corporate sales in Japan


Probably the most profitable business you will do.

1.  Probably the most profitable business you will do.

Japanese companies are some of the world's most successful corporations and doing business with them in Japan benefits massively from the country's relatively small size and excellent infrastructure - where else in the world can you visit companies such as Toyota in the morning, Honda in the afternoon and Sony in the evening....of the same day? The Japanese market is an incredible market for corporate products and services and understanding Japanese corporate sales will enable you to do very profitable business with Japan's largest corporations - in my experience some of the most profitable partnerships you will make anywhere in the world.

15 - 20 years ago, when those infamous myths of doing business in Japan first emerged, Japanese business culture must have seemed impenetrable and the barriers to Japanese business probably appeared to be higher than Mount Fuji! The protracted recession of the 1990s and the explosion of communications and IT technologies in Japan in the past 10 years, have dramatically changed the business climate in Japan for foreign companies entering the Japanese market. Those changes have made it much easier for foreign companies that understand Japan's business culture to successfully do business in Japan and especially to do substantial and very profitable business with major Japanese companies.

So how do sales to Japanese companies differ from sales to companies in the US or Europe? These are some of my thoughts after 13 years of doing business in Japan - much of which has been corporate sales involving traveling around the country, meeting, presenting, negotiating and closing contracts face-to-face with some of the largest Japanese companies including: Canon, Fujitsu, Fuji Xerox, Hitachi, Honda, Mazda, Mitsubishi, Nissan, Matsushita (Panasonic), Nikon, NTT, Ricoh, Seiko, Sharp, Sony, Takenaka, Toshiba, Toyota, Yamaha and others too numerous to mention.

"..the Japanese sales process reflects the personal service aspect of Japanese business culture.."

Even in 2004, Japanese corporate sales technique will seem very old-fashioned to a US and European businessman used to doing much of his business electronically. Both in corporate and consumer markets, the Japanese sales process reflects the personal service aspect of the Japanese business culture and tends to be very people and time intensive. The prices of most products in Japan are very high compared to the US or Europe and those extra margins allow Japanese companies to continue people intensive sales activities which would be impossible on the much slimmer margins typical elsewhere. Although discount stores are very popular and traditional department stores have recently faced huge problems, Japan remains a service-oriented society and customers are still content to pay a premium (albeit a reduced premium) for service.

To understand just how people and service intensive sales to a Japanese company can be, lets look in detail at the traditional Japanese corporate sales-cycle:

  • the salesmen (Japanese salesmen usually work in teams of 2 or more one of which may well be female) identify a prospect company in their region
  • if possible they try to get a personal introduction to the prospect company from an existing customer but failing that, they personally visit the prospect company and, after enquiring the name of the manager responsible for purchasing, leave business cards with the receptionist or with a junior clerk from the purchasing department
  • after 2 or 3 such visits over a few weeks, they ask to see the buyer in person and, if successful, exchange business cards with the buyer, make a few polite inquiries, bow and leave
  • after another 2 or 3 such visits over a few more weeks to reinforce their dedication and commitment, the salesmen may be allowed to present their product portfolio to the buyer
  • if the salesmen represents a smaller company than the prospect company, then at this stage they may take their senior managers (and often their President if the opportunity is substantial) to meet with the buyer and one of the buyer's senior managers - if the salesmen represents a large Japanese company and the prospect company is also large, then they may take a team of 5 or more senior managers to meet with the buyer and a team of his senior managers
  • at this point (maybe 3 - 4 months after the initial visit) the buyer may ask for a quotation for a small initial 'gesture' order
  • assuming the initial order is satisfactorily completed, the salesmen start a regular pattern of personal visits, giving the traditionally expected summer and winter gifts, sending New Years cards and gradually building the depth and value of the relationship over a period of years

Just a decade ago, very few Japanese executives and managers used e-mail or carried mobile phones - the preferred methods of initial contact were: 1) personal meeting, 2) telephone, and, 3) fax. At that time, Japanese business culture had not changed much from the 1970s and 1980s and doing business in Japan, though very profitable, was often painstakingly slow. Today in 2004, 99.99% of Japanese executives and managers have mobile phones, regularly use e-mail and are more directly accessible than ever before, but Japanese salespeople still do the majority of their sales in the traditional manner.

Mobile phones have made telephone contact less impersonal but the telephone is still most often used by a salesman to confirm orders, get delivery status updates, to make appointments for the next face-to-face meeting. In fact one of the most important uses of the mobile phone in Japanese corporate sales is to give a customer 45-minutes advance notice of being late for a meeting! One factor that has not changed in the past 10 years is that very few Japanese companies use voice-mail systems, which contrasts starkly with the US where you are more likely to talk to a message-center than to a live person. It is also one of the ways in which Japanese business culture differs widely from Japanese social culture because most Japanese use voice-mail on their mobile and home telephones. The fax is still widely used in business but as elsewhere is gradually being replaced by e-mail.

The internet has of course affected Japanese business culture but not nearly to the extent that it has affected US business culture. Japan has seen strong growth in automated online sales of components and supplies but those Japanese companies that do use online sales in the corporate sector seem to do so in addition to maintaining their existing salespeople. Online sales systems typically seem to be used as automated order-fulfillment back-ends to Japanese salespeople building strong personal relationships on the trust accumulated in those traditional face-to-face meetings.

2.  Customer loyalty is the hidden trade barrier >>

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