take the following measures.

 Solution 1: Remember that their nods don’t mean much.

It is easy to think that a nod means that the other person understands you or is responsive, but it is important to remember that a Japanese nod is not significant, and often just means that “I’m listening”. If the nod is followed by a detailed question or request, it can be taken as a sign that the business meeting is moving forward.

 Solution 2: Ask them questions during your explanation.

Instead of explaining everything all at once, ask if he/she understands and what he/she thinks at some point in the business meeting. This will make the other person feel respected and make the meeting more pleasant for both parties.

You may also notice that although they nodded their heads, they had quite a few questions and requests. These are some of the common problems in doing business with Japanese people and how to deal with them.

Japan is said to be a difficult country to enter because of its various business protocols. However, on the other hand, once you have established trust, it is true that you can build a long-lasting relationship and conduct business in a stable manner. If you need any of the following services with your business in Japan, please contact Biz Trip Story. 

 Practice business negotiations with Japanese people (role-playing)

 Translation of documents

 Video production for the Japanese market

 Research on companies to be discussed 

 Recommendations for exhibitions to attend as an exhibitor and visitor

 Consulting for exhibitions

 Exhibiting at the show on your behalf