HOW TO MAKE A SUCCESSFUL NEGOTIATION WITH THE JAPANESE

I. OVERVIEW OF JAPAN Japan is an Eastern Asia country, located in the North Pacific Ocean. It is surrounded by the sea, and it is an archipelago of 6,852 islands. The word “Japan” is characterized with “sun-origin”, and then the country is also referred to the name “Land of Rising Sun”. Japan has the tenth largest population in the world, and in worldwide, no others possess the population per square root which is as dense as Japan‟s. Due to a large population as well as the highest density of population in the world, Japanese society is known as the most homogeneous one because Japanese people live with too many other people in the same area, then they have to deal with each other in order to maintain the community balance. Eventually, through hundreds and thousands of years of development, the nation becomes the most homogeneous in the world. Japan is also the 3rd strongest economy in the world, only ranked after China and the US. The nation is also famous for its determination and discipline. After World War II, Japan belonged to the Defeated with Germany and Italy, the country was seriously damaged. However, with the support from the world community (mainly from the US), Japanese economy has risen and developed rapidly during the 70s and 80s. In the 90s of 20th century, Japan became the 2nd strongest economy in the world, but the global economic crisis and the rise of China have made the economy fall behind the two giants. Japan also has a long history and culture, and the spread of Japanese culture is now international and it influences others quite strongly, especially ones that have tight bond with the Japanese. Japan is famous for the development of technology. The main three industries that have been contributing to the position of the nation are Automobile industry, Technology industry and Construction industry. The nation is also famous for its own landscapes and traditional occupations, which have provided a strong and stable foundation for the development of tourism. II. ANALYSIS OF JAPANESE CULTURE 1. The Hofstede’s Culture Dimension Theory According to the Hofstede‟s Culture Dimension Theory, the Japanese culture is characterized as below: - High power distance: There is a big gap between the leader and his subordinates. This results from the fundamental ideology in Japanese culture, which is an Eastern Asia culture, in which the elder are respected by the younger, and they often get high positions due to the age and years

of experience. In Japanese companies, the elder are always leaders, and the younger are only subordinates. The decision-making power in Japanese culture is centralized and autocratic, which means it lies in the hand of a single person, even if there are various teams existing the company. Therefore, seniority is an important factor in a Japanese company since it proves one‟s years of development and experience - Collectivistic society: It focuses on integration of individual into the groups and teams. Integration in Japanese business may be found in any kind of activities such as training, education or even punishment since they promote individual integration into the community. Therefore, the way that a person is treated in Japanese society depends on the group to which the person belongs. And from the matter above, Japanese business rules and tasks become less important than relationships among colleagues in the group. - Masculine community: Japanese community emphasizes the achievement and competition inside the group. Within the organization, emotions and feelings are hardly expressed. And as a masculine society, women have difficulty achieving equality in the group, in this case, it means high positions. - High Uncertainty Avoidance: Japanese people do not highly appreciate uncertainty in the work. They want to control the situations without any unexpected events during the process. Therefore, they have a doubled-checking action made by the right-hand man and the boss after the consultation with the group. Thus, this factor reflects that Japanese business is informationfocused. - Long-term Orientated Business: The culture sees the company as an eternal structure, the company leaders pay no concerns to immediate and short-term profits. What they expect is the way that the company develops, in which individuals are able to improve their competencies through training and education. In addition, senior officials play the decisive role in guiding the development of company, in general, and of employees, in particular. 2. The main features of the Japanese Culture 2.1. The Japanese Business Organization The relationship of lifetime mutual reliance has been existed between the Japanese enterprises and their employees. This not only involved the aspect of economic benefits but also the aspect of employees‟ loyalty to an organization and mutual sharing of responsibilities. The Japanese enterprises offered care for accommodation, food, shops, etc. in addition to distributing salaries. Therefore, the Japanese operated enterprises based on the concept of “home”. The hiring relationship was similar to parent-child relationship. The destiny leading an employee to an enterprise meant a lifetime employment. Even though the Japanese enterprises introduced American way of management, the nature still rooted from familism.

In Japanese culture, it is group oriented and human-relationship oriented. Under such special Japanese corporate culture, unique styles of business negotiations have been formed. Japanese believe that good human relationships help facilitate business interactions and development. They value human relationships very much. Human relationships and the degree of trust determine the establishment of business relationships with Japanese. Japanese also believe that a certain form of introduction is beneficial to faster establishment of business relationships between both parties. Therefore, Japanese businessmen will try to find someone or a company they have worked with to be the introducer before any negotiation is started. 2.2. The Decision-Making Process: the consensus Japanese decision-making is very different from western countries. In a decision-making program or process, Japanese always make each member involved in a negotiation feel important about his or her participation. There are two features: first, it is from lower level to higher level. The higher level makes an approval. The lower level or subordinates make discussions over a certain project before submitting it to a higher level for making a final decision. This process works on a basis of sufficient discussions which lead to easy implementations. However, poorer efficiency is shown due to excessive time for decision-making. Second, the agreement on a negotiation goes before group decision-making. Japanese businessmen often divide their members into several groups in the process of negotiation. No one is held responsible for the overall process of negotiation. The decision requires the opinions given by all of the members. Any decision will be carried out only when all of the members reach to an agreement. In other words, the decisions have to be based on a consensus of all persons involved, all these persons involved in a team or in the negotiation process must get the trust of the leader. 2.3. The Japanese Seniority System In Japan a person‟s rank, status and position in society is determined by factors such as education, age, sex, family name, occupation, physical features and birthplace. Japanese shows respect for the age. The rank and status of each company within the vertically organized Japanese society is also determined by the size of the company, its position relative to competitors, the prestige of board members, marketing accomplishments, the status of the industry sector and the number of foreign subsidiaries. That is why titles are extremely important in the Japanese society. When the Japanese conduct a business negotiation, the first thing that they do is to find out their position. They want to know who has the higher social status and where they themselves need to fit in among the people involved in the negotiation. The relative power relationship is first

determined by the size of the companies. If the companies have a similar status, they move on to see who has the higher title and they want to know who is older.

2.4. Some more concepts of the Japanese culture - The face In Asia and especially in Japan the “Face” has an important role in the life of each individual. The idea behind the term “Face” can be compared with dignity, self-esteem and pride. “Caring about face” is the common quality shared by Japanese. The language which hurts “face” or an action negatively influencing reputation will lead things to a deadlock. “Face” is the first thing that Japanese value. Loss of Face means that not only does individual suffer from embarrassment or shame but also importantly do it destroy all connections and network he or she is involved. - The way of wa: a Zen based social ethic to become “living Buddhas” This word can be the ancient one for the concept of “peace and harmony”. One of the most honored Samurai principles practiced in modern Japanese corporate society is the effort to maintain harmony, which is derived from Buddhist influence and is one of the practiced ideologies in Japan. They will maintain a sense of harmony in their efforts to avoid confrontation at all costs. - The Amae: concept: the “oil of life” Amae is a Japanese concept that is used to describe people‟s behavior when you desire to be loved, you desire someone to take care of you, when you want unconsciously to be depending on another person (your parents, your wife/husband or even your boss) with a certain meaning of submission Amae plays a fundamental role in a collectivist society where individualism is not well seen and people like the group to have the power. Amae helps in the process of creating harmonious interconnections inside the family, in the companies and between friends. Japanese do not usually confront each other; it is very difficult to see Japanese people arguing. Amae is one of the tools to keep the harmony, the peace, the wa in the Japanese society. - Uramu, that hostile feeling The feelings of hostility are a result of a trust or faith (amae) that have been betrayed. When Japanese is unable to express his amae, he is deeply upset. A resentment against the person or the system involved manifests this hostility. - Chokkan To Ronri: “intuition VS logic” Japanese thinking tends to be intuitive instead of logical. Especially, in associating with people Japanese make much of people‟s sentiments and relationships rather than expressing themselves logically.

3. Japanese Style and Etiquette in Negotiation Depends on the characteristics of the Culture, each country has some typical etiquette in negotiation process and the style in negotiation is different. 3.1. Early Arrival Before the negotiation, we should arrive about 15 minutes sooner than the start time of the negotiation. This action shows your high respect to both the partner and the result of the negotiation. Furthermore, early arrival help you have time to calm down and rearrange all the information in mind before officially come into the negotiation. Additionally, sometimes, your partners also arrive early, hence this is a good chance to make friends and create good feeling of them about you, and makes the negotiation flow more smoothly. 3.2. Careful Preparation for Negotiation Japanese pay attention to details, hence careful preparation is never useless in negotiation with them. You should focus on every details of the negotiation, not only the information, but also the surrounding of the negotiation environment (the layout of your handouts, the place, the way you say greetings to them). Japanese will feel happy if everything is carefully prepared and they will know that they are highly respected. 3.3. Pay Respect and Attention to the Partner During the negotiation, you should carefully listen to any idea of your partner and to understand what they want. Furthermore, your behavior should also show that. For example, if you are in lower level than your partner or you are younger, if you are a man, you should put your both hand on the table, from the elbow to the hand, hold your hand, move your body towards your partner, listen carefully and say “Hai” to show that you totally agree with him. But in case you are a woman, you should put both your hand under the table. Because Japan is a feminine society, hence the code of behavior in negotiation for each gender is totally different. 3.4. Create a Harmonious Atmosphere Japanese appreciate calming environment and the harmony. Hence, during the negotiation, you must maintain the friendly atmosphere. Always keep your voice in the low tone. Especially if there is any disagreement, do not attack them directly to protect your idea. You should stay calm, listen to them carefully and “softly” raise your idea slowly and with the very carefully chosen words. 3.5. Long Process to reach final agreement

Japanese organizations always have a clear hierarchy in structure which almost all power focus on the top. Hence, the last decision of the negotiation should be raised to the top leading before being finalized. Additionally, Japanese is careful people, hence they consider each aspect of the deal very carefully before final decision. Obviously, it will take a lot of time but in return, once they decide, it is very hard to break the deal with them. 4. The Japanese Negotiation process 4.1. Non Task Sounding As in its domestic negotiations, the Japanese company in international negotiations is seeking a long-term relationship characterized by friendship, trust, and respect between the negotiating parties. When a Japanese company negotiates an agreement with a foreign party, it will not only look for profits but also will strive to achieve a business relationship based on the spirit of „wa‟. The Japanese believe that an agreement encompasses a moral as well as a legal obligation. In many cases, when a Japanese company seeks to reach an agreement with a foreign party, it will stress the importance of establishing goodwill and a good working relationship more than the agreement itself. For these reasons, a Japanese company is likely to take longer to develop a business relationship with a foreign company. At the beginning of a meeting, there is normally some small talk. This allows participants to slowly become personally acquainted. Light humor may be welcome, although you should avoid western-style jokes. It is best to let the local side set the pace and follow along. Overall, negotiations are generally very formal and serious. The primary purpose of the first meeting is to get to know each other and start building relationships and mutual trust. It would be very unrealistic to expect a meeting to lead to a straight decision In the business circle in Japan, they pay much attention to etiquettes. Gift giving is common in social and business settings in Japan, including initial meetings. If you received one, it is best to reciprocate with an item of similar value that is typical of your home country. Giving a gift after signing a contract is also viewed very favorably. Give and accept gifts using both hands. Do not open gifts in the presence of the giver unless your host did so first. There are numerous potential pitfalls in what to give and how to wrap it, so prepare upfront or ask someone from the country to avoid causing embarrassment. Punctuality and reliability are greatly valued. When attending a meeting or appointment give yourself plenty of time, allowing for traffic delays and such, and don't be late. However, Japanese sometimes overbook themselves and postpone meetings at the last moment.

The exchange of business cards is an essential step when meeting someone for the first time, so bring a lot more than you need. Under no circumstances should you use paper copies because you ran out of cards. Business cards are symbols of „personal identity.‟ If someone presents you with his or her card and you do not offer one in return, the person will assume that you either do not want to make their acquaintance, that your status in your company‟s hierarchy is very low, or, quite to the contrary, that your status is very high. Use cards where one side is in English and the other in Japanese. Show any advanced degrees as well as memberships in professional associations on your card. Also, make sure that it clearly states your professional title, especially if you have the seniority to make decisions. Present your card with two hands, and ensure that the Japanese side is facing the recipient. Similarly, accept others‟ cards using both hands if possible. Smile and keep eye contact while doing so, then examine the card carefully. Not reading someone‟s card can be an insult. The time spent to gather information and discuss various details before the bargaining stage of a negotiation can begin is usually extensive. In this phase, the Japanese seek to find the other side‟s weaknesses. They rarely share information freely, since the Japanese view is that having privileged information creates bargaining advantages. Your counterparts consider putting all your cards on the table foolish. However, it is unwise to surprise the Japanese. If you have new information that is significant, share it with your counterparts prior to your next negotiation round. Keep in mind that the Japanese are very detail-oriented. If you make exaggerated claims in an effort to impress the other side or to obtain concessions, they will likely investigate your claims before responding. This could become very embarrassing and may ruin the trust that has been built. 4.2. Task-related exchange of information When a U.S. businessperson negotiates with a Japanese counterpart, the whole negotiation process will usually be conducted with the assistance of an interpreter. Generally speaking, Japanese negotiators are hesitant to negotiate with Americans in English because they feel embarrassed or disadvantaged if they talk face-to-face with a native English speaker. In addition, since many Japanese company staff members are able to understand spoken English, they can think matters over while the interpreter is translating. Bargaining through an interpreter can certainly slow down the negotiation process, however, since both Japanese and foreign negotiators will want to be sure that their message is adequately translated and understood by the other party. There are several reasons why so much time must be spent in conferences: The Japanese desire thorough explanations of every point. In describing and explaining new products and ideas, it will be found that the employment of visual aids is of especial value, for the eyes can supplement what is being said by the interpreter. Samples, models, photographs,

maps, sketches, diagrams, catalogs, pamphlets, books, leaflets, blueprints, and so on are indispensable. At the end of meetings, it may be desirable to give the conferees copies of printed matter and photographs to take back to their offices for further study. Where a formal presentation is made, it is also helpful to use slide films with synchronized recordings, 35mm slides with recordings, or talking motion pictures. The sound should, of course, be in Japanese. It is often beneficial to lend the audio-visual material to the Japanese so that they may then repeat the showings before other groups within their own organization and, if appropriate, to the government officials concerned. If a presentation has aroused enthusiasm, the borrowers will in effect assist in the selling by showing the material. The Japanese use meetings in order to size up their visitors. They study not only what the Occidentals say, but also the character of the strange people from beyond the seas. Since the Japanese spend so much effort in studying the personalities of those around them and comparing notes with one another, they seem to have developed considerable skill in judging people. It should be kept in mind that they rarely do business singly; they usually go in twos and threes in accordance with the group concept. 4.3. Persuasion There are several reasons why so much time must be spent in conferences: The Japanese desire thorough explanations of every point. In describing and explaining new products and ideas, it will be found that the employment of visual aids is of especial value, for the eyes can supplement what is being said by the interpreter. Samples, models, photographs, maps, sketches, diagrams, catalogs, pamphlets, books, leaflets, blueprints, and so on are indispensable. At the end of meetings, it may be desirable to give the conferees copies of printed matter and photographs to take back to their offices for further study. Where a formal presentation is made, it is also helpful to use slide films with synchronized recordings, 35mm slides with recordings, or talking motion pictures. The sound should, of course, be in Japanese. It is often beneficial to lend the audio-visual material to the Japanese so that they may then repeat the showings before other groups within their own organization and, if appropriate, to the government officials concerned. If a presentation has aroused enthusiasm, the borrowers will in effect assist in the selling by showing the material. The Japanese use meetings in order to size up their visitors. They study not only what the Occidentals say, but also the character of the strange people from beyond the seas. Since the Japanese spend so much effort in studying the personalities of those around them and comparing notes with one another, they seem to have developed considerable skill in judging people. It

should be kept in mind that they rarely do business singly; they usually go in twos and threes in accordance with the group concept. “Caring about face” is the common quality shared by Japanese. It represents an individual‟s honorable record as well as the origin of confidence. “Face” strongly affects everything presented by Japanese. The language which hurts “face” or an action negatively influencing reputation will lead things to a deadlock. “Face” is the first thing that Japanese value. Therefore, please remember to constantly make Japanese feel they have “face” while getting along with them. Japanese value morality and favor. They think “a person shall never be able to repay one over ten thousand of favor given by others”. When they get favor, they‟ll try to repay. Such concept is common but important to Japanese. Japanese dislike confrontations between people. For avoiding such condition, Japanese businessmen will try their best to conduct their works when all group members reach an agreement. It is unforgivable to sacrifice group benefits for obtaining personal satisfaction or overemphasize oneself regardless of the existence of a group. 4.4. Concessions and agreement Written meeting protocols are frequently used. They may get signed by both sides to indicate agreement. Their purpose is to ensure error-proof communication, not to introduce any legality. If time ran out, then a follow up e-mail should be sent quickly at the meeting by one of the parties, asking the other side to confirm or modify. Make sure to put every important assumption you are making into that protocol to avoid surprises down the road. The way the Japanese communicate agreement is by clearly stating all terms and conditions they agree with. An agreement exists only if both parties have done this, so do not simply respond with „yes‟ instead of following this approach. Agreements may be acknowledged by nods or slight bows rather than handshakes. Do not pressure the Japanese into signing contracts. If used at all, written contracts are normally kept high-level, capturing only the primary aspects, terms, and conditions of the agreement. The Japanese believe that the primary strength of an agreement lies in the partners‟ commitment rather than in its written documentation. Carefully explain and document confidentiality agreements. However, the Japanese may still distribute information within their company even if you are trying to restrict that. Using a local attorney, rather than a western one, is viewed favorably. Their primary role is to function as notaries. Lawsuits are extremely rare in Japan, and filing one will likely destroy your business relationship for good. Signed contracts will be honored. However, the Japanese do not view them as final agreements since their expectation is that both sides remain flexible if conditions change, which may include agreeing to modify contract terms. 5. Cultural value differences between Vietnamese and Japanese

The Japanese is the big island and isolated by ocean, the densest population and a homogeneous society. So people live in harmonious way. They try to avoid conflict with other. Beside Vietnamese people attempt to keep harmony, however conflict arise rapidly due to disagreement. Both Vietnamese and Japanese society are structured as vertical society, meaning that your role is determined by your seniority. The way people define the concept of time is different from culture to culture. Japanese has long term-oriented. In the company, CEOs concern more about cooperation and other long term benefit rather than short term time benefit. While Vietnamese has short term oriented. CEOs just concern about maximize company profit and his or her benefit in his or her period. Moreover, the Vietnamese staff often do not consider themselves as part of the company as the Japanese. Staff just make sure his job duties done then come back to individual interests. They can get more responsibility for themselves, but must be paid for that work. While the Japanese work, they see themselves as part of the company, dedicate to the company as devoted to his own family. There are some other differences between Vietnamese and Japanese in term of competitiveness and formality. The competition among employees while Vietnam is the large while among the

Japanese staff is cooperative. They do not want their inter-personal relationship to be interrupted by an issue, so they may change the subject of the discussion if disagreement arises. About the formality, the Vietnamese is more informal than Japanese. We can see that in some situation Vietnamese come to a conference with different style or in Vietnamese‟s conference people sometime talk familiarly or naturally. Both two of these east - Asian culture emphasize to hierarchy and have the definition of public space. In the company, the senior always keep an important position and have power of decision making.

III. RECOMMENDATIONS • • • • • • • • • • • • • • • • • Establish personal rapport Avoid placing a negotiating lawyer in the forefront Learn the extent of the Japanese negotiator‟s authority Specify the authority of your negotiator Avoid addressing a Japanese as “You” Be alert to indirect no‟s Do not hurry Be prepared for long hours Speak clearly and avoid idioms Explain ideas several different ways Avoid winners and losers Avoid direct no‟s yourself Write down as much as possible Use numbers over ten thousand slowly Avoid interfering in negotiations with the Japanese government Elicit all of the Japanese negotiator‟s ideas Take all of the above with a grain of salt