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Japanese Cultural Impact on Business

Submitted By: Qasim Ali Saleem Younas Syed Wasim Abbas Abdul Rehman Mehboob Imran Shouqat
Department BBA 7th Semester (AZ)

10022120-088 10022120-046 10022120-033 10022120-072 10022120-103

Submitted to:

Sir Waqas Manzoor Dar

Brief History of Japan

Japan has a long history with the first humans arriving around 35,000 B.C. The position of Japan relative to the Asian mainland had played a significant role in the country's development. Although the archipelago is situated near the mainland, there is still a considerable amount of open sea, which separates the two landmasses. Throughout most of Japan's history, it has been closed to the outside world refusing to open its borders to foreigners. The sakoku policy, literal translation "locked country", enacted in 1633 by the Tokugawa Shogunate prevented foreigners from entering Japan on penalty of death. The same policy also prevented Japanese from leaving Japan. The first historical documents mentioning Japan date to around the 5th century. Japanese myth holds that Emperor Jimmu was the first emperor of an imperial line that is still in place today. However, archaeological evidence gathered by a number of researchers place the imperial rule starting later around the third to seventh centuries AD, during the Kofun period. The following Asuka regime during the mid-8th century is noted for a more centralized Japan in which Chinese culture significantly influenced Japanese traditions. Nara was the first centralized capital of the nation established in the late 8th century. The layout of the capital city was influenced by Changan, the capital of China during that time. The Nara period was the last time that political power was held by the emperor. The following Heian period was characterized by an affluent aristocracy with eccentric social customs, and the moving of the capital from Nara to Kyoto. The capital city of Kyoto became the residence of Japans emperors until the late 19th century. Toward the end of the Heian period, the aristocracy lost their power and the Kamakura period marked the beginning of

military rule. Regional warlords became powerful and often rose to become Shogun, a position that sometimes wielded more power than the Emperor. During this period, a caste system developed with the Shogun at the top. The Shogun controlled large areas of land and would divide it up and delegate responsibility to a Daimyo, or regional warlord. The Daimyo ruled with an army of Samarai who protected the land and its people. Feudal Japan did not allow for social mobility and marrying outside ones own caste was prohibited. After a succession of powerful Shogun, Japan fell into a state of near-anarchy as provinces declared war upon one another during the 15th century. In 1600 during the AzuchiMomoyama period, Tokugawa Ieyasu moved to reunify the country and successfully established the Tokugawa Shogunate. Under the Tokugawa Shogunate the feudalist system was re-established. During his reign, Tokugawa ruled from Edo, the location of present day Tokyo. Under the Tokugawa Shogunate the Edo period was a time of stability for the Japanese people, but there was little or no development when compared to other nations in the rest of the world during the same period. From 1852-1854, Commodore Matthew Perry negotiated a trade agreement between Japan and the United States. The government at Tokyo was forced to agree to the demands of the United States as they were intimidated by the technologically advanced and heavily armed fleet of steam frigates under the command of Commodore Perry. The ships in Perry's fleet are now known in Japan as the "Black Ships" and have come to symbolize the threat imposed by western technology. In 1867, the Tokugawa Shogunate collapsed, and gave way to the Meiji Restoration. The imperial capital was moved from Kyoto to Tokyo, renamed from Edo to Tokyo (Eastern Capital). Japan then directed their efforts toward industrialization and modernization. During World War I the United States and Japan fought on the same side although relations were not favorable between the two nations due to policy disagreements over China and competition for power in the Pacific. After World War I Japan's economy began to decline and hit a low point during the Showa recession in 1926. The negative impact of the recession combined with domestic political turmoil (assassination attempts on the emperor, coups d'etat attempts, terrorist violence) ultimately contributed to the increased militarism in Japan during the late 1920's and 1930's.

The city of Hiroshima after the U.S. dropped an atomic bomb in August 1945 (U.S. government photo)

Japan surrenders at the end of WWII


Japanese imperialist policy aimed to dominate China to acquire its vast material reserves and natural resources. In the early 1930's there were many small-scale military engagements in so-called "incidents" between the two sides. This culminated into a full-scale war in 1937. Western powers were reluctant to provide support to the Chinese who they

thought would eventually lose the war. The United States entered the war in 1942 after the surprise attack on Pearl Harbor by Japanese forces. In 1945, atomic bombs were dropped on the Japanese cities of Hiroshima and Nagasaki and Japan surrendered soon afterward. After surrendering Japan was occupied by the Allied Forces marking the first time in the nation's history it had been occupied by a foreign power. After the occupation ended in 1951, Japan's government shifted from imperial and military rule to a parliamentary democracy. Today, despite suffering massive losses during World War II and possessing very little natural resources, Japan has become an economic and technological powerhouse.

Politics and Business

The Japanese political and legal system presents a complex picture. On the one hand, Japan is a democratic state, with strong civic and legal institutions. On the other hand, the country has characteristics of nondemocratic systems. It is a democracy yet just one party, the Liberal Democratic Party (LDP), has run the country almost continuously since the end of World War II. Japan is highly bureaucratic as well. Decisions affecting national policy are often made by ministries with substantial power and influence and ties to business and industrial groups. As a result, it is often said that Japan lacks the pragmatic approach to change that is common in Western democracies, and this is seen as contributing to Japans extended economic malaise. To most foreigners, Japanese politics may appear somewhat puzzling. The policy making process in Japan is more similar to the parliamentary systems of Europe and contrasts with the American system, in which presidential appointees attempt to exercise control over branches of the bureaucracy on behalf of the president. It's not uncommon in Japan for the influence and power of a Japanese ministry or agency to outlive the reign of a prime minister,

as evident in the powerful Ministry of International Trade and Industry, better known as MITI. Not surprisingly given the culture, the Japanese political system also has a tradition of group rather than personalized leadership. Elderly statesmen and party chiefs, not individual prime ministers, often make political decisions. Cabinet members are usually appointed to head ministries or agencies for very brief periods of time and at most establish only general policy control. Recently, commentators have begun to question this lack of action. Japans legal system is very different from what most Westerners are used to. For example, only since 1986 have foreign legal consultants (Gaigokuho-Jimu-Bengoshi) been allowed to provide legal services. The requirements were modified in 1994 with the signing of the Amendments to the Foreign Attorney Law. In certain types of practices, licensed legal consultants from other countries can now practice together with Japanese attorneys. Anyone planning on doing business in Japan should bear in mind that prefectures and municipalities may create laws and regulations independently of each other, so long as they do not contradict national laws. In other words, there are local laws and regulations in addition to laws that are consistent and uniform throughout the country. Each of the 47 prefectures may have a slightly different requirement concerning paperwork for example the Japanese are not very litigious, they generally prefer arbitration and compromise to instituting lawsuits. Lawyers encourage settlement out of court for all disputes, and the amount of money awarded as compensation is a fraction of the amounts awarded in America, For example in recent years, more cases have been brought to court, but they have tended to be high-profile suits that had the support of a group. The judge makes the ruling and decides whether and how much to award as compensation, such cases do not go before a jury. Japan had a jury system at one time, but it was discontinued after five years since ordinary citizens were very reluctant to make important decisions about other people's lives. To deter people from filing suits, the plaintiff is required to pay a large filing fee and all legal costs, attorneys may not take cases on contingency. One of the most significant differences between Japanese law and the law in many other countries has to do with the power of contracts. Japanese contracts are not necessarily meant to be binding. Rather, founded on trust (shiny), they're often more short statements of

mutual intent. The assumption is that if a change occurs in the circumstances of the contract, the terms will be renegotiated. If you enter into a Western-style contract, which more companies are using as they work with overseas businesses, you will want to hire an English-speaking Japanese lawyer or a lawyer very familiar with Japanese law to guide you through the process. If you or your company is drafting the contract, keep the language as simple as legally possible or provide explanations for legal jargon. Especially in smaller companies, the person appointed to translate or interpret the contract may have limited English-language skills. As you would do with any cross cultural agreement, be sure to define currency exchange rates and legal processes and language especially clearly.

Trade Barriers
Japan puts tariffs on imports of many agricultural products, such as dairy products, wheat, rice, pork, oilseeds, vegetables, fruit, and other things. Import quotas are imposed limits by the government on the quantities of certain goods and services allowed to be imported. They are used by governments to protect domestic industries from foreign competition. Japan used had an import quota on beef and citrus fruit, but the United States led to an agreement that Japan would end import quotas on those in 1991. In 1988, a General Agreement on Tariffs and Trades panel urged Japan to eliminate import barriers on evaporated milk and cream, processed cheese, ice cream powder, prepared beef, ketchup, fruit juice, glucose, starches, pineapples, etc. Taxes paid in Japan include income taxes, enterprise taxes, property taxes, consumption taxes, vehicle related taxes, liquor, tobacco, and gasoline taxes. Trade barriers benefit Japanese farmers, especially those producing rice, milk for manufacturing, sugar beets and sugarcane, and wheat. Japan maintains tariff-rate quotas for some commodities, including rice, rice flour, wheat, wheat flour, butter, and milk powder.

Japans Trade Policy


2013 could very well be a big year for Japanese trade policy. Japan is contemplating four major trade negotiations that could finally help its trade policy gain traction the trilateral China-Japan-Korea Free Trade Agreement (FTA), the Regional Comprehensive Economic

Partnership (RCEP), an FTA with Europe, and the Trans Pacific Partnership (TPP) trade negotiations. The first three of these trade initiatives received the green light just last November, and of course the decision on Japans TPP membership is still pending.

Economic Condition of Japan


In its economic relations, Japan is both a major trading nation and one of the largest international investors in the world. In many respects, international trade is the lifeblood of Japan's economy. Imports and exports totaling the equivalent of nearly US$522 billion in 1990 meant that Japan was the world's third largest trading nation after the United States and the Federal Republic of Germany (West Germany). Trade was once the primary form of Japan's international economic relationships, but in the 1980s its rapidly rising foreign investments added a new and increasingly important dimension, broadening the horizons of Japanese businesses and giving Japan new world prominence.

International Trade and Development Institutions:


Japan is a member of the United Nations (UN), the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), and the General Agreement on Tariffs and Trade (GATT). It also participates in the international organizations focusing on economic development, including the World Bank and the Asian Development Bank. As a member of the IMF and World Bank, for example, Japan played a role in the effort during the 1980s to address the international debt crisis brought on by the inability of certain developing countries to service their foreign debts as raw material prices fell and their economies stagnated. As a member of the IMF, Japan also cooperates with other countries in moderating the short-run volatility of the yen and participates in discussions on strengthening the international monetary system.

Japanese Economy:
Japans economy, combined with its productivity and the average wealth of its population, make it the second largest economy in the world after the USA.

Rapid Growth in the early years Japans rapid growth in the early years stemmed from factors such as:
the traditional relationship between government and business; its unique capital markets (national finance and investment systems); its traditionally strong keiretsu groupings of firms; Keiretsu: a business group consisting of a host of companies and banks linked through ownership and/or joint ventures. the role of the corporation in society, and the role of the employee in the firm.

Japan and China: the New Asian Powerhouse?


Trade and FDI flows between Japan and China are growing particularly quickly, raising the potential of a powerful axis of economic growth in Asia. Japans technological leadership, its excellence in innovation, its large, wealthy market and its footholds in Europe and the US. Chinas low-cost manufacturing base and its evolving, large but low-income market.

Starting a Business:

Where does the economy stand today?


What does it take to start a business in Japan? According to data collected by resources, starting a business there requires 8 procedures, takes 22.0 days, costs 7.5% of income per capita and requires paid-in minimum capital of 0.0% of income per capita.

The present condition of Japan economy


The economy of Japan is the third largest in the world after the United States and the People's Republic of China but ahead of Germany at 4th.Some of the main aspects of its economy are given below: Currency: GDP: GDP:growth: GDP per capita: Inflation (CPI): Population below poverty line: Unemployment: FDI stock: Exports: Imports: Japanese Yen (JPY) $5.073 trillion (2009) 0.4% $39,573 (2009) -1.3% (2009 est.) 13.5% 5.6% $205.4 billion (31 September 2009 est.) $516.3 billion f.o.b. (2009 est.) $490.6 billion f.o.b. (2009 est.)

How Japan and comparator economies rank on the ease of starting a business?

Ease to enter the Japanese Markets due to low initial costs including investment, registering the business etc. As Japanese economy is becoming stronger day by day, so its the opportunity to flourish the business in this market. Low costs will help the business to provide the products or services at the low prices, this will help to capture the market and ease for the entering and penetration. As GDP and Purchasing power of the people are increasing after a long period of recession, so it will be economical for the business also. It means to enter a Japanese market, its suitable for the business in terms of Japanese GDP, Purchasing Power Parity, low initial investment requirement and low transaction costs. Japan economy is also contributed in the export of almost top 40 businesses in the world, so it will be beneficial to enter such types of business that are already flourished.

Religion, Social and Cultural Religion:

Most Japanese people do not exclusively identify themselves as adherents of a single religion rather they incorporate elements of various religions in a syncretic fashion known as Shinbutsu shg. Moreover Japan grants full religious freedom, allowing minority religions such as Christianity, Islam and Sikhism to be practiced. Shinto and Buddhism are Japan's two major religions. Shinto is as old as the Japanese culture, while Buddhism was imported from the mainland in the 6th century. Since then, the two religions have been co-existing relatively harmoniously and have even complemented each other to a certain degree. Most Japanese consider themselves Buddhist, Shintoist or both.

Religion does not play a big role in the everyday life of most Japanese people today. The average person typically follows the religious rituals at ceremonies like birth, weddings and funerals, may visit a shrine or temple on New Year and participates at local festivals (matsuri), most of which have a religious background.

Family Life and Education:


The monogamous and patriarchal family has been prevalent in Japan since the 8th century. If a wife were childless the husband often kept a concubine, whose offspring succeeded to the headship of the family, thus securing its continuation. When neither wife nor concubine bore him a child, custom allowed the family head to adopt a successor. One male offspring who is to succeed to the headship of the family lives with his parents after his marriage. He assumes the headship and has to take care of the parents when they have become aged.

Japan's education system played a central part in Japan's recovery and rapid economic growth in the decades following the end of World War II. Education is compulsory at the elementary a n d lower secondary levels. Virtually all students progress to the upper secondary level voluntarily. Most students attend public schools through the lower secondary level, but private education is popular at the upper secondary and university levels. Its literacy rate is 99.0%. Social and Cultural Gaming is a very popular hobby in Japan, therefore there is a lot of potential for expansion. However, Japan believes that gaming usually denotes a negative effect towards society, therefore games are deemed as unhealthy for the average citizen. Although gaming is popular, it is not one that has merit, promoting such cause may cause the citizens of Japan to protest against Nintendo. Also, there is way too much competition due to the amount of market share Sony has on its PSP in Japan.

Language
When writing in Japanese it can be written in a Western style, which would be horizontal rows or traditional style, which would be vertical columns. Both of these styles in

writing Japanese co-exist today. The language lacks distinction between plural and singular articles. For someone learning the language, it is difficult to speak due to the accent but the pronunciation of words can be easier to pronounce. There are several words that are pronounced the same, but have different meanings, which can be a challenge for learners of the language. In Japan there are three different main character sets known as Kanji, Hiragana and Katakana (the Latin alphabet and Hindu-Arabic numerals are occasionally used).

Religious Events and Holidays


January 1 The second Monday in January February 11 March 20 or 21 April 29 May 3 May 4 May 5 The third Monday in July The third Monday in September September 23 or 24 The second Monday in October November 3 November 23 December 23 New Year's Day (Ganjitsu) Adult's Day (Seijin-no hi) National Founding Day (Kenkoku Kinen-no hi) Vernal Equinox (Shunbun-no hi) Showa Day (Showa-no hi) Constitution Memorial Day (Kenpou Kinenbi) Greenery Day (Midori-no hi) Children's Day (Kodomo-no hi) Marine Day (Umi-no hi) Respect-for-the-Aged Day (Keirou-no hi) Autumnal Equinox (Shuubun-no hi) Health/Sports Day (Taiiku-no hi) Culture Day (Bunka-no hi) Labor Thanksgiving Day (Kinrou Kansha-no hi) Emperor's Birthday (Tennou Tanjoubi)

Cultural Trails

Kimonos Tea Ceremonies Bonsai Tree Origami Sushi/Sake Pokemon Aibo (Robotic Pet)

Hello Kitty Anime/Manga Godzilla Martial Arts

Japanese Business Culture

Men should wear dark suits (navy or black) with a white shirt and tie. Wearing all black is avoided because it is funeral attire. Men are also not a loud to have beards or to shave their heads. Business women should wear either pants or a skirt with a blouse. They also wear the same colors as men. Their hair should be tied back and jewelry should be avoided, as well as high heeled shoes. Business cards are a must have.

When concerning meetings, it is polite to schedule them at least 1-2 hours before and if you know that you are going to be late, call at least an hour in advance. One should always arrive ten minutes before a meeting and come prepared.

Negotiation Styles:
Business workers in Japan tend to value the needs and goals of the group ahead of the needs and goals of themselves. When doing business one should always be calm and polite, and if someone makes a mistake, it is not proper to criticize or humiliate them in public. To speed up the negation process business workers often interact with their clients socially. This helps with negotiation and it also strengthens relationships. The business workers speak little in negotiation. When they do in a negotiation, it is almost always in the form of questions. Which is why decisions are rarely made in the first meeting. Kissing or hugging should be avoided. This can be very embarrassing to the Japanese recipient. One should also never blow their nose in public; sniffling and snorting is allowed, but not blowing your nose. Seating at dinners and in meetings is very important in Japan. The seating protocol depends on seniority, relationship, the location of the door, and objects in the room

. In Japanese business culture, if anyone on the job sleeping let him sleep dont disturb him.

Communication:
Communication is a very important part of Japanese business; it's what gets the job done. Communication between Japanese business workers and foreign workers can be difficult since most Japanese people don't speak English. The English of foreign workers cannot be understood or worse, misunderstood so translators are always available.

Technology
Technology is one of the biggest things Japan is known for. Usually, when someone thinks about technology, they usually link it to Japan. Japan is known for being probably the most technologically advanced country.

In Technology Japan is mostly focused and prominent in electronics, robotics, automotive and the automobile industry.

Electronics:
Japan is well known for its electronics industry throughout the

world, and Japanese electronic products account for a large share in the world market, compared to a majority of other countries. Japan is one of the leading nations in the fields of scientific research, technology, machinery, and medical research with the world's third largest budget for research and development at $130 billion USD, and over 677,731 researchers. Japan has received the most science Nobel prizes in Asia. Japan has large international corporate conglomerates such as Fuji and Sony. Sony, Panasonic, Canon, Nikon, Fujitsu, Hitachi, Sharp, NEC, Epson and Toshiba are among the best-known electronics companies in the world. very well-known companies in the world.

Robotics:
Japan is well known in robotics industry throughout the world, and Japanese robotic products account for a large share in the world market, compared to a majority of other countries. There are many different types of Japanese Robotics. Some different types of robots are: Humanoid Entertainment Robots, Androids, Animal Robots, Social Robots, Guard Robots, and many more. There are also a variety of characteristics for these robots. The Robotics industry is more important in Japan than any other country in the world. Japan employs over a quarter of a million industrial robot workers. In the next 15 years, Japan estimates that number to jump to over one million and they expect revenue for robotics to be near $70 billion by 2025.

Automation:

Japan

is

very

advanced

in

automation. Most of the offices and forms are automated. Hospitals,

restaurants, offices, airports, factories and all the other facilities are highly efficient because of the use of high tech automated system.

Automobile:
Japan is well known in automobile industry as well throughout the world, and it account for a large market share in the world market. Japan is a leading nation in the field of different kinds of vehicles. Worlds most prominent brands in vehicle like Toyota, Honda, Nissan, Mazda, Mitsubishi, Suzuki, Nintendo and Subaru are Japanese brands. Toyota capturing a huge market from both high and low end and have a great market share.

Video Games: History


Prior to producing video games, Japanese companies like Sega, Taito, Namco and Nintendo were producers of electro-mechanical arcade games. Soon after the video game industry began in the early 1970s, many of these companies turned their attention to producing arcade video games. Japan eventually became a major exporter of video games during the golden age of arcade video games, an era that began with the release of Taito's Space Invaders in 1978 and ended around the mid-1980s. Following the North American video game crash of 1983, Japan went on to become the most dominant country within the global video game industry, since the release of the Nintendo Entertainment System and the third-generation of consoles. Japan's dominance within the industry would continue for the next two decades, up until Microsoft's Xbox consoles began challenging Sony and Nintendo in the 2000s. Although Japanese video games often do sell well in Western markets, the reverse is not so in Japan. Foreign games often sell more poorly in Japanese markets due to differences in escapism. However, as detailed below, Japanese games have been becoming much less successful in recent years even in its own country.

Decline:
In 2002, the Japanese video game industry made up about 50% of the global market; that share has since shrunk to around 10% by 2010. The shrinkage in market share has been attributed to a difference of taste between Japanese and Western audiences, and the country's economic recession. Despite declining home console game sales, the overall Japanese gaming industry, as of 2009, is still valued at $20 billion, the largest sector of which are arcade games at $6 billion, in comparison to home console game sales of $3.5 billion and mobile game sales of $2 billion. The Japanese arcade industry has also been steadily declining, however, from 702.9 billion ($8.7 billion) in 2007 to 504.3 billion ($6.2 billion) in 2010. The domestic arcade market's decline has also been attributed to the country's economic recession. In recent years, Japanese companies have been criticized for long development times and slow release dates on home video game consoles, their lack of third-party game engines, and for being too insular to appeal to a global market. Yoichi Wada stated in the Financial Times on April 27, 2009 the Japanese gaming industry of having become a "closed environment" and "almost xenophobic." He also stated: "The lag with the US is very clear. The US games industry was not good in the past but it has now attracted people from the computer industry and from Hollywood, which has led to strong growth."

Games:
PlayStation: PlayStation was invented by Ken Kutsaragi the Sony PlayStation. Research and development for the PlayStation had begun in 1990, headed by Sony engineer, Ken Kutaragi. Nintendo: Gunpei Yokoi was the creator of the Game Boy and Virtual Boy and worked on Famicom (and NES), the Metroid series, Game Boy Pocket and did extensive work on the system we know today as the Nintendo Entertainment System. Beat 'em up:

The first game to feature fist fighting was Sega's boxing game Heavyweight Champ (1976), but it was Data East's fighting game Karate Champ (1984) which popularized martial arts themed games. The same year, Hong Kong cinema-inspired Kung-Fu Master laid the foundations for scrolling beat 'em ups with its simple gameplay and multiple enemies. Nekketsu Kha Kunio-kun, released in 1986 in Japan, deviated from the martial arts themes of earlier games and introduced street brawling to the genre. Renegade added an underworld revenge plot that proved more popular with gamers than the principled combat sport of other games. Renegade set the standard for future beat 'em up games as it introduced the ability to move both horizontally and vertically. Fighting Game: Sega's black and white boxing game Heavyweight Champ was released in 1976 as the first video game to feature fist fighting. However, Data East's Karate Champ from 1984 is credited with establishing and popularizing the one-on-one fighting game genre, and went on to influence Konami's Yie Ar Kung-Fu from 1985. Yie Ar Kung Fu expanded on Karate Champ by pitting the player against a variety of opponents, each with a unique appearance and fighting style. Capcom's Street Fighter (1987) introduced the use of special moves that could only be discovered by experimenting with the game controls. Street Fighter II (1991) established the conventions of the fighting game genre and, whereas previous games allowed players to combat computer-controlled fighters, Street Fighter II allowed players to play against each other. Shoot 'em up: Space Invaders is frequently cited as the "first" or "original" in the genre. Space Invaders pitted the player against multiple enemies descending from the top of the screen at a constantly increasing rate of speed. As with subsequent shoot 'em ups of the time, the game was set in space as the available technology only permitted a

black background. The game also introduced the idea of giving the player a number of "lives". Space Invaders was a massive commercial success, causing a coin shortage in Japan. The following year, Namco's Galaxian took the genre further with more complex enemy patterns and richer graphics. Stealth Game: The first stealth-based videogame was Sega's 005 (1981). The first commercially successful stealth game was Hideo Kojima's Metal Gear (1987), the first in the Metal Gear series. It was followed by Metal Gear 2: Solid Snake (1990) which significantly expanded the genre, and then Metal Gear Solid (1998). Survival Horror: The survival horror video game genre began with Capcom's Resident Evil (1996), which coined the term "survival horror" and defined the genre. The game was inspired by Capcom's earlier horror game Sweet Home (1989).

The End

References http://www.facts-about-japan.com/brief-history.html http://people.cohums.ohiostate.edu/bender4/eall131/EAHReadings/module02/m02japanese.html http://www.scribd.com/doc/134596052/PESTEL-Analysis-of-JAPAN http://sites.cdnis.edu.hk/students/991475/japan-pest-analysis/