Doing Business In Japan: Do You Understand Saving Face?

Would You Choose Honor Over Profit For Your Small Business?

I’m on a Delta flight to Tokyo as I write this.  What’s on my mind is the concept of honor in doing business.  My destination is a meeting with a critical manufacturer for our company. I’m traveling thousands of miles from Cincinnati to LA, LA to Tokyo, bullet train to Nagano, crossing 12 time zones and the vast Pacific, to say “Thank you.” In person, face to face, with my attempt at a decent bow of respect to the Managing Director of this Japanese company hereinafter referred to as “Mr. K.” because he would prefer anonymity.

As the CEO of a small business, I’m often made aware how important honor is to leadership.  Everyday employees put themselves in my care.  They want and need me to honor them. They want management to be fair. They don’t often join our company expecting honor from their bosses, the supervisors, the “executive managers.”  I can see the quiet desperation in so many faces from so much dishonorable treatment through many years.

When I started doing business with our Japanese partner, I didn’t trust him. I certainly didn’t feel honored. I felt they were slow, confusing, and too damned expensive. I found it very hard to communicate. At that time I didn’t know that in Japan there are many meanings to the little word “Yes.” There’s the “Yes” with eyes not making contact,  looking down at the ground or said with a laugh. These mean “Maybe.” It took me a long time to understand that a yes didn’t mean yes.  This drove me crazy for years.  Now I understand the motivation behind this reluctance to say “no” or “maybe.” It’s an attempt to not offend me. To say “no” to me would be dishonorable.

It’s a deep divide between our cultures. But it doesn’t have to be negative. (Now I also understand that when he says “Yes” with full eye contact, he means yes, no doubt about it.)

These cultural differences can drive you mad.  For example, why do Japanese manufacturers tend to choose only one distributor for each country into which they want to sell product?  Does that make good business sense?  If the country is Lithuania, I understand.  But for a large country like the USA, only one exclusive distributor?

I can name several Japanese brands right now that are very poorly served by their exclusive US distributors. We really didn’t deserve Mr. K’s trust. We were buying only about $100k a year at that time, after 15 years! Why didn’t they drop us? I would have. I often decide to drop distributors that have not met expectations. It’s the American way. But recently, Mr. K made a decision that stunned me. It was an extraordinary example of principle-driven business.

Here’s what happened. A global brand in the healthcare products industry found a needle device we were having made by Mr. K’s company. It was an innovative idea created by our vp of sales. It applied an existing design (no longer patented) for ultrasound-enhanced biopsy needles to anesthesia needles used for various regional and peripheral pain management injections. No one had ever used ultrasound to visualize these anesthesia injections before. This global brand noticed our product and asked Mr. K to make it for them. This global brand happened to be Mr. K’s biggest customer. They bought huge quantities of biopsy needles from Mr. K. every year. In comparative value to Mr. K, we were a fly on the wall.

But Mr. K said to Mr. Global Brand, “Sorry, can’t do it. Even though we make this technology for your biopsy needles sold in the USA, we can’t make this for your anesthesia needles because this was Havel’s idea. Havel’s is our distributor for anesthesia needles in the USA.”

Good business decision? Certainly not in the American way. We would have chosen sales and profits 99.9% of the time. I’ve done it before. Every American business executive would not think twice about it. It’s not a violation of our values. But it is a perfect example of how different The American and Japanese cultures can be. To Mr. K. it is simple. Honoring our relationship is not based on the productivity of the relationship. Honor is the foundation of the relationship itself. It is exactly what saving face is all about.

Now I am so happy to be at 30,000 feet heading west to the Far East. Can’t wait for that moment when I offer a bow of deep respect to my friend and partner, Mr. K.

What is your experience with doing business in Japan? Share a comment here.

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