4 Relationship building mistakes to avoid when working with Japanese corporates
So your company was contacted by a large Japanese corporation. They're interested in investing in your company, or in a Joint R&D, or in some other form of corporation. That's great news! Japanese corporations have a lot of expertise, experience and resources that any company, big or small, can find handy. Not to mention, a relationship with a Japanese corporation can really help you enter the Japanese market and the Asian market as a whole.
But not all is tengoku (heaven) when you enter a relationship with a Japanese corporation. Along with issues that one might encounter in a relationship with any other kind of corporation from any country or culture, it seems Israeli companies and startups have a particular tendency to run into setbacks when working with Japanese corporations.
Here at Aniwo we work on the bridge between Israeli startups and Japanese corporations all the time, and we've crossed it back and forth more times than we can remember. We thus noticed 4 common mistakes that Israeli startups tend to make when they engage with their Japanese corporation counter-parts. We've listed them here below for you, along with a word of advice from us on how you can avoid making the same mistakes yourselves. Ganbarimasho! (let's try our best!)
1. Get frustrated when things move too slow
The mistake: In the startup world, things can change very quickly. In the span of one week the company's whole strategy can change, and pivoting can be an occurrence as frequent as having lunch. But Japanese companies don't move that fast. Many Japanese corporations have been around for decades, sometimes even centuries. Strategies can stay the same for years and the word pivot is mostly associated with an Excel program feature. This makes decision making a slower, more calculated process.
Japanese companies' hierarchy is also an issue to consider. In most Israeli startups the hierarchy can be pretty flat with decision making up to many of the senior members. But in most Japanese corporations, decision making has to travel from the bottom up, and if a consensus isn't reached, many decisions can get stuck on their way up.
Because of all these reasons, Israeli startups often find themselves frustrated with the Japanese "slowness". Signing deals, making decisions, and getting approval from superiors to pursue a certain direction can take longer than the average Israeli startup founder would like.
Our advice: Be patient. Maybe signing that NDA would take a few more weeks than you expected, but once you've established a good, trusting relationship with a Japanese corporation, rest assured that they will stick with you through thick and thin, and will help you every step of the way.
TL;DR: It may take longer for Japanese companies to make decisions, move to next steps, etc., because of the company's culture and hierarchical structure. However, it's worth the wait so try and be patient.
2. Ask for too much, too soon
The mistake: From our experience, Israeli startups tend to expect that once they've signed that NDA, investment, or other cooperation, then the Japanese corporation would lay down the red carpet, and accommodate any request that the startup may have.
But as we've seen in the previous clause, things aren't always that simple. Decisions in Japanese companies aren't done in a vacuum, and many levels in the organization can be involved even in the simplest decision. Even if you've created trust with a certain contact in the company, that contact still needs to convince their superiors whenever you ask them for anything, and that process takes time. If something goes wrong, it can cost your contact their prestige and reputation. When you ask them for too much, too fast, even if they believe in your cooperation, it may be difficult for them to accommodate, and having to face and refuse your request constantly can cause severe harm to the relationship.
Our Advice: doing favors and asking for help is an important part of any healthy relationship, even a business one. We know that as a startup, your timelines are short, and that work can be done faster if your Japanese counterparts could provide with certain kinds of help, financial or otherwise. But we suggest you let your counterparts (and though them, their supervisor) get to know you and trust you before you ask for anything that wasn't agreed upon in your original agreements.
TL;DR: Building a trusting relationship with a Japanese corporation takes time, and asking for too much, too fast, can deal a blow to that process. Be patient and don't ask for "favors" outside the agreed upon agreement until trust has been established.
3. Think short term instead of long term
The mistake: Israel has been through many changes in it's short 70+ years of existence. Israelis had to learn to adapt to extreme changes in short periods of time and under extreme conditions, not knowing what the future might bring. This, and other factors, made for a culture of short-term (rather than long term) strategic thinking and planning. The fact most startups can change their whole set-up in a manner of weeks does not help, either.
Japanese corporations, however, prefer long-term thinking and strategies. Like we've previously mentioned, many Japanese corporations have been around for a very long time and expect to continue to be so for decades to come. Because of this, their strategies, business plans, financial forecasts are very long term and take into consideration conditions not only in the present but in the near and far future, as well.
This fact can create many miscommunications between the Israeli startups and their Japanese counterparts, as Israelis tend to speak in short-term language while the Japanese tend to think and speak while having the long term in mind. This can bring forth difficulties when creating plans and establishing the two companies' cooperation, and in some cases can even create misunderstandings and lack of trust between the two sides.
Our advice: Short term planning is of course very important when working in the ever-changing environment of a startup. But in order to conduct smooth communication and business relationship with a Japanese company, you must also adjust to long-term thinking and planning. When you make a suggestion or draw up a plan, try not just to think a few months ahead, but at least one or a few years in the future.
TL;DR: Japanese business thinking can lean more towards the long term than the short term. When making proposals and dealing with Japanese counterparts, try to think and speak long-term.
4. Thinking in Western terms
The mistake: Israeli tech companies and especially startups have always looked outside the country's borders to find investments, research partners, and markets to expand in. Most startups had or will have dealings with foreign entities such as marketing companies, Venture Capital firms, or corporate partners at some point or another. Because of this, startup executives will tend to think that since they've worked with foreign companies in the past, they should not have a problem cooperating with a Japanese company, as they're already accustomed to working with other cultures.
However, startups that work with Japanese corporations must keep in mind that the Japanese business culture is very unlike its Western counterparts. Japanese business culture has been created and shaped under very different conditions than those in the west, and it's approach to cross-border cooperation is fundamentally different. Things that might seem inappropriate while dealing with Western companies (such as drinking together after working hours) can be welcomed and even obvious in the Japanese corporate culture, and vice-versa.
Our advice: there are many online resources to learn about Japanese business culture, and there are quite a few expert cultural advisors that offer their services to teach your team about do and don't when working with Japanese companies. If those don't work or if you're still unsure, you can always hire a consulting company to work alongside you, attend meetings and offer advice while you build your lasting relationship with a Japanese company.
TL;DR: dealing with Japanese corporations can be different when compared to western companies. Try and learn about Japanese business culture beforehand, and consider hiring a consultant if you run into any trouble.
Japanese companies have a lot to offer not just financially, but also in expertise, knowledge and networking. We think the combination between Israeli creativity, fast thinking and flexibility and Japanese precision, long-term thinking and thoroughness can create a thriving, outstanding business partnership. There might be a few difficulties along the way but with these 4 points in mind, any Israeli startup can create and maintain a successful business relationship with a Japanese corporation for the benefit of both sides.
Are you a start-up looking to work with Japanese corporations and/or penetrate the Japanese market, or a Japanese company looking to make meaningful connections with innovative Israeli start-ups? Drop us a line!