Thursday, April 12, 2007

When Engaging in International Business, Don't Forget that the Overseas Business Environment, Culture, and Value Systems Differ

This is a highly interesting article by Ms.Yoko Kawaguchi, President, Y's Worth Corp. which appeared in the JETRO newsletter this week.We are awaiting her formal approval to reproduce this for general reading.

Advances in means of transportation and means of communication have enabled even small businesses to easily participate in international business. The increasingly shorter distance with other countries both has its merits and its demerits - such as the increasingly less attention paid when engaging in international business.

I have often worked as a consultant at government agencies overseas. There, I have been consulted by many overseas manufacturers. Through such activities, I have learned that many practices of the Japanese invite misunderstanding and trouble in international business.

1. Communications Should be Clear and Fast

One of the typical complaints that overseas businessmen have is that "we are often asked to send catalogs or samples, but don't hear anything back after sending them. Even when inquiring about this, we don't receive any replies. We suspect the other side is collecting information for illicit use".

Japanese companies do indeed use catalogs and samples so to weigh potential partners and products. Once a company grows to over a certain size, however, the person in charge almost never can initiate business on his own. Further, as discussions in the company become protracted, interest tends to wane. Still, when receiving requested catalogs or samples, the polite thing to do is to send a simple thank you letter and inform the other side of about when you will contact it about the results of your study.

Even if you conclude you don't want to do business, you shouldn't just allow things to stand. If explaining your reasons, you can help the other side to understand Japanese companies and the Japanese market. At your next business negotiations, you might even be able to expect a better response or terms.

According to Japanese culture and language practices, it is considered impolite to clearly refuse something to another party. As a result, Japanese end up using somewhat tortuous expressions instead. If translating these directly into the foreign language, the result will be vague in content and will lead to misunderstandings. Alternatively, if being timid and not giving any answer, Japanese will sometimes be thought impolite. When Japanese deal with each other, they can guess the answer just by experience and the behavior of the opposing party, but foreigners can't do this. If the other party in a business deal is a foreigner, it is important to communicate your intensions clearly and quickly.

2. Awareness of Rights and Obligations

Japanese businesses stress mutual trust over contractual rights and obligations. Sometimes things which your company should do are done for it by the other party at no charge, damage which your company has incurred is kept from spreading by the other party giving a grace period for payment or a discount even if the other party has no responsibility for this, sales assistance will be provided to help increase profits, and other cooperation will be extended. In back of this is the fact that companies with business relationships are deemed to be in the same boat in terms of future fate.

If bringing this attitude with you in international business, the Japanese side will often up end criticizing the other party as "not having a cooperative attitude" or "not paying it back for its kindness", while may be criticized from the foreign side for "poking its nose into another person's business".Trade transactions are conducted along international rules. Japanese must learn those rules and respect the rights and obligations set down in contracts.

3. Be Logical and Objective

All businesses are rapidly becoming internationalized. Even in Japan, beginners are jumping right into foreign trade in an increasing number of cases. Unfortunately, business often will not go as smoothly in the developing countries as in Japan and the other industrialized countries. Some Japanese take an arrogant attitude to their business partners. Among them, some will simply conclude that the other country is bad or the people there are all bad if failing in business just once. Each country has its good points and its bad points and its good people and bad people, so this kind of attitude is very rude.

Of course, sometimes the other party will have problems in knowledge or attitude, but sometimes the background surrounding the business, for example, the improperly functioning infrastructure, institutions, educational system, etc. and differences in culture or value systems will be the cause. If things don't go the way you want, don't become emotional. Leaving yourself enough of a margin of comfort so as to logically and objectively analyze the reasons why they are not going well and devising suitable countermeasures is the secret to successful business.

No comments: