Doing Business in Japan

Despite its recent economic and environmental challenges, Japan remains one of the world’s key economies and an important business destination for expats.
Doing business in Japan
Japan is ranked by the World Bank 20th place out of 183 countries for ease of doing business, scoring particularly highly for its protection of investors, ease of getting credit, and cross-border trading. Moreover, the Japanese are an affluent population with considerable spending power, and an excellent IT infrastructure prevails; even rural homesteads have fibre-optic cable connections.

The biggest drawbacks to doing business in Japan are the cumbersome and expensive tax regimen and the complexity involved in starting a business. In addition, Japanese culture and business practices contain many pitfalls for the uninformed businessperson, and hence mastering or at least understanding these will be key to a business meeting's success.

Japanese business etiquette

Underlying Japanese business culture is the notion of “Kaizen” – the drive for constant improvement. This reflects in the hard work ethic, excellent customer service, and never-ending quest to innovate and improve on business practices.

When dealing with Japanese clients it's a good idea to be excessively formal in everything from conduct to dress. There are also specific unspoken rules of business etiquette governing most situations. When meeting hosts or business associates for the first time exchange business cards, receiving theirs with both hands and an attitude of respect, as the card is taken to represent the individual. Greet the delegation in order of seniority, first bowing then offering handshakes.

Japanese business etiquette - exchanging business cardsSilence during meetings is not uncommon, even accompanied by closed eyes. While in the West, such a turn of events would signify the meeting is going rather badly, in Japan this indicates a period of reflection; do not interrupt or feel the need to speak and fill the silence.

Expats doing business in Japan should note that it's important to be sincere and honest, but without being confrontational or too direct. Vague forms of expression are best used, and there is an art to deflecting a difficult question to avoid embarrassing or disappointing someone.

Meetings often begin with excessive small talk as rapport is built and relationships are established. It is important that this phase is not rushed. Note that decisions are seldom made in the actual meeting, where it is more usual to exchange information or confirm previously made decisions.

A calm, humble, introverted personality style is likely to be respected by the Japanese, while the brash extrovert is considered untrustworthy and offensive. There is an exception to this though, and it starts once the meetings are over for the day, and the evening's social activities commence. This is where the sombre, sober rules of engagement that govern the office culture are suspended in favour of Bacchanalian abandon. In fact, getting drunk with your client – or at least as drunk they are – is a key part of solidifying the relationship and progressing the deal. Rest assured that unless an actual crime has been committed no one will speak of the evening’s more salacious events the next day once business etiquette is restored.

Starting a business in Japan

Setting up a business in Japan is a fairly common procedure and navigating the various steps is seldom problematic. The basic steps to getting up and running are as follows:
  • Get a company seal made – it will be created by a seal carver
  • Get a certificate of seal registration
  • Register at the Legal Affairs Bureau of the Ministry of Justice
  • File notification of the incorporation of a company, the opening of a payroll office, and application for the approval of blue tax returns with District Tax Office
  • File notification of the commencement of business with the local tax office
  • File notifications of starting the applied business and labour insurance, and the rules of employment with the Labour Standards Inspection Office
  • File applications for health insurance and public welfare pension with the Social Insurance Office
  • File application for business establishment of employment insurance with the Public Employment Security Office

Doing business in Japan: Fact facts

Business language: English is not widely spoken and a translator will be required for most business meetings.

Hours of Business: 8am to 6pm, weekdays

Dress: Formal business attire

Gifts: Not expected or appropriate; unless it is a small item branded by or representing one's company

Gender equality: Improving, but well behind Europe and USA. Spouses are not invited out to business meetings.

Do’s and don’ts of business in Japan

  • Do – get bilingual business cards printed with Japanese on one side.
  • Don’t – write on a Japanese business card, or wave it around, flick it, or use to pick your teeth.
  • Do – accept a business card with two hands and a small bow, and treat it with respect.
  • Do – use titles when greeting people.
  • Do – be on time, or if being late is unavoidable, apologise profusely and repeatedly.
  • Don’t – take any seat at a meeting, wait to be placed.
  • Do – make notes during meetings, but avoid red ink.

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