Doing Business in Japan

Historical Overview

In the mid-nineteenth century, following two decades of stability and isolation from foreign influence, Japan opened its ports and began to swiftly modernize and industrialize. Over the next hundred years, Japan became one of the world’s most technologically and militarily advanced countries, taking on the forces of both China and Russia. During the 1930s and early 1940s, Japan occupied much of East and Southeast Asia, launching a full-scale invasion of China in 1937. In 1945, after experiencing defeat in WWII, Japan officially renounced its right to declare war.

Japan’s swift shift from defeat in 1945 to become an economic superpower is hailed as one of the most remarkable transformations in history. Made up of a mountain range broken into islands off the eastern coast of mainland Asia, Japan’s rugged terrain and multiple volcanoes provided limited natural resources to support its growing population. To counteract the increasing shortages, Japan built up its manufacturing and processing industries to convert raw materials imported from abroad. Nuclear reactors were seen as a means to power industry without relying on further imports. This strategy established a strong economic infrastructure that provided Japan, as well as the world, with much needed energy, transportation, communications, and technological know-how.

Japan has lead the way in technological developments for consumer electronics, automobile manufacturing, semiconductor manufacturing, optical fibers, optoelectronics, optical media, facsimile and copy machines, and fermentation processes in food and biochemistry. Today it is one of the world’s leading exporters of transport equipment, motor vehicles, semiconductors, and electrical machinery.

In March 2011, the strongest earthquake in recorded history ever to hit Japan occurred with an epicenter off the northeast coast of Honshu Island. The shocks and subsequent tsunami devastated the region, killing thousands and damaging several nuclear reactors. The outcome of crisis in terms of the country’s economy as well as its energy infrastructure is unknown as yet, as Japan deals with the humanitarian disaster while working to stabilize the crippled reactors.

Facts & Statistics

Known as the “Land of the Rising Sun,” the characters in Japan’s name (日本) mean “sun-origin.”

Geography: Japan is an archipelago consisting of four primary islands: from north to south Hokkaido, Honshu, Shikoku, and Kyushu. Located in the Pacific Ocean east of the Sea of Japan, China, North Korea, South Korea, and Russia, Japan is slightly smaller than California and stretches from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south. The capital city of Japan is Tokyo.

Ethnicities of Japan: Japanese 98.5%, Koreans 0.5%, Chinese 0.4%, other 0.6%

Religion: Shintoism 83.9%, Buddhism 71.4%, Christianity 2%, other 7.8% (Note: total adherents exceed 100% because many people practice both Shintoism and Buddhism.)

Economic Power: Japan has the world’s third largest economy ranked by nominal GDP (2011) and by purchasing power parity. As the world’s fourth largest exporter, Japan sends an estimated $516.3 billion a year in transport equipment, motor vehicles, semiconductors, electrical machinery, and chemicals overseas. As the fifth largest importer, Japan brings in an estimated $490.6 billion in machinery and equipment, fuels, foodstuffs, chemicals, textiles, and raw materials.

Life Expectancy: According to UN and WHO estimates, Japan has the highest life expectancy (M: 78, F: 86.1) of any country (the US comes in at 36 with M: 75.6, F: 80.8) and the third lowest infant mortality rate after Iceland and Singapore (the US comes in at 33).

Population: Japan is the tenth most populous country with 127.38 billion people, and a population density of 337.13 people per square kilometer, compared with the US (third largest) with 309.975 billion people, and a population density of 32.19 per square kilometer.

Language: Japanese is the ninth most spoken native language and is spoken in Japan and Palau. There are 126 million native Japanese speakers, with only 1 million speakers of Japanese as a second language.

Military: Although post-WWII Japan officially renounced its right to declare war, it maintains an extensive modern military force for self-defense and peacekeeping roles.

Government: Similar in structure to the government of Great Britain, Japan has both an emperor and a prime minister. Their legal system is modeled after European civil law systems with an English-American influence. The executive branch consists of Chief of State Emperor Akihito (hereditary position), Prime Minister Naoto Kan (elected position), and the Cabinet (appointed by the prime minister). The legislative branch consists of the House of Councillors (242 seats with members elected for fixed six-year terms; half reelected every three years; 146 members in multi-seat constituencies and 96 by proportional representation) and the House of Representatives (480 seats with members elected for maximum four-year terms; 300 in single-seat constituencies; 180 members by proportional representation in 11 regional blocs); the prime minister has the right to dissolve the House of Representatives at any time with the agreement of the Cabinet. The judicial branch or Supreme Court consists of the chief justice (appointed by the emperor after designation by the Cabinet) and all other justices (appointed by the Cabinet).

Japanese Culture

The Japanese people understand the difficulty foreigners face when working in Japan. They do not expect them to speak or read Japanese, or to be familiar with their cultural nuances and protocol. Mistakes are easily forgiven as long as genuine respect is shown at all times.

Greetings: It is important, if possible, to wait to be introduced, as it can be seen as impolite to introduce yourself. The traditional greeting in Japan is the bow. The deeper you bow, the more respect you show. Foreigners are not expected to understand the subtle degrees of bowing and may bow the head slightly or shake hands.

Communication: Japanese people place high value on the context in which something is said as it affects the meaning of the words. They rely on body language and facial expressions, as well as tone of voice to tell them how someone feels. Though Japanese people often will not directly disagree with another person, such feelings will be expressed through nonverbal messages including frowning, tilting the head, clenching teeth, or scratching an eyebrow.

Saying No: Turning down a request or invitation can cause embarrassment. If the request cannot be agreed to, it is preferred to respond that the invitation is either inconvenient or under consideration.

Eye Contact: It is disrespectful to stare into another person’s eyes, especially one who is your senior. Japanese people avoid eye contact in public to give themselves as well as others privacy.

Status: Japanese people are very conscious of age and status, be it within the family unit, in social situations, or in business. The oldest person in a group is always treated with respect; in social situations their drinks will be poured for them and they will be served first.

Gift Giving: In Japan gift giving is an art form, representing friendship, respect, and gratitude. The ceremony is important; the gift is always presented in a gift box or beautifully wrapped in quality paper and given with great respect. When you offer your gift, hold it in both hands and bow, saying words that let the person know, “this gift is insignificant in comparison to the importance of our relationship.” Saying it’s “a small thing,” even if the gift is expensive, conveys this sentiment. Learn more about this ritual.

Dining: As discussed previously, hierarchy is important in Japan. When dining for an occasion, wait to be told where to sit. The guest being honored or the eldest guest will be seated first in the center table and will be the first to begin eating. Acceptable dining etiquette includes:

  • Typically subdued conversation at the table as the Japanese like to savor their food.
  • You will receive a moist towel to wipe your hands with. Use it on only your hands.
  • Learn how to eat with chopsticks. Don’t point your chopsticks at anyone. Place them on the chopstick rest without crossing them when taking a drink and when you have completed your meal.
  • Bring your soup bowl close to your mouth so as not to drop any liquid. Miso soup is traditionally drunk from the bowl, although a spoon will often be provided. It is completely acceptable to slurp your noodles and soup.
  • Do not pour soy sauce over your food, but rather use the dipping tray. Mixing food with rice is not polite. Eat some of one and a bit of the other.
  • Do not pour your own drinks. If you see someone else’s glass is empty, pour a drink for that person. If you do not wish to have more to drink, don’t finish what is in your glass.
  • Try a little bit of everything; being picky or making special preparation requests can be deemed impolite. Eat everything on your plate, down to the last piece of rice. Place any bones to the side of your dish.


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