Richard has spent his whole career in Japan, after he studied in Nijmegen in the Netherlands. As a teenager, he felt the urge to see a bit more of the world outside the Netherlands so he studied in Nijmegen and moved to Amsterdam for an internship. When Amsterdam got too small, he decided to go to Japan because in the late 1980s the Netherlands and the rest of Europe were not doing really well economically, but Japan was booming.
New management styles and production technology– these kinds of things were happening in Japan. Richard left the Netherlands with a scholarship for a year and never came back, as Japan remains an adventure for him. Although he has been in Japan for many years, Richard still finds it a very interesting place to work.
Until Covid hit, Japan’s office culture had remained fairly static and traditional with employees putting in long hours and long commutes. Office workers would stay in the office as long as their boss would stay and go out for drinks with colleagues to blow off steam. Many workers would not even take up all of their holidays. COVID has shown that things can be done differently. And workers and companies have quickly and gratefully adapted and embraced a healthier work-life balance. Richard has seen surveys where as many as 70% of people say they would like to continue working partially from home. And companies like Fujitsu and Honda have announced to reduce office time and
commuting allowance and pay a monthly allowance instead to cover increased utility costs at home. Richard thinks that companies quickly recognised who should be made redundant. In the real estate market, which is Richard’s industry, he sees that demand for larger residential units has increased while the demand for smaller units has dropped: “People want more space so they can work from home comfortably. Mind you, that inflexion point is at around 30 square meters.”
As Richard has always worked in Japan and has helped many Dutch companies, he has a great experience with cultural differences. “Japanese employees regard the manager as the leader who is ultimately responsible for company performance, and their own role is to help
the manager and ultimately the company succeed. As a result, they tend to position themselves as order takers, less as initiators and not as decision makers. So, without giving clear instructions they are at a loss and little happens. They wait to be given a role and a task. It’s not that Japanese people are not good leaders. They can be, but they have to be assigned the authority first before they embrace a leadership role.
The roots for this go back to the Tokugawa era which lasted about 300 years, when Japan was a feudal society and had a class system. This embedded a strong sense of hierarchy in society and its professions and institutions. Also, the adoption of the sempai-kohai (this means senior-junior; as a senior, you need to tell the juniors what to do and instruct them)
system is alive and well in universities, politics, sports, etc. It also laid the foundations for Japan being a very controlled and organised society where one’s life is pretty much managed from cradle to grave. You move through every stage as a group, managed by your superiors, and everybody is expected to conform to the group. It doesn’t generate creativity. You do what you are told. Self-initiative and decision-making do not fit this model. That is why it is so difficult in a group meeting to get people to speak with confidence and bring new ideas to the table. Their eyes are always focused on management, as if they are saying ‘lead me the way and I will follow’. This is a very embedded structure that you will not find anywhere else.
Another remarkable thing about Japanese employees is that they commit themselves to one company for their whole career. In the last 10 to 15 years, companies that are more cost competitive lobbied the government to change employment rules and conditions so that it became easier for them to lay off staff or to restructure. As a result, fewer younger people could find jobs or had to become used to switching jobs, and they got a liking for that. They go their own way and they do not sign up for a lifelong employment with a big Japanese company. There is, of course, still a segment of society that has a liking for that, but there is a much bigger segment of society that aspires for that less and less. Now because of COVID, people are at home, they might already have lost their job or are worried about losing their job, and so it hastened the process where you see less lifetime employment and more people becoming entrepreneurs or working according to their conditions, as many hours as they like. The society is changing.”
According to Richard, it is important to have a local presence in Japan if you want to do
business as a European company. Apart from patent holders, certain exporters and manufacturers of unique product components, he believes that it is absolutely required to have a local presence in order to succeed in Japan. “For a consumer product, you will need to understand your market. You need to deliver quality and service to not only your end customers, but to the entire delivery chain. Besides, how else do you get to know the market if you are not on the ground? To understand the market, you have to be here.”
And he doesn’t think this has changed because of COVID. “It may be so for companies, to a small extent, who are already on the ground with a well-established operation. COVID has shown us that company meetings can be done remotely, and face-to-face meetings can be less frequent. And so can meetings with vendors, customers, etc. Therefore, we will see less business travel. Companies now understand that they can save money by hiring fewer employees, allowing less travel and having less office space. But if you want to break into this market, a larger effort and first-hand look are indispensable.”
Richard also had a few tips for doing business with the Japanese: “Come with a unique business proposition. It is hard to convince the Japanese that you know better than they do in their own market. So, they easily buy into a novel concept if it is a western concept and that has potential here in Japan. But it is harder to convince them that you are better at something then they are when it is already an established Japanese practice. You are in that case not needed.”
In the 1990s, Richard’s company introduced the concept of tenant representation. Until then, companies who wanted to relocate an office would go to a broker. The broker would sit in the middle between the tenant and the landlord, and they would take a fee from both sides. That was common knowledge, and it was widely accepted with no exceptions. Richard’s company came into the market, and they started acting only on behalf of the tenants so that they could negotiate better deals than a broker that has a conflict of interests and takes a fee from both sides. That concept became extremely successful as it was a new (American) concept, introduced by a foreign company.
“They see you as a foreigner, and they want you to bring something unique to the game because you are a
foreigner. Another piece of advice would be to build on your strength. You need to be sincere and reasonable in all your business dealings. Spend time with your business partners. Make your expectations clear. Seek win-win relationships. Build a network and use connections. These may not be unique to Japan, but they are qualities which will serve you well.”
According to Richard, the best takeaway or lesson learned in cross cultural business is this: “Because cultures differ, it is all the more important that you LISTEN; listen to your colleagues, your business partner(s), the people across the table to what they say and what they want. And then you find ways to be of value, more so than when it is Dutch to Dutch. The cultural differences in language, in social habits, business values – they are plenty. You have to tune in to what they really want and then add value and come to a deal. Again, this is not unique to Japan, but all the more important at a cultural crossroad. Communication is everything!”
Cecile Eijsink-Bonnier represents Houthoff in Tokyo. Her focus is on developing close ties with our local clients and firms to create new alliances and strengthen our network. Cecile works closely on this with our Netherlands-based professionals who will be visiting Tokyo regularly.
Cecile has experience as a corporate lawyer as she worked for more than 10 years for several law firms in the Netherlands. Her former role as a lawyer makes her the ideal candidate for this representative position.
Cultural affinity is fundamental to doing business in Japan. It either opens doors for you, or it closes them. Patience is a key factor. You only get to know Japan one step at a time – it’s a journey that has no end.