In the run-up to negotiations with Japanese business partners, in addition to technical preparations, you should gather detailed information about the Japanese company and possible contacts and decision-makers.
In Japan, you will often be confronted with a larger number of participants during a negotiation. The more important the topic of negotiation is, the greater will be the number of Japanese representatives. Faced with this situation, many foreigners will feel pushed into a corner and their self-confidence will dwindle. This is especially true when all Japanese interlocutors put on their serious faces. However, there is no need to be intimated; this is simply respectful behaviour. Don’t try to lighten things up with casual remarks and comments. Stay calm and keep your composure.
In many cases, high-ranking company representatives are only personally involved in the initial phase of a negotiation meeting, for example, to welcome the visitors hospitably and to give a short company presentation. Afterwards, they will withdraw with a polite apology and support the process in the background.
Only when a promising end is in sight, do the higher-ranking managers get involved again and support the negotiations until the end. You can therefore assume that it is a good sign when the top managers return to the negotiating table after lengthy negotiations.
Negotiations with the Japanese are usually very quiet and unspectacular. The Japanese always sit upright and straight, with a serious face and without much gesticulation, and put forward their arguments quietly. It often takes quite a long time before they broach the actual topic; initially, any conversation will be about your trip, the company or some other small matters.
Negotiations with the Japanese may seem somewhat confused and unstructured to foreigners. There does not appear to be any logical structure in the negotiation process. Details that seem to be unimportant are touched upon, and there is plenty of switching between different negotiation points.
Nevertheless, pay attention and watch what your negotiating partners are up to. Even though a lot of things seem to make no discernible sense, you will find that many of these things are important.
If you give your Japanese negotiating partners plenty of time to talk, you will be raising your odds of a successful settlement. So take your time. Stay calm and listen patiently, even if you feel that the same points are being discussed over and over again.
In Japan, the individuals involved as well as their personal relationship with each other have a major influence on the course of price negotiation. The negotiated price reflects the quality of personal relationships.
The time factor is also of great importance. The more time you devote to negotiations, the more valuable the deal will be for your Japanese partners. Impatience and time pressure will work against you.
When negotiating discounts, you should divide them into small increments so that you do not jump the gun. In return, you should demand concessions from the other party, e.g. additional purchase quantities or other considerations.
Attention: List prices are often very inflated. Make sure to negotiate high discounts. Calculate your own list prices with a sufficiently high margin for negotiation.
The decision-making process within a Japanese company is called “ringi seido“. Ideas and suggestions from management are first discussed at lower hierarchical levels and results are obtained. Through intensive consultations between all parties involved, an attempt is made to come to a far-reaching consensus before the management is able to make a final consensus decision.
Although this system is particularly time-consuming, senior management can be sure that all the departments and employees involved in the company are ultimately fully behind it and are driving the project forward together and quickly.
The Japanese will always try to avoid making individual decisions and short-term decisions without extensive prior consultation with each other. If they feel pressured by Western partners, they will evade the issue.
It is also important to bear in mind that Japanese people always make decisions from the gut while taking the quality of their personal relationships into account. The willingness of a foreign business partner to adapt to typical Japanese business practices can therefore have a very positive impact on decisions. Remember: for Japanese people, harmony in business relationships is very important!
After building a viable personal relationship, verbal agreements will have the same, if not higher, value in Japan than written agreements. Therefore, you should only promise verbally what you can really keep. Nevertheless, you should keep written agreements once they have been made, either in the form of memos or contracts.
Politely explain to your Japanese counterparts that this is common practice in your business culture. Try to limit the contents of the contract to the essentials and avoid detailed safeguards for all possible scenarios. This will otherwise quickly be perceived as mistrust.
Once again bear in mind that in a long-term business relationship based on trust, the Japanese expect a level of flexibility from their partners that you may rarely experience in other countries. Go for it!