Choose ONE correct answer and mark it according to the text below:
1. The second stage of international business negotiations is
[ ] a) persuasion;
[ ] b) non-task sounding;
[ ] c) task-related exchange of information;
2. The party which spends more time on persuasion is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
3. The party which spends more time on establishing a relationship is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
4. The most difficult part of the international business negotiations is
[ ] a) going into business negotiations;
[ ] b) face-to-face meeting;
[ ] c) signing a contract;
5. The ceremonial role in Japanese negotiations is that of
[ ] a) top executives;
[ ] b) middle level executives;
[ ] c) operational staff;
6. Business talk is inappropriate at dinner for middle level executives for
[ ] a) Americans;
[ ] b) Japanese;
[ ] c) neither;
7. Task related exchange of information implies
[ ] a) asking a lot of questions;
[ ] b) giving some feedback;
[ ] c) two-way communication;
8. Americans and Japanese have
[ ] a) identical understanding of all economic terms;
[ ] b) different understanding of all economic terms;
[ ] c) different understanding of some economic terms;
9. The party which would not give long explanations before proposal is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;

10. The party which will speak only after reaching a consensus in the entire group
is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
11. The party which uses more eye contact during negotiations is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
12. Informal channel of international business negotiations is for
[ ] a) persuasion;
[ ] b) non-task sounding;
[ ] c) task related exchange of information;
13. Bargaining is like father-son interaction in
[ ] a) America;
[ ] b) Japan;
[ ] c) neither;
14. The party which asks a lot of questions as a persuasive tactics is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
15. The party which seeks a long-term business relationship of mutual benefit is
[ ] a) American;
[ ] b) Japanese;
[ ] c) neither;
16. The economic issues are the content of international business negotiations for
[ ] a) Americans;
[ ] b) Japanese;
[ ] c) neither;
17. Aggressive persuasive tactics is used more often by
[ ] a) Americans;
[ ] b) Japanese;
[ ] c) neither;
18. Concession making as a stage of international business negotiations is
[ ] a) preliminary;
[ ] b) main;
[ ] c) final;                                                     
Business Communication in Different Parts of the World.
Business Negotiations Between Japanese and Americans.

More than 35 years ago, anthropologist E. T. Hall  warned, “When the American executive travels abroad to do business, he is frequently shocked to discover to what extent the many variables of foreign behavior and custom complicate his efforts”. Despite Hall’s comments, little attention has been paid to the “typically ethnocentric American” sitting across the table from “inscrutable Japanese customers”, trying to negotiate an acceptable business contract. This chapter attempts to shed light on this circumstance. The topic is most worthy of consideration since business negotiations with Japanese often fail for seemingly inexplicable reasons and because most others have ignored such questions.


Conceptual Framework: A Framework for Understanding Negotiation Processes

The most difficult aspect of international business negotiations is the actual conduct of the face-to-face meeting. Assuming that the best representatives have been chosen, and assuming those representatives are well-prepared, and that situational factors have been manipulated in one’s favor, things can still go sour at the negotiation table.
Obviously, if these other preliminaries haven’t been managed properly, things will go wrong during the meetings. Even with great care and attention

to preliminary details, managing the dynamics of the negotiation process is almost always the greatest challenge facing Americans seeking to do business with Japanese.
Going into a business negotiation, most people have expectations about the “proper” or normal process of such a meeting. Based on these expectations, progress is measured and appropriate bargaining strategies are selected. That is, things may be done differently in the latter stages of a negotiation than they were in the earlier. Higher risk strategies may be employed to conclude the talks — as in the final two minutes of a close football game. But all such decisions about strategy are made relative to perceptions of progress through an expected course of events.
Differences in the expectations held by parties from different cultures are one of the major difficulties in any cross-cultural business negotiation. Before we discuss differences between the processes of business negotiations in Japan and the United States, however, it is important to point out similarities. In both countries, business negotiations proceed through four stages: (i) non-task sounding; (ii) task-related exchange of information; (iii) persuasion; and (iv) concessions and agreement.
The first stage, non-task sounding, includes all those activities which might be described as establishing a rapport or getting to know one another, but it does not include information related to the “business” of the meeting.
The information exchanged in the second stage of business negotiations regards the parties’ needs and preferences, or, stated more precisely, the parties’ subjective expected utilities of the various alternatives open to the interactants.
The third stage, persuasion, involves the parties’ attempts to modify one another’s subjective expected utilities through the use of various persuasive tactics. The final stage of business negotiations involves the consummation of an agreement which often is the summation of a series of concessions or smaller agreements.
Despite the consistency of this process across cultures, the content and duration of the four stages differ substantially between the two cultural groups (see Table 16.1). Compared to the Japanese, Americans spend little time establishing a relationship.1
 It is imperative to avoid stereotyping the behavior of Japanese and American managers. Moreover, personalities may be even more important than cultural norms, particularly in business negotiations. Even so, an understanding of norms, particularly when there are major differences, should help negotiators on both sides of the table be more patient

The typical Japanese negotiation may involve a series of non-task interactions and even ceremonial gift giving. Witness the media attention given to the very large kosai-hi (literally, entertainment expenses) that once were typical of business dealings in Japan: “While the Japanese defense budget is 0.9% of the country’s GNP, corporate wining and dining accounts for 1.5% of the total national output” (Time 1981). In the 1990s, since the steep decline in the Japanese economy, Japanese executives have cut back on the “excesses” of the 1980s. Even so, a greater emphasis on business entertainment by the Japanese will be noticeable. To the American critic, this may seem a waste. However, the Japanese make a great effort in the beginning to establish a harmonious relationship.
In America, the second stage (exchanging task-related information) is relatively direct, with clear statements of needs and preferences. For the Japanese, this exchange of information is the main part of the negotiation. A “complete” understanding is imperative. The Japanese are reported to ask


Table 16.1: Four stages of business negotiations.

Japan	United States

Non-task sounding


Task-related exchange of information
Considerable time and expense devoted to such efforts is the practice in Japan.
This is the most important step — high first offers with long explanations and in- depth clarification.
Relatively shorter periods are typical.


Information is given briefly and directly. “Fair” first offers are more typical.

Persuasion	Persuasion is accomplished
primarily behind the scenes. Vertical status relations dictate bargaining outcomes.
The most important step, minds are changed at the negotiation table and aggressive persuasive tactics used.

Concessions and agreement
Concessions are made only toward the end of negotiations — a holistic approach to decision making. Progress is difficult to measure for Americans.
Concessions and commitments are made throughout — a sequential approach to decision making.




“endless” questions while offering little information and ambiguous responses. Japanese negotiators spend much more time trying to understand the situation and associated details of one another’s bargaining position.
Americans tend to spend the most time in the third stage of negotiation — persuasion. Americans openly disagree and use aggressive persuasive tactics such as threats and warnings. Alternatively, Japanese take the time to understand one another during the first two stages of the negotiation, so little persuasion is necessary, and they avoid confrontations and respond to threats by a change of subject, a silent period, or withdrawal. For Japanese, it is more important to maintain the relationship than to be frank and open.
Regarding the fourth and final stage of business negotiations, Americans tend to make concessions throughout, settling one issue, then proceeding to the next. Thus, the final agreement is a sequence of several smaller concessions, and progress is easy to measure. The Japanese tend to make concessions at the end of the negotiation, and agreements are concluded rather abruptly from the American point of view. Such differences are a major point of procedural conflict for trans-Pacific negotiations.
The following presentation of recommendations regarding face-to-face meetings with Japanese clients is ordered according to the four stages typical in most business negotiations. First comes non-task sounding.

Non-Task Sounding
Americans always discuss topics other than business at the negotiations table (e.g. the weather, family, sports, politics, business conditions in general), but not for long. Usually, the discussion is moved to the specific business at hand after 5 to 10 minutes. Such preliminary talk is much more than just being friendly or polite. Before getting to the “business” at hand, it is important to learn how the other side feels this particular day. One can determine during non-task sounding if a client’s attention is focused on business or distracted by other matters, personal or professional.
Learning about a client’s background and interests also provides important cues about appropriate communication styles. To the extent that people’s backgrounds are similar, communication can be more efficient. Engineers can use technical jargon when talking to other engineers. Golfers can use golfing analogies “the deal is ‘in the rough’” — with other golfers. Those with children can compare the cash drain of “putting a kid through college”, and so on.
During these initial stages of conversation, judgments, too, are made about the “kind” of person(s) with whom one is dealing: Can this person be truste

Will he be reliable? How much power does she have in her organization? All such judgments are made before business discussions even begin.
So there is a definite purpose to these preliminary non-task discussions. Although most people are often unaware of it, such time almost always is used to size up (or “sound”, in the nautical sense) one’s clients. Depending on the results of this sounding process, proposals and arguments are formed using different jargon and analogies. Or it may be decided not to discuss business at all if clients are distracted by other personal matters or if the other person seems untrustworthy. All this sounds like a lot to accomplish in 5 or 10 minutes, but that’s how long it usually takes in the United States. This is not the case in Japan; the goals of the non-task sounding are identical, but the time spent is much longer.
In the United States, firms resort to lawyers when they’ve made a bad deal because of a mistake in sizing up a client or vendor. In Japan, lawyers are not used for such purposes. Instead, Japanese executives spend substantial time and effort in non-task sounding so that problems do not develop later. Japanese clients and suppliers will want to spend much more time in non-task sounding than Americans will want, and Americans must reconsider, from the Japanese perspective, the importance of this stage of bargaining if negotiations with Japanese are to be successful.
Negotiations with Japanese firms often include three levels of executives — top executives, middle managers, and operational staff. Depending on the level of the negotiations, the process of non-task sounding is somewhat different, so we will first discuss recommendations for non-task sounding among top executives, and then we will discuss the processes among middle managers and operational staff.


Non-Task Sounding for Top Executives

The role of the top executive in Japanese negotiations is usually ceremonial in nature. Ordinarily, top executives are brought into negotiations only to sign the agreement, and this only after all issues have been settled and agreed upon by lower-level executives. On occasion, top executives are included earlier to communicate commitment and importance. In either case, the main activity of top executives is non-task sounding.
The ceremony, formality and apparent triviality will seem very out of place for American executives, because to most Americans it will seem “unnatural” to avoid discussing specific business and to leave the persuasion to others. They need, however, a very clear understanding of their role in the negotiation,

though getting them to make adjustments in their behavior may be difficult. It could be helpful to supply a long list of “non-task sounding” questions for them to ask during such sessions. It is important, too, that American executives understand that what is said is not so important, from a Japanese perspective, as how things are said.
The Japanese top executive is making gut-level judgments about the integrity, reliability, commitment and humility of his American counterpart particularly if the Japanese is considerably older or if his company is more powerful. The non-task sounding provides a context or vehicle for making such judgments. To the Americans, the “content” of early conversations — words and verbal information may seem inane, but the Japanese regard as critical the non-verbal messages and feelings the wa (interpersonal harmony) and shinyo (trust) such talk conveys.


Non-Task Sounding for Middle-Level Executives

Establishing business relationships in the United States typically involves certain procedures, such as a letter of introduction, followed by a phone call for an appointment, then a meeting at the client’s office (including 5 to 10 minutes of non-task sounding followed by the business proposal), and perhaps lunch, with more business talk. Almost always, after 5 or 10 minutes of non-task sounding, an American client will ask, “Well, what can I do for you?”
In Tokyo, the typical routine goes something like this: The initial appointment will be set up and attended by a shokai-sha (third-party introducer), and the Japanese client will invite the American party, including the shokai-sha, for a late afternoon (approximately 4 p.m.) meeting at the Japanese firm’s offices. There, the Americans will meet the concerned operational-level personnel for a “ chat”, not to include business talk or proposals. At around 6 p.m., the Japanese suggest dinner. Ordinarily, they will pick the restaurant and pick up the tab. Americans will not have a chance to “fight” for the bill because they will never see one. At this point, business talk still is inappropriate. After dinner, the Japanese will suggest a few drinks, and conversation with the bar hostesses will be the bill of fare. The sessions ordinarily go on at past 11 p.m. and end with the scheduling of future meetings. While the 1990s have witnessed cutbacks in the lavish expenditures of the 1980s, the need for more informal non-task time in Japan persists.
Throughout the introductions, the business of the meeting, the purposes of the visit, are not discussed. Again, vague and indirect references to a future relationship may be made, but only in response to similar comments by the

Japanese. The Japanese will be looking for integrity, sincerity, a cooperative attitude shinyo and wa. Economics will come later.


Task-related Exchange of Information
Only when the non-task sounding is complete, when wa has been established, should business be introduced. American executives are advised to let the Japanese side decide when such substantive discussions should begin. Typically, the Japanese will signal their readiness for an exchange of task- related information, after tea or coffee has been served, by remarks such as, “Can you tell me more about your company?” or “Tell me, what has brought you to Japan?”
A task-related exchange of information implies a two-way communication process. However, observations suggest that when Americans meet Japanese across a negotiating table, the information flow is unidirectional from Americans to Japanese. The Japanese appear: (i) to ask “thousands” of questions; and (ii) to give little feedback. The first severely tests American negotiators’ patience, and the latter causes them great anxiety. Both can add up to much longer stays in Japan (compared to negotiating in other countries), which means higher travel expenses.


Giving Information

The most obvious problem associated with providing information to Japanese clients will be doing so in another language. It is true that there are many more Japanese executives who understand and speak English than there are Americans who understand and speak Japanese, thus meetings on both sides of the Pacific usually can be handled in English. Americans should be careful, however, of misunderstandings that can arise from the Japanese side’s limited knowledge of English. Often, confusion can result because Japanese executives are too polite to indicate they do not understand. When doubt exists, Americans should use visual media (slides, brochures, videos, etc.), and should provide copies of written support materials.
American negotiators should provide an interpreter, if the Japanese side has not, and even then there may be critical stages when an interpreter should be included on the American negotiation team as well. Even with the best of interpreters, language problems still can be sources of misunderstandings. Economists suggest that

Americans and Japanese have different conceptualizations of the word profit and that these differences lead to what general semanticists call bypassing. Bypassing occurs when two people use the same word. Japanese and American negotiators, usually communicating in English, initially may think they are in agreement regarding profit and profitability discussions when in fact they are not. This false agreement can lead to bewilderment, confusion, frustration, and perhaps failure in future negotia- tions.

Once comfortable with the language, attention can be turned to more subtle aspects of giving information to the Japanese. The first of these has to do with the order of presentation. In the United Stages, negotiators tend to say what they want and explain the reasons behind the request only if necessary. That’s why the task-related exchange of information goes quickly in America.
Things don’t work this way in Japan. Very long explanations come first, then the request/proposal. Accordingly, it is not surprising to hear the American executives’ complaints about the “1000 questions”. The Japanese expect long explanations.
American negotiators should be prepared with detailed information to back up their proposals and should include appropriate technical experts on negotiation teams, as their contribution will be required. Finally, we recommend the Japanese style of presentation, with background and explana- tions presented first and the actual request/proposal made only toward the end. While such an approach will take longer, with Japanese clients it will obtain better results.
Another reason for the “1000 questions” has to do with the consensus decision-making style of Japanese organizations. Several people on their side may ask for the same information or explanation. Most Americans find this repetitive questioning irritating and even insulting. “ Didn’t they believe me the first time?” Such tactics should be viewed in light of the Japanese consensus decision-making style when everyone must be convinced, not just the key decision maker. To some degree this questioning may be a tactic to make sure explanations hold up under close scrutiny. A degree of patience with this process is recommended, along with the kind of detailed preparations necessary to prevent inconsistent answers.
Americans tend to make initial offers they consider “fair” or near what they expect the eventual agreement to be, while Japanese executives expect to spend time in bargaining and tend to ask for more initially. Thus, Americans dealing with Japanese clients should present second lowest offers first.

The same can be anticipated from them. They initially may ask for more than appears reasonable, but they will move from that position, albeit with reluctance. After each party has supported its “ second best offer” with detailed explanations, the Japanese consider it “fair” behavior to move however reluctantly from their initial position. American bargainers should guard against their own tendency to make concessions during the exchange of information. Often they are impatient with the process and make concessions before they have determined what the Japanese negotiators’ interests and positions are. Americans need to constrain their natural urge to get on to stage three, persuasion, via making concessions in the hope that the Japanese will reciprocate.


Getting Information

Hopefully Japanese clients will be the ones seeking American business, because in such situations the Japanese will be the ones making the proposals and supplying more information than appears necessary. In situations where American firms initiate contact or try to make sales, they experience great difficulty in getting feedback on their proposals. For example, if they ask a group of Japanese executives what they think of an American firm’s price quote, the Japanese will often say, “ Oh, it looks fine”, even if they think the quote is totally unacceptable. Americans need to consider, for a moment, the Japanese reasons for such “strange” behavior.
In the first place, no Japanese, especially not the boss, will venture to speak for the entire group until a consensus has been reached. Second, the Japanese executives wish to maintain the wa, and, from their point of view, a negative (albeit honest) answer during the negotiation may disrupt the harmony already established. Finally, even the most experienced American negotiator may not be able to read the subtle, non-verbal, negative cues that another Japanese executive would read (via tone of voice, body movements, pauses in speech, looks of surprise, etc.) along with the politely offered phrase, “Oh, it looks fine”.
Besides their language differences, the non-verbal behaviors of Japanese and American executives differ. The Japanese conversational style in both simulated and real business negotiations includes much less eye contact than the American style. This difference seems to cause problems for both sides. The Japanese report discomfort at the “aggressive staring” of the Americans. Americans suggest that “something must be wrong” because the Japanese won’t look them in the eye. Eye contact and movements, ordinarily a source of

information about the other person’s feelings, don’t communicate across cultural barriers.
Most people process such information as the facial expression of a client reacting to a proposal, etc., but in the United States such processing often is subconscious. Attention should always be paid to this channel of information, however. Many American executives report great frustration in trying to read Japanese negotiators’ “poker faces”. In our studies of videotapes of simulated business negotiations involving Japanese we found little difference in the quantity of facial expression. Rather, the inscrutability has more to do with the timing and cultural rules for facial expressions. This, then, is the reason we hear наvery experienced Americans say, “I make deals all over the world. Everywhere I go I can pretty much tell where I stand with my clients — everywhere, that is, except Japan”. How, then, are Americans ever to get at the honne, or true mind, of Japanese negotiators?
At the negotiation table, the tatemae (truthful, official stance) often isn’t very helpful. An informal channel of communication, which can be established only between and through the lower levels of the negotiation teams, is the only way Americans can become privy to the honne. This, then, is the primary reason for including lower-level executives on negotiation teams. Besides, it would be too difficult, without some division of efforts, to handle both formal communica- tions at the negotiating table and informal communications after hours.
Management of the informal channel of communications is critical for efficient and successful negotiations, as it can be a delicate undertaking. During the non-task sounding activities, lower-level members of the American team should be assigned the task of establishing rapport with the operational level managers on the Japanese side. Then, throughout the task-related exchange of information and the rest of the negotiations, they should invest in after-hours nurturing such relationships. They can begin by simply asking the selected and/ or indicated Japanese executive(s) out for a drink “to solve our companies’ problems”. The Japanese will be looking to open such a channel of communication, and the Americans should be alert for such overtures.
Once this informal channel has been opened, it will be used for aggressive persuasive tactics (discussed later) and to learn how the Japanese really feel about proposals and the associated arguments. After hours, such information is communicated in restaurants, over drinks, and at bath houses. It emanates from and is transmitted to all members of the Japanese negotiation team. While everyone knows about this informal channel of communication, it is critical that it remains “under the table”, and any reference to such a channel (e.g. “Suzuki-san told Mr Smith last night that . . .”) will lead to elimination of the “leak” by immediate dismissal of Mr Suzuki from the negotiations.

The following illustrates the importance of this informal channel. A large American firm sought to acquire a smaller Japanese firm. Talks between executives of the two companies had not been fruitful. Although the Japanese executives showed initial interest in the deal and the American firm had a final proposal ready, the Japanese seemed to be hesitant. The American side decided on a wait-and-see strategy, and nothing happened for almost six months. Then, a lower-level manager of the American firm received a call from an acquaintance (they had played golf and had a drinks together a few times) asking if they could have drinks. When they met, the Japanese explained the delays: “ I have something to tell you that just couldn’t be talked about by my boss to your boss ’ He went on to explain the primary problems, from the Japanese point of view, which were with the acquisition price and the renaming of the company. Once these were out in “the open” (the informal “gut spilling” by these lower-level players was never discussed), the companies were able to deal with both issues. The Japanese side simply felt it inappropriate to voice such objections to a higher-status buyer and potential owner at the negotiation table, using a formal communication channel.

Persuasion
In Japan, a clear separation does not exist between task-related exchange of information and persuasion. The two stages tend to blend together as each side defines and refines its needs and preferences. Much time is spent in the task- related exchange of information, leaving little to “argue” about during the persuasion stage. Indeed, Robert March  reports that Japanese negotiators tend to prepare for negotiations in a way that differs greatly from how Americans prepare:
They [Japanese negotiators] developed defensive arguments with no consideration of persuading or selling or converting the other side. Nor did they consider what the other side might be thinking or offering, nor of anticipated strategies, nor of any concession strategies.
A strong consensus was reached based on the arguments supporting their position after the leader had reviewed these and everyone had noted them down. There was strong group cohesion.
However, from the American perspective, persuasion is the heart of a negotiation. Once it is determined what each side wants, then “the fun” begins

— trying to change the other side’s mind and bring them closer to one’s own side’s proposal. Many persuasive tactics can be applied, and often are, to change clients’ minds. Researchers at the Kellogg School of Business Administration at Northwestern University have come up with a list of such persuasive tactics (Table 16.2). We have observed Americans using all such persuasive tactics.
Table 16.3 is a list of persuasive tactics considered appropriate in Japan. One of the primary differences between American and Japanese bargaining styles has to do with the importance of the role or power position of the bargainer.
Relationships in Japan, whether personal or business, are vertical in nature. A simple analogy demonstrates this: bargaining in Japan is like an interaction between father and son, while in America it is like that of two brothers. The point is, the repertoire of persuasive tactics available to bargainers in Japan is prescribed by status/power relations. Buyers, playing the role of “father”, can say things to sellers that sellers would not even consider saying to buyers. Alternatively, buyers and sellers in the United States are on much more of an equal footing (although still not completely equal).
Another important factor in Japan is where specific tactics are used. That is, at the negotiation table, bargainers are limited to the use of questions, self- disclosures, and other positive tactics that influence behaviors. Aggressive influence tactics, which can be used only by negotiators in high power/status positions, should be communicated through the low-level, informal commu- nication channel. Even there, threats, commands, etc., are subtle and indirect. This makes establishing an informal channel of communication doubly important to the American side, because it not only can provide a “reading” of Japanese clients but will allow them to employ persuasive tactics that would be completely inappropriate (from the Japanese perspective) at the formal talks.
To sum up, if an impasse is reached with Japanese clients, rather than trying to persuade them in the usual American manner, it is appropriate to use the following nine persuasive tactics, in order and in the specified circumstances:

Ask more questions. The single most important consideration is the use of questions as a persuasive tactic. This is true not only in Japan but anywhere in the world, including the United States. Chester Karrass  in his book, The Negotiation Game, suggests that sometimes it is “smart to be a little bit dumb” in business negotiations. Ask the same questions more than once; for example, “I didn’t completely understand what you meant — can you please explain that again?” If clients or potential business partners have good answers, then perhaps it is best to compromise on the issue. Often, however, under close and repeated scrutiny their answers are not


Table 16.2: Bargaining tactics, definitions, and examples (Anglemar & Stern 1978).

POSITIVE INFLUENCE TACTICS
Promise. A statement in which the source indicates his intention to provide the target with a reinforcing consequence which source anticipates target will evaluate as pleasant, positive, or rewarding. “If you can deliver the equipment by 1 June, we will make another order right away.”
Recommendation. A statement in which the source predicts that a pleasant environmental consequence will occur to the target. Its occurrence is not under the source’s control. “If you keep the company name after the acquisition, then your present customers will stay with the company.” Reward. A statement by the source that is thought to create pleasant consequences for the target. “This negotiation is progressing smoothly because you have prepared well.”
Positive normative appeal. A statement in which the source indicates that the target’s past, present, or future behavior was or will be in conformity with social norms. “Lowering your price in light of the new information will demonstrate your interest in good principles of business.”
AGGRESSIVE INFLUENCE TACTICS
Threat. Same as promise, except that the reinforcing consequences are thought to be noxious, unpleasant, or punishing. “If you insist on those terms we will have to find another suitor for our company.”
Warning. Same as recommendation, except that the consequences are thought to be noxious. unpleasant, or punishing. “If we can’t get together at this stage, few other companies will be interested in your proposal.”
Punishment. Same as reward, except that the consequences are thought to be unpleasant. “You can’t possibly mean that. Only a fool would ask for such a high price.”
Negative normative appeal. Same as positive normative appeal, except that the target’s behavior is in violation of social norms. “No one else we deal with requires that kind of guarantee.”
Command. A statement in which the source suggests that the target performs a certain behavior. “It’s your turn to make a counter offer.”
INFORMATION EXCHANGE TACTICS
Commitment. A statement by the source to the effect that its future bids will not go below or above a certain level. “We will deliver the equipment within three months, and at the price we originally quoted.”


Table 16.2: Continued.

Self-Disclosure. A statement in which the source reveals information about itself. “My company now requires an ROI of at least 15% during the first year.”
Question. A statement in which the source asks the target to reveal information about itself. “Why are you asking for such a high royalty pay- ment?”


very good. When their weak position has been exposed, they will be obligated to concede. Questions can elicit key information, being powerful yet passive persuasive devices. Indeed, the use of questions is a favored Japanese tactic which they will use against you.
Re-explain your company’s situation, needs, and preferences.
Use other positive influence tactics.
If still dissatisfied with the Japanese response, try silence. Let them think about your proposal and give them an opportunity to change their position. Be aware, however, that the Japanese are the world’s experts at the use of silence and that your Japanese clients are likely to use it frequently.
If tactics 1 through 4 produce no concessions, change the subject or call a recess and put the informal communication channel to work. At this level, it would be appropriate, rather than going directly to more aggressive tactics, to try tactics 1 through 4 again. Continuing to ask questions and offer explanations may cause new information to surface that could not be broached at the negotiation table.


Table 16.3: Persuasive tactics appropriate for negotiations with Japanese.

At the Negotiation Table	Informal Channels and Buyers Only

Questions	1. Aggressive influence tactics
Self-disclosures
Positive influence tactics
Silence
Change subject
Recess and delays
Concessions and commitments

Only in special circumstances and with an awareness of the great risk involved should aggressive tactics be used with Japanese. They should be used only when the American company is clearly in the stronger position (e.g. monopoly power, larger size, the Japanese company has come courting), and they must be carried out only via the informal channel in the most indirect manner possible. Rather than an American saying, “If your company can’t lower its price, then we’ll go to another supplier”, it would be better if he said, “Lower prices on the part of your company would go a long way toward our not having to consider other options available to us”.
Even then, the use of aggressive persuasion tactics probably will damage wa, which in the long run may be to the American company’s disadvantage. If power relations ever shift, the Japanese will be quick to exploit the change of events. If the American side exercises restraint and maintains the wa, then the Japanese, if and when power relations shift, will consider the American company’s interests.
This latter point is difficult for most Americans to believe. “Why should they consider our interests?” We have, however, witnessed Japanese executives behave in this way several times. For example, some years ago, International Multi-Food Company (IMFC) sold franchise rights for the Mr Donut chain to Duskin Ltd. in Japan. Initially, IMFC provided the know- how (operations and marketing) for a successful venture in Japan. Indeed, ten years later the franchise revenues from Duskin exceeded the total profits IMFC made from its U.S. operations. When, IMFC executives met with Duskin to re-negotiate the franchise agreement, they anticipated changes in the agreement (reduced royalties, etc.) to reflect the change in power relations. Certainly, an American franchisee would have demanded such an adjustment. However, because IMFC initially had been careful to maintain wa with the Japanese clients, the president of Duskin simply offered to renew the agreement. Needless to say, the IMFC executives were pleasantly surprised.
If tactics 1 through 6 have not produced concessions by the Japanese, we suggest that they employ the use of time. This tactic requires the cooperation and understanding of the American home office.
Give the Japanese time to consider new information and time to reach a consensus. They almost never make concessions immediately following persuasive appeals, because the entire group must consult and agree. This takes time. Unfortunately, American bargainers seem to find the use of the time tactic most difficult. “Letting things hang” goes against their nature, but it may be necessary, in the hope that the Japanese will run into their

time limits before you run into yours. Consensus decision making and their long-term approach to business deals seem to enhance the effectiveness of tactical delays for Japanese bargaining with Americans.
The next persuasive tactic that can be used with Japanese clients is asking the shokai-sha to arbitrate differences by calling the Japanese clients and serving as a go-between. Though shokai-sha often successfully settles otherwise irreconcilable differences, serious consideration should be given to making concessions before calling in shokai-sha, because third-party arbitration ordinarily will work only once.
As a last resort, bring together top executives of the two companies to see if that will stimulate more cooperation using a top-down approach. Such a tactic is, however, fraught with danger, particularly if negative influence tactics have been used in the past. A refusal at this stage means the business is finished.
To conclude our discussion of persuasive tactics, we want to emphasize the importance of our recommendations. A mistake at this stage, even a minor one, can have serious consequences for Japanese/American cooperation. American managers will have to be doubly conscientious to avoid blunders here because the Japanese style of persuasion is so different and, apparently, cumbersome.
Remember that the Japanese are looking to establish a long-term business relationship of mutual benefit. Threats and the like do not fit into their understanding of how such a relationship should work. They are not in a hurry, because they are concerned about wa and cooperation in the long run. We recommend, moreover, that you adopt a Japanese approach to persuasion when bargaining with Japanese clients and business partners. Such an approach may take longer, but, in the end both companies will benefit by using it. Finally, smart American negotiators will anticipate the Japanese use of the nine persuasive tactics described in this section of the chapter.

Concessions and Agreement
The final stage of business negotiations involves concession making, building toward agreement. Negotiation requires compromise. Usually, both sides give up something to get even more.
However, the approaches used for compromise differ on the two sides of the Pacific. Americans and other Western business executives tend to take a sequential approach to solving complex problems. That is, “ Let’s discuss and settle quantity, then price, then delivery, then after-sale service”, and so on. Alternatively, the Asian approach is more holistic — looking at all issues

simultaneously and not agreeing on any single issue until the end. Americans often are very upset by such differences in style of concession making.
American managers report great difficulty in measuring progress. “After all, in America you’re half done when half the issues are settled”. In Japan, nothing seems to get settled. Then — surprise — the negotiation is done. Frequently, impatient Americans make unnecessary concessions right before agreements are announced by the Japanese.
These difficulties reflect more differences than just in decision-making styles (sequential vs. holistic). The differences go deeper than that. In the American view, a business negotiation is a problem-solving activity, the solution being a deal that suits both parties. From the Japanese standpoint, a business negotiation is a time to develop a business relationship with the goal of long- term mutual benefit. For the Japanese the economic issues are the context, not the content, of the talks. Settling any one issue is not really so important. Such details will take care of themselves once a viable, harmonious business relationship is established. Once the relationship has been established, signaled by the first “agreement”, then the other “details” are settled quickly.
American bargainers in Japan should expect this holistic approach and should be prepared to discuss all issues simultaneously and in what may appear to be a haphazard order. Progress in the talks should not be measured by how many issues have been settled. Rather, Americans must try to gauge the quality of the business relationship by watching for the following important signals of progress:
higher-level Japanese executives being included in the discussions;
their questions beginning to focus on specific areas of the deal;
a softening of their attitudes and positions on some of the issues, such as, “Let us take some time to study this issue”;
at the negotiation table increased talk among themselves in Japanese, which may often mean they’re trying to decide something; and
increased bargaining and use of the lower-level, informal channels of communication.
A crucial part of preparing for negotiations is deciding upon and writing down planned concession strategies. Americans need to follow such strategies with care, because “trading” concessions will not work with Japanese bargainers who will settle nothing until everything can be settled. After all issues and interests have been exposed and discussed fully, to help establish the relationship, make concessions on minor issues first.
Besides following a plan in making concessions, American negotiators in Japan should take care that concessions are made following recesses in the

talks, not at the negotiation table the first time the topic is broached. It is better to reconsider each concession away from the social pressures of the formal negotiations. Again, this is a Japanese practice. Because of the nature of their consensus decision-making process, you will find that the Japanese frequently “have to check with the home office”. This is a negotiation practice which Americans would do well to emulate, particularly in Japan. Having limited authority can be an important check on “run-away” concession making.
In conclusion, American managers will spend more time putting deals together with Japanese clients or partners than with other Americans. If the negotiation processes are handled adroitly, the U.S. negotiators can look forward to long, mutually beneficial business relationships with Japanese partner