Moscow State University
BUSINESS RELATIONSHIPS IN JAPAN
Business relationships in Japan are characterized by a well-structured
hierarchy and a strong emphasis on nurturing personal contacts.
Generally, they are built up over long periods of time or are based on
common roots, such as birthplace, school or college. Also, an unusually
strong emphasis is placed on social activities to strengthen ties. It is
not surprising, therefore, that those looking in from the outside may
see the Japanese business world as comparatively hard to break into. In
fact, there are many different kinds of business relationships, but most
share two features - they have been built up slowly and carefully, and
much time is spent in keeping them up to date.
Business relationships in Japan are part of an ever-broadening circle
that starts within the company (uchi - inside, or"us"), and moves
towards the outside (soto) to include related companies, industry or
business organizations, and the like.
Most Japanese companies have a series of very close relationships with
a number of other companies that provide them with support and a
multitude of services. It has been traditional practice for a company to
hold shares in these "related" companies, a practice which has given
rise to a high proportion of corporate cross-share holdings in Japan.
This has been a show of faith on the part of one company towards
another, and also has been useful in providing companies with a core of
stable and friendly shareholders.
When dealing with a Japanese company, it is important to be aware of
the existence and nature of some of these close relationships, in
particular those with banks and trading companies. Understanding these
can help to define the nature of the company and the way it does
business, as well as its positioning in the Japanese business world. It
should also be understood that there is a constant flow of information
between Japanese enterprises and their banks and trading companies.
Unless the need for confidentiality is made very clear, these may soon
be aware of any negotiations in which the company is involved.
Larger corporate groupings are becoming more familiar to non-Japanese
business circles. These groupings are known as keiretsu, and some have
their roots in the large pre-World War II conglomerates. Accusations of
keiretsu favouritism overriding more attractive outside offers sometimes
are levelled at Japanese companies. When asked about this practice by a
foreign businessman, the president of a large Japanese electronics
company replied: "It's like going to the tailor your father went to. He
may be more expensive than the competition and perhaps even not the
best, but he has served your family well for many years and you feel
duty bound to remain a faithful customer." There is a tendency in
Japanese business to be guided by the familiar and human considerations,
and thus it is important for anyone wishing to do business in Japan to
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