Episode #84: Gaining Buyer Trust When Doing Business In Japan

Trust is a big issue in Japan. The people we deal with in companies are salaried employees, who have probably been with that same company their whole career. There is an escalator system here that carries you upward over the many years of your career. “Steady as she goes” is the mantra. They are primarily interested in gradually moving up inside the firm by making no mistakes. The best way of not making a mistake is to do nothing new or risky.

Their aversion to risk precludes trying anything that might have a negative impact, even at the expense of denying the company significant business opportunities. There is little reward inside companies in Japan for risk taking and a big downside if things go wrong. Everyone knows this, so everyone operates the same way – very cautiously. So when we approach a Japanese company, we have to think about how we can take away the risk for the individual we are dealing with. It might be testimonials from happy customers, statistical evidence, money back guarantees, warranties, escape clauses, etc.

This timid buyer attitude toward doing new things is summed up by the saying that Japanese buyers "prefer the devil they know to the angel they don't know". By definition you are the angel they don't know, because you are offering a new product or service or an alternative to what they are using now. And you are foreign.

In the distribution system in Japan, there is a very complex food chain to work through. There are many layers and if you don't deliver, as you said you would, when you said you would, you endanger the whole interlocking food chain. Space is at a premium here, so there are not the massive warehouses full of inventory being held, as maybe we see in other more spacious countries.

Everyone is trying to get by with as little inventory on hand as possible, but with the backing of a stock supply system that is totally reliable and highly efficient. No Japanese company want to see their distribution system set on fire by a new player, they don't know well. The people they are dealing with now, whom you wish to supplant, have shown they can supply when needed and all present and correct each time. Therefore buyers are very conservative about introducing a new, untested supplier.

You imagine you have a strong price point advantage, which will tip the scales in your favour and help you to muscle your way into the market. Not always true, because price is only one point of comparison being made by buyers, when weighting alternatives. For example, when you are competing in the marketplace with the big Japanese trading companies, they take the risk away by providing very long payment terms.

They will have a much higher price than what you can supply, but their offer is less risky. The company can land the product, sell it and then pay the trading company later. Your discounted price requiring immediate payment can't compete with that risk free arrangement.

You are in a hurry to get the Japan business going. There is a lot of expectation back at your HQ and you are the one designated to make this happen. Sadly, deals rarely get done in one meeting in Japan, so expect multiple meetings. That may mean multiple trips to Japan if you are not based here. Bosses back home don’t get that. “What do you mean you didn’t do a deal while you were in Japan? You just wasted the firm’s monies on that trip, with no result, except for some nice sushi meals you had while you were there swanning around on the company’s dime”.

The bosses may not get it, but things take a lot longer here, because companies have to gain consensus internally, about making a change to their supply arrangements. They are risk averse remember and doing nothing is the safest course of action. It might take years in fact, before the buyer is comfortable to give you a try.

This happens in my own training business here all the time. Companies we met four years ago, finally send one person to trial the training. It can drive you nuts, but this is how it is and if you want to play, then you have to pay. Western companies being driven by quarterly earnings and the stock price, have a hard time with Japanese long play timeframes.

Gaining trust is done step by step. Ask for a small piece of their business to show your credentials. Make it as low risk as possible. They can test you and few times and then if they like what they see they can increase the volumes. That is a much better proposition than an all or nothing approach of we went for it but we didn’t get the order we wanted. You may not like it or agree with it, but slow and steady does win the race in Japan. And nobody cares what you think sunshine.

Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com

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About The Author

Dr. Greg Story: President, Dale Carnegie Training Japan

Author of Japan Sales Mastery, the Amazon #1 Bestseller on selling in Japan and the first book on the subject in the last thirty years.

In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.

A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, "THE Sales Japan series", THE Presentations Japan Series", he is a thought leader in the four critical areas for business people: leadership, communication, sales and presentations. Dr. Story is a popular keynote speaker, executive coach and trainer.

Since 1971, he has been a disciple of traditional Shitoryu Karate and is currently a 6th Dan. Bunbu Ryodo (文武両道-both pen & sword) is his mantra and he applies martial art philosophies and strategies to business.