OBSTACLES TO DOING BUSINESS IN JAPAN

Any discussion on business obstacles in Japan must be entrenched in the basic understanding of the country’s corporate governance system, the Japanese culture and their language. Here we discussed some of the challenges and obstacles of doing business in Japan.

 

Language and Culture

Most global organizations face real challenges in reaching their business goals in Japan due to the Japanese language and culture. Japan is undoubtedly seen from abroad as a country with safe and clean cities, where dynamic global companies can emerge and thrive. However, Japan is a country with unique formal and informal communication rules. There is strong expectations on product quality and corporate integrity which, when defeated, may hurt beyond recovery trust and business prospects.

Although there is the significant improvement in English language capabilities, the average proficiency level among Japanese professionals presently lags far behind some other Asian countries such as Singapore, India or the Philippines. Apart from the difficulties with business communication in English, multinational organizations may also struggle with Japanese only official documentation and information systems and they may require the help of an interpreter.

Even when language is not an obstacle, cultural differences may also hinder effective business communications.

 

Difficulty in finding human resources

In a survey conducted by JETRO in 2016 on “Survey on Japan’s Investment Climate” in which they analyzed the attractiveness, challenges, and obstacles of doing business in Japan. The report shows that majority of the foreign affiliated companies who participated in the survey choose ‘difficulty in finding human resources” as the number one obstacle to doing business in Japan.

Most of these companies recognize the challenge of finding global human resources as an obstacle, which is followed by the difficulty in finding a specialist and low mobility in the labor market. Some of the companies also identify the difficulty in finding human resources with a high ability that can communicate in English and talk directly with the head office. They highlighted that, though workers prefer big corporations they do not want to work in a foreign enterprise.

 

Information Security

Managing information security challenges has become a widespread concern among top decision makers all over the world. Doing business in Japan going forward requires adapting to strengthening regulatory conditions and addressing stakeholders’ increasing expectations pertaining to the prevention of the following three main issues: Cybercrime (hacking), Privacy Protection and Third Party Providers.

 

Natural Disasters

Japan is highly prone to and had experienced numerous natural disasters such as:

  • Earthquakes
  • Tsunamis
  • Typhoons
  • Volcanic eruptions

Such natural phenomenon is a common occurrence in Japan and Japanese people are taught from a young age how to prepare for these natural disasters as much as possible. However, no amount of preparation can avert dire consequences when those occurrences take terrible proportions such as the 1995 earthquake in Kobe, the earthquake and tsunami in Fukushima and the Tohoku region in 2011.

 

Organized Crime

Japan is known to be a society with less crime, terrorists or violent groups attack Japanese soil have been historically very rare. Nevertheless, international corporations should be aware of the fact that Japan is home to the largest organized crime group in the world with total members estimated to be a little above 100,000, commonly known as the Yakuza.

Japanese are challenged when it comes to using English – you can’t believe what it takes when consumers want to buy your product when all they see are contents in English! There are more than just borders to cross.

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