Contract law and negotiations in Japan

What do you need to know about Japanese business culture?

The business approach in Japan springs from its culture. The Japanese follow a group culture where the welfare of the society is its prime goal. It is based on ‘Honne’ and ‘Tatemae’, the difference between one’s true feelings and what a person displays in public. Personal opinions are sacrificed at times, according to the expectation of society. Hence, harmony is their top priority.

The Japanese believe strictly in hierarchy and are courteous to the core. They give importance to human relationships and mutual trust. These are the fundamental aspects of their culture that colour their business transactions and negotiations.

What are some negotiation tactics in Japan?

It is helpful to be aware of business procedures and etiquette before initiating business with the Japanese:

  • Japanese follow hierarchical order even at the initial stages of discussion. They prefer to deal with their equivalent counterpart.
  • Business cards are a must, clearly indicating the position held. The cards are to be offered with both hands to show respect for the parties.
  • The Japanese prefer an introduction to the business party through a known third source.
  • Discussions are more through written word and visuals as the Japanese are people of few words.
  • All business discussions are group oriented. Great emphasis is given to human relationships; any decision making involves all members.
  • Discussion and decision making are usually slow.
  • Any language or action that hurts or negatively influences reputation can deter proceedings.
  • Strict etiquette is followed; excuses are not accepted. Apologies are accepted and discussions are tinged with extreme courteousness.
  • At the same time, any favour is valued and repaid. The Japanese accept appropriate gifts as a mark of appreciation and value it greatly.
  • Peaceful and calm negotiations mark their meetings. They hesitate to say no and there are periods of total silence which may indicate either their acceptance or their disapproval.
  • Business meetings require a formal dress code.

How much is a contract worth in Japan?

Mutual trust is an essential part of their business contracts. Having a written contract in the most favourable of situations is highly recommended. Japan has a clear contract law and mechanisms for its enforcement.

What are pricing policy, pressure and restraints in Japan?

The Japanese generally prefer quality over price. In Japan, it is better to present economy over price. Japanese products reflect this philosophy of high quality being cheaper to own in the long run.

Sharp alignment of your products and services with consumer needs and expectations can get you premium prices in Japan.

How is the Japanese legal system set-up?

The Japanese legal system in based on civil law.

What is the arbitration and litigation in Japan?

On business plan consideration, Japanese arbitration laws meet international standards and are comparable with the quality of equivalent mechanisms in developed western countries. However, during arbitration, you should be prepared for many documents to be in Japanese and ensure access to professional translation services to have documents translated into English.

The Japanese avoid litigation because it disrupts their prime objective-harmony. The legal system in Japan is on par with the best in the world, however, if you to take disputes to the court, be fully prepared it may take years or even decades to reach a conclusion. In most cases, victory only provides mental satisfaction as the compensation package may not even cover the legal fees .


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