The Swiss Business Hub Japan has acquired some experiences in that area together with the Swiss SMEs supported. Many of them experienced during the meeting that their potential Japanese business partners or customers were very polite and seemed reasonably interested in their product, but sometimes it was extremely difficult to enter into a successful business deal discussion right away as they are used to in other markets.
Japan and business meetings
Group decision-making takes a long time
Unless you are dealing with a charismatic top executive at a large global company or a managing director of a family owned business, you will not get your sales contract signed just after your first or second or third meeting. In fact, simply setting up the first meeting can be extremely difficult in Japan. Why?
Because in Japan, things are thought over and over, data is collected, analyzed and based upon it, a consensus is reached which will then be presented to the senior people who are to be convinced of the validity of the idea, as they guide everyone throughout the project and will need to take responsibility for the success or the failure of it. This is a time-consuming process.
The Swiss companies assisted by the Swiss Business Hub Japan in the past were exhaustively frustrated during the process, thinking the reason why they did not hear from the Japanese company was because the Japanese were too polite to say no and just waiting for the Swiss company to lose interest (which can also be the case). In the case we experienced, however, the Japanese contact person for the Swiss company actually kept doing his research on the project feasibility and providing other groups in the company with information, a procedure which was repeated for months.
Therefore, silence could actually also be a good sign. It means that the Japanese are taking the offer from Switzerland seriously. They include and consult with everyone who will have to agree on the need to purchase the Swiss product.
The good news is, once the consensus has been made, actions are immediately taken and things start moving very quickly as all involved groups of the organization are already onboard and ready to carry out what has been decided.
The Japanese do not feel comfortable with taking risks in making decisions
What also affects the decision-making process is the risk-averse nature of Japanese culture.
Most Japanese companies prefer to start small, test the market first and then grow big once it’s confirmed that there is solid demand for the product and service and the Swiss company has proven to be able to deliver what they promised. That is why first-time partners in Japan will always ask; “Do you have a track record in Japan?”
In Japan, they say the customer is God, not king. When the customers of the Japanese distributor of the Swiss exporter like the Swiss product, start buying, and the Swiss exporter is unable to make the product because of insufficient production capacity, or a quality control issue, that would be fatal for the Japanese company. The Japanese have a certain expectation for high quality products including appearance, or packages even though these will be thrown away after the delivery anyway. Their expectation level is incomprehensive for the Swiss exporter, for them it is just outrageous.
The Swiss Business Hub Japan has seen such cases and can very well imagine that Japanese distributors have been experiencing such problems with foreign suppliers more often than they want to and have lost customers.
Risk and return assessment in Japan is different from other markets. Generally, there are very few incentives for your Japanese counterpart (or their business unit) for success, but failure brings shame and sometimes leads to punishment.
The most effective way of climbing the career ladder in a big Japanese company is not to fail, so middle managers tend to stick to the status quo and are very reluctant to try new things. Why should they change their current supplier if they meet the company’s needs well enough?
How to make your business meeting a success
To begin with, the Japanese accepting meeting you, means they have basic interest in your product. That means again they must have pain, and your offer could be a solution. You should be able to point out the flaws and pain points in their current situation/product. Additionally, the business world is quickly changing. Like it or not, they need to change their decision-making style and move quicker sooner or later - and they know it.
Before the meeting: “By failing to prepare, you are preparing to fail.”
You need to make sure that you deliver good reasons why the Japanese should buy from you and not from their current supplier or anyone else and prove that there is no risk (or minimize their risk) in doing so. The reasons why have to be well documented, backed by data, proven with track records, etc. You should help your contact convince other groups of the organization in several aspects (technical, financial, political, in terms of after-sales, etc. etc.).
One example of such a presentation that the Swiss Business Hub drew up and presented successfully together with a Swiss company included the following components:
- Industry trends and issues
- You have to address Solutions and ideas
- Demonstrating you are top quality and rightfully in the premium price segment.
- Past clients in same industry and their feedback
- Similar projects/Interesting credentials
- Resources, depending on timing and availability
- Benefits of your offer
- What value will be created
- Why your product is the best
- What is special about it
- Why the client will benefit
Make sure your offer fits well with your client’s needs, addresses their pain points or objectives and selection criteria; value generation and benefits are clearly identified, your offer is economically attractive and all buyers (your clients’ clients, for example) and decision makers will benefit.
In order to deliver the material, you need to know the industry trend in Japan, your customer, your competitors, your customers’ current supplier, their pricing, product, services and what/how you do better.
Market research is key.
Meeting with your Japanese counterpart
Most Japanese prefer to do business with people they have met face-to-face. It is not only about the quality of your product, but also about yourself. They want to deal with someone who is reliable and decent. The Swiss company should ideally visit the Japanese counterpart several times to reinforce their dedication and commitment. You have to remember that, because of Japan being a relatively small country with excellent infrastructure, your Japanese competitors are able to do personal sales calls much better than you.
Japanese companies are also wary of foreign companies without local representation. A local rep office or partner that can be a point of contact in Japan is of great value when beginning a new business partnership. The Japanese sales process requires the personal service aspect and it is very labor- and time-intensive.
- Looking for a Japanese business partner? Get in touch with us!
In this respect, Swiss SMEs are at disadvantage and this is where our local experts of the Swiss Business Hub Japan can help. As part of the Embassy of Switzerland in Japan, they can vouch for a Swiss company’s credibility, communicate with Japanese companies in their language and be your initial liaison in Japan.
Personal relationship is key.
During the meeting: Understand the cultural background
Japanese often make a distinction between what they truly feel or think (honne) and what they say in public because they think it is the appropriate thing to say (tatemae). Although there can be Japanese business people who are straightforward, you should take into account that your Japanese counterpart will not reveal their "honne" during the initial business meeting, but rather first listen to your proposal without giving a strong opinion on it. Japanese desire to maintain harmony and relationships by avoiding confrontation, which may lead to ambiguous responses that can be misinterpreted. One often used example is the word "Yes" in Japanese, that can mean anything from "I'm listening to you," to "I understand what you're saying" to "I understand what you're saying, but don't agree with you."
Another difficulty in Japan is that few people are perfectly fluent in English and many of those who can speak English to some extent, use a rather vague language that resembles the way they would speak in Japanese. This is why it is recommended to attend your meetings together with an interpreter or at least a Japanese-speaking person (for example someone from the Swiss Business Hub Japan) on your side in order to fully grasp the hidden meaning of the words spoken.
Intercultural communication is key.
Follow-up after the meeting
After your first meeting, you need to follow up, explain your proposal again in writing, discuss, answer any questions, update as required until an agreement is reached. This may not differ much from other countries, but the Japanese language may be a barrier. Even if your counterpart is proficient in English, they may still think in Japanese, their communication style rather vague which is usual in Japan, and you are not really sure what they mean.
When dealing with a Japanese company, you should be assisted a person who is familiar with the Japanese culture and language inside-out, so that you avoid giving up an opportunity too quick or chasing an opportunity that never existed wasting your travel budget.