Problems of starting a business in Japan
Japan is growing fast in every sector in Asia. They are using their innovation method to increase resources because of lacking natural resources. This is considered a better a secure place for investing. A lot of outside investors are running their business right now in Japan and rewarded it the third position considering the Gross Domestic Product (GDP) growth around the world. But investors find that a business establishment isn’t that much easier than other countries in Japan.
The outside investors face some difficulties and the major one is “Differentiation in Culture”. Cultural awareness is highly preferable in Japan such as rules and regulation in office. Normally the Japanese employees strictly follow ‘Hierarchy Rules’. Japanese business didn’t lose the path during recession in 1990 and even the business growth is increasing higher because of following the hardcore hierarchy rules. In Japan, a mostly popular picture is seen that a university graduate enters a company at the age of 22 in dreaming that he/she will retire at the age of 65 from the same company. The graduates are committed to work for achieving corporate goals of the company. This commitment is considered as “Lifetime Commitment” regardless a big or small company, low or higher labor liquidity.
The bondage between the employees and company becomes stronger in terms of long term relationship. An employee is rewarded considering his/her age, positional status and experience rather than effective work which is totally inverse comparing western world. Besides, the thinking way of employees, group/ combined works are highly measurable. The foreign investors should bear in mind that Japanese would like to work in a group which is in contrast to the western people. So, it would be better to reward a group for their good job rather individuals.
The next one is non-verbal gestures. Investors may find a problem to communicate with Japanese employees properly in most of the time. Japanese would like to make anyone understand indirectly like body language, emotion etc. Communication gap often occurs when business holders held in a meeting with other multinationals. Japanese employees use English very little like Good Morning/Afternoon in this kind of situation. The most amazing thing is, they often use “NO”. Sometimes, international investors and business people fall in a confusion to take a proper decision which ultimately affects to achieve organizational goals.
Discrimination isn’t a viable thing in Japan though men dominate office. Women make a great effect on social participation to influence and spread out Japanese language. It is unfamiliar to see a female in the decision-making process in the big companies in Japan because a Japanese woman gets married in 25- 30 years and leaves the job to raise children in home which is totally controversial with the US and European culture. The above stated all the problems will not take a big effect on one’s business because of Japanese are really polite, time maintaining, hard working. After few months, the business holders find how much effective the employees are for the betterment of company.
Kabushiki Kaisha is mostly preferred in Japan if anyone wants to shine in business sector. The people who are interested about foreign Start-ups, they will find it a difficult thing in Japan because of searching reliable investors. There is a misconception on the Japanese thinking. They always think, big innovations come from the big companies like Sony, Panasonic etc. So, they don’t even try to care about this kind of young projects. Besides, a most noticeable thing is ‘Business Cards” are very essential in the business or social meeting in Japan. The outside investors often fall in a big trouble when the senior and junior employees use same words to interpret the “Hierarchy of Family” or “Hierarchy of Corporate”. The hierarchy of family includes parents and the elders. But the corporate hierarchy includes many kinds of subsidiaries and third party suppliers. So, outsiders think to change the corporate culture which eventually fall them in a miserable situation to run their business for a long time. Always the investors should bear in mind that the Japanese would like to work together rather individually.
The other problems and investor may face that dealing with construction permission, getting credit to protect them. Contract enforcement, trade permission in other countries and insolvency problem may also arise to do business in Japan. Normally, the authority gives construct permission within 193 days which is really longer than other countries stated the World Bank and International Finance Corporation. Another thing is, to obtain credit is considered a simple process in Japan though the legal system protects investors. Moreover, the authority could take a year to enforce the contracts with investors and change 32.2% under 30 procedures. Investors might face a lot of frustrating problems but the big light is, Japan is considered as a country of resoling insolvency which takes 6 months and recovery rate is 90%.