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Conflict Negotiations
(final paper)
Moscow State University
(International College)

BUSINESS RELATIONSHIPS IN JAPAN

            Business relationships in Japan are characterized by a well-structured hierarchy and a strong emphasis on nurturing personal contacts. Generally, they are built up over long periods of time or are based on common roots, such as birthplace, school or college. Also, an unusually strong emphasis is placed on social activities to strengthen ties. It is not surprising, therefore, that those looking in from the outside may see the Japanese business world as comparatively hard to break into. In fact, there are many different kinds of business relationships, but most share two features - they have been built up slowly and carefully, and much time is spent in keeping them up to date.
Business relationships in Japan are part of an ever-broadening circle that starts within the company (uchi - inside, or"us"), and moves towards the outside (soto) to include related companies, industry or business organizations, and the like.
            Most Japanese companies have a series of very close relationships with a number of other companies that provide them with support and a multitude of services. It has been traditional practice for a company to hold shares in these "related" companies, a practice which has given rise to a high proportion of corporate cross-share holdings in Japan. This has been a show of faith on the part of one company towards another, and also has been useful in providing companies with a core of stable and friendly shareholders.
            When dealing with a Japanese company, it is important to be aware of the existence and nature of some of these close relationships, in particular those with banks and trading companies. Understanding these can help to define the nature of the company and the way it does business, as well as its positioning in the Japanese business world. It should also be understood that there is a constant flow of information between Japanese enterprises and their banks and trading companies. Unless the need for confidentiality is made very clear, these may soon be aware of any negotiations in which the company is involved.
            Larger corporate groupings are becoming more familiar to non-Japanese business circles. These groupings are known as keiretsu, and some have their roots in the large pre-World War II conglomerates. Accusations of keiretsu favouritism overriding more attractive outside offers sometimes are levelled at Japanese companies. When asked about this practice by a foreign businessman, the president of a large Japanese electronics company replied: "It's like going to the tailor your father went to. He may be more expensive than the competition and perhaps even not the best, but he has served your family well for many years and you feel duty bound to remain a faithful customer." There is a tendency in