Impact of cultural differences on acquiring Japanese enterprises

The year-on-year increase in the number of mainland tourists visiting Japan has seen more Chinese enterprises also set their investment sights on their neighbour to the east. While China’s regulations and administrative approvals are far more complex, Japan’s rules are minimal without any need for confounding legal processes. Still, corporate culture or unwritten commercial practices in the land of the rising sun have had a major impact on a foreign entity’s chances of a successful acquisition of a Japanese enterprise.

According to media reports, there still exist in Japan more than 30,000 century-old shops. Due to issues like a rapidly aging society, owners of many of these old shops do not have potential successors, giving Chinese enterprises commercial opportunities for acquisitions. However, the number of cases where Chinese enterprises successfully acquire and operate Japanese enterprises can still be counted with the fingers on one hand. With more than 20 years of experience in dealing with Sino-Japanese enterprise legal matters, the writer of this article is sharing ideas on how to understand Japanese corporate culture.

Understanding internal inhibition character of Japanese. It is evident to the Chinese that Japanese people, be it their language or their emotion, are quite introverted. Not only do discussions with the Japanese require a lot of time and energy, it is also tough to figure out the other party’s real attitude. For example, in a certain proposal, the Japanese will often respond with something like “that sounds a bit difficult”. If we do not realize that, in Japanese, “a bit difficult is tantamount to impossible”, it could affect subsequent discussions.

Zhang Hefu is a partner at East & Concord Partners

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