In prior columns we have discussed development strategies, financing and business issues related to developing new products, particularly geared towards the new entrepreneur. Global strategy is another important issue to consider early in business planning. As Japan is one of the top markets outside the United States, in this installment of Development Insights we will explore some elements related to Japanese business culture and customs that may be useful to consider as business and development relationships are sought after and formed in Japan.
There are many opportunities for entrepreneurs and start-up companies to explore global or regional partnerships with pharmaceutical and biotech companies in Japan, pursue assets and engage investors from within Japan, or try to bring products being developed in the United States into Japan. Historically there has in general been a significant lag between drug approvals in the two countries. Today, there is more focus on reducing that time-lag, which may involve engaging with global or regional Japanese partners early in the process. Japan is a unique country, with a culture different from any other. Here, we will focus on three key concepts: respect; formality; and long-term relationships. These customs tie together an underlying theme of respect and building trust, moving toward a long-term relationship that is important for the entrepreneur/developer who is forging a new relationship in Japan.
Respect
As in most, if not all cultures, respect is the ultimate form of acceptance and value, and is highly revered in Japan. Japanese respect others, and they respect seniority. One form of Japanese etiquette and respect best known outside of Japan is bowing. In the Japanese culture, bowing signifies greeting one another with respect. There are still many people in Japan, especially those of the older generations, who believe that they cannot trust those who do not greet properly, as it denotes lack of respect.
This concept is an important foundation to those looking to do business in Japan. For example, when visiting with a Japanese company, the first step should be for the main contact persons from both parties to greet each other, and continue with the exchange of business cards. As a nod to seniority, the main contact person from the host company should introduce the other members of the group, starting with the most senior personnel. During the meeting, the highest ranking person will likely make opening remarks, followed by his or her second-in-command, who will then begin the meeting. While the meeting is proceeding, conversation can take place as it plays out; however, great care should be taken to avoid interrupting any speakers. In Japan, this is considered one of the highest forms of disrespect to the speaker, and signals a lack of listening and understanding by the person who interrupts. Straightforward discussions are appropriate; however, it is recommended that you acknowledge points made by your Japanese partners before you introduce your ideas. This demonstrates that you were listening and respect their opinion, even if you have differing thoughts.
Formality
Japanese business always involves formality. While we are in a digital age with social networking, and this practice is certainly accepted by the Japanese, the preferred route of introduction, when possible and available, is through mutual friends. For Japanese, being formally introduced by a common connection is considered to be a more personal and professional route of introduction. This is particularly important when dealing with sensitive matters of a significant business deal, as a proper initial meeting is crucial for both parties and helps to kick off a successful project.
The exchange of business cards is considered a formal ritual. In the Japanese culture, offering a business card is quite personal, as it represents the “face” of the individual. Giving a business card is equivalent to providing someone with a significant amount of information about yourself. It is representative of the individual personally and professionally, and of the company. During a business card exchange, Japanese will present it with both hands, and prefer to receive business cards the same way, as it is a sign of respect. Additionally, the card should be delivered face-up and facing the recipient so he or she may read the card, with introduction of name and title. Finally, be sure to leave the card unmarked—it is not appropriate to write anything on a business card in front of the individual.
One fairly common mistake by made by foreigners surrounds the use of the word “san.” Those unfamiliar with Japanese culture may believe that using san at the end of a first name is very polite and formal. However, san is rarely used in this manner among the Japanese. Among friends and colleagues in Japan, san is most commonly used at the end of an individual’s last name. For those unaccustomed to Japanese formalities, the best way to show formality is to use a title such as doctor, mister or miss until the person indicates that you may use just his or her last name; and then it is appropriate to use the last name with san. Once you have established a friendship and valued relationship, the person may ask you to use his or her given name.
Another common mistake surrounding the use of san is its use to refer to your own colleagues. While in Japan, it is not commonplace to use san with last names when speaking about anyone in your company, including those that maintain higher positions. For example, you might say, “Our company president, Sato, believes that innovation is the key for our company.” You simply refer to your own colleagues by their last name, which shows formality and politeness to others in Japan.
Specifically in the field of science or academia, when meeting with professors and researchers at Japanese universities, it’s proper etiquette to include doctor or professor with their last names. This demonstrates your respect for their accomplishments. Should a professor or researcher suggest that you call him by his last name, still use “sensei,” meaning “teacher,” accompanied by the last name. If he insists that you use his first name, it is then appropriate to use that name. It should be noted, however, that Japanese typically will not asked to be called by their first name until there is a sustained, long-lasting relationship. It’s always safer to use “sensei” at the first meeting, and when they say that they prefer to be called by a first name, move forward accordingly.
Formality at meetings is common, and often can be misinterpreted. A very interesting example is nodding. Japanese business people tend to show politeness to the other party, and tend to nod, meaning that they listen well and understand, even at a negotiation table. However, Americans may interpret nodding to suggest agreement. This is very common mistake and can lead to misunderstandings. Therefore it is very important to ensure alignment and avoid misunderstanding, to confirm via written minutes or summary what both parties talked about, any decisions that were made, and action or follow-up items discussed.
Long-Term Relationships
The Japanese value relationships, so it is important to cultivate and build long-term relationships. Certainly, building a long-term relationship takes time and likely requires many interactions with one another. It is generally a good sign if an invitation to dinner is extended, and this is an important time for continuing to build the relationship with more casual conversation. Don’t be afraid to engage in business talk and/or topics that were discussed earlier in the day. Japanese business people value honesty, and will appreciate it if you can honestly talk about what you need from the Japanese company.
If you are invited to a social networking event, consider yourself to be a valued partner. If you have been able to cultivate a relationship with a Japanese company to such an extent that you are invited to gatherings of this type, you can expect that your relationship is solid, and will benefit you as you begin to expand your network across Japan.
Corporate-wide relationship-building can be much tougher than at an individual level because it involves multiple people and moving parts. As with many development programs, there may be longer-term potential opportunity for a continued relationship beyond a single product or deal. In stereotypical “U.S. fashion,” it is tempting to try to put several topics and objectives into one first deal or project discussion and figure it all out at once. While, of course, the desire for a long-term relationship is a good thing to show, the Japanese company may want to take a step-by-step approach and focus on the first item or product deal. It is important to respect the process and have patience for the benefit of the long-term relationship.
Trust and honesty are key components to creating such long-lasting relationships, and while this characteristic is not unique to Japan, be prepared for what is typically a longer process in Japan. The customs and formalities all relate to respect and building trust, which is ultimately what a successful long-term relationship can be based on.
Each country naturally has its own business manner and customary practices, and of course, you should value and respect all of them. It is always important for you to be dedicated to sound and clear science and good business practices, and be true to yourself without getting overly hung up with tradition and formal details. As you prepare, present and defend details of a project, don’t lose sight of the end goal. As long as you always try to value respect, trust and integrity, Japanese business people will certainly prefer a friendly approach, open discussion and creativity that sparks long relationships that have value for everyone.
Mr. Chapin and Mr. Tobaru are with the Corporate Development group at Ora Inc. Ora provides a comprehensive range of product development, clinical-regulatory and product consulting for developers, investors and buyers; clinical trial services and regulatory submissions; and asset and business partnering support in ophthalmology. Dr. Matsuda is General Manager of Ora Japan KK, based in Japan. Ora Japan provides local support, consulting and clinical trial services to clients and partners for development in Japan and support for business collaborations between the U.S. and Japan. We welcome comments or questions related to this or other development topics. Please send correspondence to mchapin@oraclinical.com.
