The Negotiation Waltz

By John Greenwald

Bargaining takes patience, politeness and preparation

The knot tightens in the Western businessman's stomach as he peers glumly at the Japanese negotiating team across the table. The executive's flight leaves early tomorrow. His home office has been pressing him to complete a deal quickly. But although the talks have dragged on for days, the key issues have barely been discussed. "What is this?" the frustrated businessman wonders. "Don't these people know that time is money?"

Such questions can arise with disquieting force and frequency when Western executives confront the Japanese. Foreigners eager to do business must often endure endless rounds of what seems to be aimless talks, dinners and drinks. Still, they have little choice but to put up with the ceremony if they hope to gain access to Japan's vast domestic market.

The exotic set of rituals seen during negotiations is the face Japan presents to the world of business. Japanese negotiators are exquisitely polite and agonizingly vague, yet at the same time, they are determined to win the best possible deal.

The most striking feature of this system of bargaining is the huge amount of time it consumes. "They can carry on negotiations until you're just plain tired of it," says Bernard Appel, an executive vice president of the Radio Shack division of Tandy Corp., which annually does more than $200 million worth of business with Japan. In Australia, Attorney Paul Davis offers clients a simple rule of thumb: allow five times as long as usual when doing business in Japan.

Executives of Nissan Motor Manufacturing Corp. spent 15 months negotiating with Tennessee state officials over the site for a $660 million assembly plant that produced its first light truck in Smyrna in June. "The Japanese practice of asking the same questions ten to twelve times, of four or five different sources, greatly protracted the talks," recalls Joseph Davis, director of international marketing for Tennessee.

Japanese companies negotiate slowly because everyone from junior management to major shareholders must approve a deal, in keeping with the national tradition of consensus. Startled Western executives may therefore find themselves confronting negotiating teams of ten or 15 Japanese. Such phalanxes, moreover, may be only the beginning. The faces can change from session to session as new experts are added for different topics.

The Japanese are usually minutely well informed about their prospective partners. Recalls a onetime official of BL PLC (formerly British Leyland) who worked on a joint agreement with Honda: "The Japanese negotiators seemed to know more about our labor and managerial problems than we did."

At first the Japanese appear to have remarkably little interest in the business at hand. Their conversation is likely to dwell at length on social and family concerns rather than on products and prices. Notes Andreas Meckel, secretary-general of the Japanese economic promotion office in Duesseldorf: "German and American businessmen wish to come to the main point straightaway, while Japanese want to create a personal atmosphere."

The Japanese stress personal relations because they are interested in the long-term implementation of an agreement. Western businessmen, on the other hand, may tend to look more at the shorter term. "The American feeling is that it's the horse buyer's fault if he fails to ask whether a horse is blind," says George White of the Harvard Business School. "For the Japanese, however, a deal is more of a discussion of where mutual interests lie."

The pursuit of those mutual interests inevitably leads through numerous restaurants and bars. The Japanese treat wining and dining as part of their business day; many managers wield expense accounts that rival their salaries.

Japanese firms will end talks suddenly when they see trouble ahead. Last May, executives of Nippon Kokan K.K., Japan's second largest steelmaker, halted negotiations to buy Ford's Rouge Steel Co., mainly because it could not reach a labor-concession agreement with the United Auto Workers. "What the Japanese wanted most was a totally dedicated and committed work force like they have in their plants," said Thomas Page, a Ford executive vice president.

Experts on Japanese business methods have compiled numerous guidelines for foreign negotiators. One of the first is that women should not be part of any formal talks. "Women are simply not accepted as business equals in Japan," notes a negotiator for a major U.S. electronics firm. Japanese women are all but barred from the management of big companies, and the important after-hours business socializing in Japan is exclusively stag. Another admonition is not to send someone under 35 to conduct negotiations. Says an American official with a high-tech firm: "You are insulting the Japanese by sending a young man to deal with a senior executive, who is likely to be 65."

Foreign businessmen must be wary of mistaking Japanese politeness for agreement. A Japanese negotiator may frequently nod and say "hai" (yes) during talks. But the word is also used to signify that the conversation is being followed, much like the English "uh-huh," or "I see." So yes is not always yes.

Japanese negotiators can also confuse outsiders by lapsing into silence to mull a point. Western businessmen may then jump into that pool of silence, sometimes to their regret. Howard Van Zandt, a professor at the University of Texas at Dallas who spent 17 years as ITT's top manager in Japan, recalls how the head of a Japanese firm did nothing when a contract was presented for his signature. Van Zandt's ITT boss then hastily sweetened the deal by $250,000. Says Van Zandt: "If he had waited a few more minutes, he would have saved the company a quarter of a million dollars."

Evasiveness is another characteristic that foreign businessmen may encounter. The Japanese, who frequently learn to suppress their views out of deference to their seniors, often hate to be pinned down. Add to this the Japanese tendency to tell listeners what they seem to want to hear and a negotiator can easily go astray.

The successful negotiation between Japanese and Western businessmen usually ends up looking very much like one between two Japanese. The visiting executive never lets on what he is really thinking, has unending patience, and is unfailingly polite. In short, he acts very Japanese. --By John Greenwald. Reported by Sam Allis/Houston and Adam Zagorin/New York

With reporting by Sam Allis, Adam Zagorin This file is automatically generated by a robot program, so viewer discretion is required.