Basic guideline for a German company to do business with Japanese companies

On the background of possible future joint ventures

Term Paper, 2009

22 Pages, Grade: 1 (A)


Table of Content:

1. Executive Summary

2. Terms of Reference

3. Analysis of the current situation
3.1. PEST/PESTEL Analysis
3.1.1. Political Factors
3.1.2. Economical Factors
3.1.3. Sociological Factors
3.1.4. Technological Factors

4. A cultural comparison between Germany and Japan
4.1. Preface
4.2. Power distance
4.3. Uncertainty avoidance
4.4. Individualism
4.5. Masculinity

5. Analysis of Japanese business behaviour
5.1. Introduction
5.2. Basic differences in communication
5.3. Initiating Business Contacts and establishing a relationship
5.4. Time and punctuality
5.5. Negotiating, selling and making contracts
5.6. Decision making
5.7. Further worth knowing things making business with Japanese
5.7.1. Business Cards and Introduction
5.7.2. Questions one should expect
5.7.3. Japanese and the German language

6. Solution and recommendations

7. Forecasts/Outcomes:

8. References
8.1. Books
8.2. World Wide Web

9. Appendices

1. Executive Summary

Even though Japan is mostly westernized it remains being traditional Japanese. It has a hierarchically structured culture and society and contains complex rules for interpersonal situations and relationships (Kazuo Nishiyama, 2000, p. 1-9). The Japan culture and society varies from the German. Those differences in cross- boarder alliances are sources of potential conflicts and misunderstandings in business relationships (Susan C. Schneider and Jean-Lois Barsoux, 2003, p. 9). Especially the way of verbal and non-verbal communication: Japan is a high context culture. Many information lay “between” the lines (in the context). Germany in contrast to that is a low context culture. They give precise information in a direct way. Japanese are more introverted and restrained than the Germans. The importance of face keeping (for e.g. not showing emotions public) is another main difference. In Japan the status of a person (often linked to its age and experience) is important (Edward T. Hall and Mildred Reed Hall, 1987, xvi). But also some little specific differences can cause huge problems. For example the differing attitude towards bribe and gifts can cause difficult misapprehensions. This summary of some of the main differences shows that there are many varieties that can cause problems in business. This gap between the German and the Japanese culture is unconditionally to considers, important to know in detail and very helpful to internalize in doing business with Japan as a German company.

illustration not visible in this excerpt

(Figure developed according to Edward T. Hall, 1989, p.102)

2. Terms of Reference

My name is Sarah Nagel and I am working for Wiesmann GmbH, a German car manufacturer. My supervisor asks me to write a short briefing paper that gives him an insight into Japanese business culture and prepares him for some meeting with Japanese companies. Against the background of a possible future joint venture with one of Japans automotive industry suppliers he wants to have some general information about Japan that could effect doing business with them. He is not interested in detailed information regarding the automotive or supplier branch, he is rather interested in hints and advices in how to interact with Japanese business people. His aim is to have a guideline for doing business with Japan and be prepared to avoid eventually rising problems because of cultural differences.

3. Analysis of the current situation

3.1. PEST/PESTEL Analysis

3.1.1. Political Factors

To understand the political system of a country or a society it is supportive to have a look at the recent history of the political system. Japan used to be a feudal nation mastered by lord before the Meiji reform in the middle of the nineteenth century brought some Western democratic practices into Japans political system. But still all power and authority (even though it was more symbolic because the system bared him from making decisions) was up to the emperor, there was no underlying democratic ideology. It was more a means to end to make Japan economically stronger. After the Second World War the role of the emperor changed. The emperor became a symbol of Japan and the nations´s unity - the power belonged to Japan´s people. The current political system is extremely influenced by the post war U.S. occupation. The main difference to the American system is that the legislature is not responsible for writing laws. In Japan it is the bureaucracy that develops and writes the laws and the Diet (which has become more power due to the new post-World War II constitution) enables them. Japan has 47 local jurisdictions. Every jurisdiction selects a governor every four years. Cities are independent self-governing units. For making business in Japan it is important to know that these governors of Japan´s prefectures are becoming more and more local autonomy. So it is necessary to have a deeper look into the certain local politics and governors rules (Pradymna P. Karan, 2005, p. 286-288). Furthermore it is important to know that nearly every organization in Japan is directly or indirectly controlled by the bureaucratic elites and the government ministries. In particular the Ministry of International Trade and Industry has an impact on most businesses and by that - also has an impact on business relationships between German and Japanese companies (Kazuo Nishiyama, 2000, p. 29). For the term of 2009-20010 Japan assumes a non-permanent seat on the UN Security Council ( factbook/geos/ja.html#Econ). After 54 years, the election on August, 30th this year brought a change to the political structure of Japan. The further officiate Liberal Democratic Party (LDP) was overruled by the Democratic Party of Japan (DPJ) ( This political change will course changes in other areas as well and by that will have an effect on business conditions. The winning and now current party in Japan wants Japan to become more assertive and reconsider internal and foreign policy. Especially the deep ally with American shall become a more equal partnership (with less American military presence in Japan) and Japan wants to loosen up its isolation

( Exceedingly the relation to its major neighbours shall be more realistic and open. In spite of all these changes and expected alterations Japans ingrained conservatism, entrenched business and distaste for risk wont melt away completely in next year - or even decades ( articles/leading-article-a-victory-with-the-potential-to-transform-japan- 1779660.html).

3.1.2. Economical Factors

Japan is the second most powerful technological economy in the world after the US. Since World War II Japan has developed into a strong economic that is the third largest economy in the world - excelled by US and China. After an enormous growth in the 1960s, 1970s and 1980s, the economic growth slowed down (got into a recession in 1998) and got into another recession in 2008. It was rather the downturn in demand for Japan´s exports and business investments than the global credit crunch that forced Japan deeper into the recession during 2008 and the early 2009. The industrial sector of Japan depends on imported fuel raw materials. Japans is one of the leading producers of motor vehicles, machine tools, chemicals, textiles, steel and electronic equipment. As like in many highly developed countries the agrarian sector reliant on subsidies. Despite of products like rice and fish (Japan has got one of largest fishing fleets in the world), Japan has to import about 60% of its food. Japan had a GDP in 2008 of 4.34 trillion dollar and an unemployment rate of 4%. Even though Japan still plays a big role in the global economic, two major running challenges Japan has to face: its senescent population and the high gearing of its government ( At the moment Japan is facing upcoming deflation. Experts are afraid of consumer stopping its spendings in anticipation of falling prices in the near future. Despite the falling prices, Japan current data show an economy growth for the third quarter of 2009 ( econony-deflation-recession).

3.1.3. Sociological Factors

After a long period of isolation, Japan opened its ports and began to became modern and industrial since the 1850s. Due to the need to compete with China and Russia during the history Japan become more and more self-contained and open-minded ( factbook/geos/ja.html#Econ). But still Japan is traditional, and hierarchical ranked. Personal relationships are as important as status and hierarchic oriented behaviour. The westernized and global Japan sticks to its traditional culture. For example the social cooperation is affected by exchanging personal favours and is a constant interaction of getting or giving social credit or social debt. The basis of this interchange, that organizes the daily lives as well as careers, is interpersonal relationships. These relationships (and by that the social living and even the business) have complex rules. For example gaining a social credit form the one who provides this favour without “paying it back” (or sometimes just pay in monetary ways directly) is unacceptable (Kazuo Nishiyama, 2000, p. 6-8). Japanese need to know the social scale and status of a person before they are able to freely act in interpersonal communication.


Excerpt out of 22 pages


Basic guideline for a German company to do business with Japanese companies
On the background of possible future joint ventures
University of Bedfordshire
1 (A)
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
579 KB
Intercultural Communication, Interkulturelle Kommunikation, Business with Japan, Communication Strategies, Hofstede, Hall
Quote paper
Sarah Nagel (Author), 2009, Basic guideline for a German company to do business with Japanese companies, Munich, GRIN Verlag,


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