Japanese companies are interesting partners for startups because Japan has always been a very tech-savvy country, often adopting innovations faster than other markets. While Europe was still tapping away on old-school cell phones, in Japan, you could already watch color television and access selected parts of the internet on the subway on I-mode models in 1999.
And yet Japan is an extremely demanding partner country in which the VC principle has only recently been recognized as a viable concept. Therefore, it is important to prepare thoroughly how to convince potential partners that your idea a) works and b) is transferable to Japan.
How to build trust?
Of course, in the startup world, a lot of things happen through pitch meetings and expos, etc., but especially with large, financially strong companies, the first hurdle is that you have to prove your trustworthiness.
At the beginning of a relationship, it's therefore extremely important to give your future partner a sense of security. If possible, have a third party introduce you, who will act as a kind of guarantor and thus underline your seriousness. Often, this step is even essential to finding the right contact person in the first place.
“Risk” from a Japanese perspective
In all seminars that Japan Consulting Office We ask how the word "risk" is interpreted in our own culture. Without exception, Japanese people respond that they may be open to a certain degree of uncertainty as individuals, but that in Japan the word "risk" itself always has negative connotations.
Japan lies at the fault line of four tectonic plates, and ever since people began living there, it has been under constant, tangible threat. Not only from earthquakes, but also from storm surges and tsunamis, landslides, typhoons, and volcanoes, which claim varying degrees of human life each year. This means that life there is characterized by a very high underlying risk.
In response, Japanese culture (and therefore also business culture) places extreme emphasis on determining, down to the smallest detail, all elements of life that can be influenced through planning. This can certainly be seen as an attempt to counteract the unpredictability of nature through the greatest possible precision in planning and execution.
How to convince Japanese people: “Elevator pitch” or attention to detail?
This fundamental Japanese "risk aversion" is obviously a problem when trying to leverage the argument of disruption and revolutionary change. Therefore, in Japan, unlike Europe and especially the US, the big picture is often not defined before moving on to the specific details.
During your very first encounters with Japanese scouts, who usually speak perfect English, an American elevator pitch might still be somewhat effective. But the more you interact with the actual organization in Japan, the more precision and detail become a make-or-break factor.
In Japan, the ultimate goal is always determined by the sum of the details. This means that a project can only be accepted if each individual step is precisely defined. This approach is explained by a fundamental incompatibility of the concept of "improvisation" with the Japanese way of thinking. The motto "let's see, then we'll see, because you can't plan everything" is incomprehensible to Japanese companies or organizations. It is important to understand that a company like Softbank, which operates quite quickly and with as much "adventurousness" as Western companies, is the absolute exception in Japan.
Accuracy is key
Always present very detailed information in your proposal or offer. A Japanese proverb states, "Proof rather than theory" (論より証拠/ Ron yori Shouko). A well-defined proof of concept with clear use case examples, benchmarks, photos, and ideally customer references is essential.
Such a detailed presentation, which also presents information visually rather than just through text, anchors the idea or product in reality. Avoid overly visionary sales pitches like "Imagine a world" and let your audience draw their own conclusions based on the facts and details provided.
Discussions and negotiations
When it comes to more concrete negotiations in Japan, maintaining the formalities is essential. Find out about correct greetings ("san," etc.) and always hand over business cards with both hands. Treat your Japanese partners with respect and act modestly, even if you're too convinced of your idea.
Pay attention to the hierarchy among those present. It's also important for you to bring the right team to the meeting. Ideally, your selection should reflect the ranks and titles on the Japanese side. By the way: Even if your boss "only" presents a small, formal gift at the beginning of the meeting, the Japanese side will remember "Mr. ___, who brought gingerbread from Germany" for a long time.
It's important to calmly create the right conditions for collaboration right from the start. A "time is money" approach is out of place in Japan. So be prepared for the fact that just getting to know each other may take much longer than expected.
Communication in Japan
The English level of many Japanese speakers, especially those in technical fields, is sometimes much lower than expected. Therefore, it's recommended to bring as much written and graphical English as possible. A combination of speaking and drawing (flipchart, etc.) is also very helpful.
When communicating with Japanese business partners, there are some signals that will help you correctly interpret the very indirect language. In Japan, it is important To actively “sense” the unspoken through empathy and thus anticipate the needs of the other person. If your counterpart says, for example, "That's a bit difficult," it usually means "That's impossible." This is how Japanese people avoid forcing their counterpart to explicitly refuse.
Last tips
- Always show your Japanese partners that you respect them and their culture.
- Be more formal than casual. Japan isn't California...
- Prepare for a very close cooperation in which a quick answer to even the 1000th detailed question from Japan is necessary.
- Pay attention to unspoken signals in communication!
Conclusion
Large trading companies from Japan in particular are currently looking for new business ideas, as the Internet has made the traditional “man in the middle” unnecessary.
Specially established VC departments make these companies interesting partners even in the current difficult environment, but they first have to be convinced in the right way.
By the way: Readers of Munich Startup receive a discount on participation in the seminar with the code “MUNICHSTARTUP2020” “Collaboration and communication with Japanese colleagues, customers and HQ” (German or English). The code is valid for all dates in October.
