All About Doing Successful Business In Japan

Hello student. Welcome to this new course on learning to successfully do business with Japan. In the next video, Dr. Vijesh Jain will share his opening comments about this course. You are welcome to introduce yourself in the Q and A section of this course to the other students of this course. Wishing you great learning from this course.

You can download the complete course plan of this course given in the pdf file in the resources section of this lecture.

Hello, Friends, welcome to this very special course of VJ Exports Mastery series of courses, which relates to doing business in and with Japan. Friends, if you're looking to work with Japan, if you want to understand how to do business in Japan, how to operate in Japan and how to deal with Japan. And even if you do not have any immediate plans to do business in Japan, you want to anyway, understand the Japan market. Or you want to work for a company which deals with Japan, and you want to acquire qualification, which indicates that you have comprehensive, complete knowledge about Japan. Friend, this course is a comprehensive guide which will tell you all about Japan market, about the business, about the procedures, about the government approach and how Japan is different from other countries.

And what are the rules and regulations and even what is the basic facts about Japan, the culture, the people, the food and Day-To-Day life and how to settle down in Japan, how much it costs to settle down in Japan? Everything. Everything, I will tell you about Japan, in this course, because it's my conviction that if you want to do business with Japan or in Japan, you need to know a lot about that particular country, about that market, about the people and all the merits and demerits, advantages and disadvantages, all the challenges and opportunities and strengths and weaknesses you need to know about that particular country. So my goal in this course is to tell all these things which will make you very, very confident about Japan, Japan market.

What are the latest developments in Japan, the latest government policies, and whether it is a good idea to set up business in Japan or to trade with Japan? So before you plunge, you need to know everything about Japan and this course is going to do that. So I'm Dr. Vijesh Jain I am an international business professional, and I have spent more than 30 years of my work in international business trading with many, many countries, especially dealing with Japan people, dealing with the Japan businesses, exports, as well as doing business within Japan. I have been part of a certain start ups in Japan. So I have visited this country many, many times. And Friend. I also have a complete series on Japan, on the travel in Japan, separately on my YouTube channel. So Friend, I am basically an expert in this country. So in this course I will be able to give you a very comprehensive and hard to find knowledge about the country, about its people, about the things which you normally do not get in these kind of courses. So I will give you unknown facts, unknown tips and techniques of dealing with Japanese people.

And the formula for a winning streak in Japan. So Friend, the very first question which comes to the mind when doing this kind of course and before plunging into this kind of course, is why Japan? So Friend, the reason of trying to understand Japan and thinking of doing business with Japan is that this is one country which is largely unexplored. It is the only industrialized, highly industrialized country in the world, which is having just three to four percent of the total economy run by the foreign investments. So there is a very deep lack of the foreign investment in the country. Which is because of many, many reasons, some are the reasons of the government approach, but many of the reasons, are the failure of the overseas investors, with regard to understanding this country and the common mistakes which they generally make. And when they do, they fail and then they abandon this country.

So it is an opportunity and it is a challenge also, because if the foreign investment is low, government of Japan wants the investments coming from overseas investors. So there is a great scope of the possibility of successfully doing business with this country.

So for other reasons of dealing with Japan or working with Japan is that it is the third largest economy of the world. So Friend, in the nominal GDP terms, it is the third largest economy after US and China, and it is trying to reform itself to come in the second or first slot. There are constant efforts in that direction. So the country want to open up. It want to invite the foreign investors, without which, it cannot move in the hierarchy up. Japan is a mature democracy with the Western type of capitalism and Friend, this capitalism maybe little unique. It may not be exactly the type of capitalism which is known to the western world. It is a little different with the existence of the 'Keiretsu' or the long working hours, for the people, working in the industries.

So there are certain peculiarities of the type of capitalism which Japan is. But definitely it is capitalism, very dynamic capitalism, and which is part of a mature democracy. Thirdly, Friend, Japan is a non aggressive military power and its behavior is non aggressive. After World War II, the country did lose its right to declare war on any country. So its military behavior is very friendly, very positive, and it is just protective in nature. Then Friend, Japan, of course, has a very mature and rich customer base, which is highly sophisticated but highly demanding. The Japanese customers are looking for very high quality products, very high tech products. So they are rich but very mature, very sophisticated. But it also puts a lot of opportunities for the companies which are doing very good and which manufactures high quality products and unique products. So there is very, very strong market in Japan for such products. Then Friend, the experience is that, in Japan, the setting up of the business is a little difficult.

But once it is set up, the scalability & expansion of the business is having a lot of potential. So Friend, you can expand the business, once it is set up, once it is a success. So once the success has been tasted by a foreign investor in Japan, the expansion of the business throughout Japan or the major cities or the scaling up of the business is much more easier. Then we all know that Japan boast of the best physical and social infrastructure in the world, and especially the transportation infrastructure, the telecommunication infrastructure and the road network, the railway network and the energy distribution, sanitation, water distribution. They have incredibly sophisticated and very expensive physical and social infrastructure, which is an envy for the world. So, Friend, these are some of the highlights of Japan. Why the country remains an area of interest and an areas of investigation and the area of exploration. Now, Friend, one of the reason of the renewed interest of the foreign investors, business people and the exporters from around the world, has been some of the recent developments, which has happened in Japan. The Japanese government have lately realized, that to go further, to mitigate the different challenges, which the country is facing internally, with regard to the society, with regard to the businesses and the economy.

There is no other alternative to inviting the foreign investors and the entrepreneurs and the traders. So since a few years, that is starting from 2018 19, several new reforms have been announced by the Japanese government to attract the foreign entrepreneurs and especially the overseas workforce, because their own population is aging, their labor force is dwindling. So new laws have been introduced in 2019 to protect the rights of the overseas workforce. It's a very major development and several new types of business visas and the other facilities have been introduced, in order to attract the foreign investors and foreign entrepreneurs. And recently, a new push to the additional infrastructure projects have been made by the government, especially due to the Olympics 2021, which are being held in the country. So Friend, Japan will be one of the best destination today.

And with the new developments, which are happening in Japan, at the government level and also at the business level, it has become a very attractive destination. So Friend, this course will go deeper into every aspect of the country and will make you very confident about understanding the country, understanding the people, the culture, the business and the methods of trading. What all can be sold in Japan, how the Japanese market can be exploited by the overseas investors and traders. So all these things I will be covering in this course,

In the next few videos, Dr. Jain shares his experience and researched facts about the unique market, which Japan is. Also shared are the opportunities and challenges of operating in Japan. At the end of this section the first interpretation documentary, especially prepared for this course is provided for a better familiarization of Japan as an important country and with its lifestyle.

So, friend, before we go further in the course, let us discuss some of the main highlights of the country. Especially with respect to the opportunities and challenges which are there in the Japanese market. The reason of sharing this at the very start of the course, is to take off the course, in a very logical manner, so that you understand that what are the opportunities, what are the challenges and what are the common mistakes which the foreign investors make, because of which Japan is famous for high level of failures by the overseas investors and entities. So these few highlights, which I'm going to share just now, will give a very good start to the course, and it will give the right direction of taking this course further and bringing the right topics, right knowledge, on the table so that you can get the maximum value out of this course. So Friend, first let us discuss that what are the different opportunities, which exist in Japanese market because of which it still remains a place to explore, to investigate, to explore and to evaluate and find the ways and means of benefiting from the existence of several opportunities, which are there in this country.

So, for instance, Japan market is a sophisticated market. It is a very well-known fact that it's a very unique, very different consumer market, where the consumers demand very high quality consumer goods. So Friend, this is very typical of the highly industrialized and sophisticated countries like Japan. The consumers are looking for high quality goods, so they are willing to give the price and they have the money to pay. They have the purchasing power, which is really very good. But they demand the products which are very, very good quality, very durable, long lasting products. And in Japan, there is a demand for the hi-tech scientific technologies and technological products, engineering products. The reason for that is that with that kind of products which are available from all over the world, they can themselves maintain the superiority of the manufactured products which are manufactured in Japan. So I will tell you more about it. I will tell you about the Japanese industry. What are the areas where Japanese are doing great in the world? For example, the 30 percent of the industrialized goods in the world, are manufactured in Japan.

Japan is the world leader in electronics and in automobiles, even auto parts. So these things, I will talk to you more in detail, later in this course. But the demand for the high technology, engineering and robotic products is very, very high for the B2B sales and even for the B2C. Then Friend, Japan is committed to use the next level of clean energy, because of the nuclear plant disasters, which has happened in the country in the past. The Japanese government has absolutely gone away from the nuclear energy and they are looking for new ways of meeting the energy demands, newer and cleaner ways of meeting the energy demands. And there is a very high demand of the energy professionals, the energy companies and the innovators in the area of clean energy production. So people with that kind of knowledge, the companies with that kind of knowledge, companies which can provide such kind of products for the clean energy technologies, companies as well as the products manufacturers. So there is a high level of demand for such products and such technologies.

Then, there is a very high demand in Japan for the latest pharmaceutical and health care products for the Japan's increasingly aging population, the population is aging. It is estimated that almost 20 percent of the Japan population is over 60 years of age, and the life expectancy in Japan is the highest in the world, which is 85 years. So what has happened is that due to lower birthrates and the resistance to marry among the young people in Japan, what is happening that their population is declining and it is estimated that the Japanese population will decline to almost 100 million only, by 2050, from the current one 135 million people in Japan. So these realities, these trends have forced the country to look for the HIGH-QUALITY pharmaceutical and healthcare products for its aging population. And there is a very big demand for highly talented companies overseas, which can supply these health care products and pharmaceutical products. Or even if they want to set up business in Japan, they want to set up their own distribution channels. They want to set up their health care production units in Japan.

They would be definitely welcome in Japan. Now friends. of late, the Japanese government has become very, very open for the foreign workers. And the new legislation has been passed to protect the rights of the foreign workers in Japan, because of the dwindling population and the number of workforce, the labor in Japan. They are inviting foreign workers in Japan and these foreign workers are forming a great part of the Japanese society, and are looking for the new food habits, who are looking for their own national food and drink products, and also the Japanese population, diversifying into new tastes for the food and drinks.

There is a very high demand at present for the newer types of food and drinks, products for this new trend, in the new food habits and for new overseas immigrants. So this is a new type of opportunity which is emerging in recent years in Japan and the companies which are into the food processing and in the food processing and beverages, they can really look for very good demand for their products and they can do big business with Japan in these areas, either within Japan or to sell the goods directly to Japan importers. And finally, Friend, there is a very big market in Japan for the gaming and music products from all over the world. So I will go a little deeper into this aspect later in this course. I will tell you a little bit about a little bit deeper into the Japanese society, the societal behaviors because of which the gaming industry has become the largest gaming industry in the world and there is a good demand for music products because of certain peculiar features of the culture, the behavior of the people.

And this aspect I will definitely discuss later in this course. And at this stage, you just take it from me like this, that there do exist a big market for the computer games, the new types of music from all over the world, and people are willing to pay for such things. And this aspect may look peculiar, but I will tell you deeper about this aspect in detail, and it will also help you to actually understand the Japan society and the people of Japan and the types of challenges internally which they are facing. So Friend, these forms some of the very important facts and opportunities in Japan.

So now we have discussed the different opportunities and the merits of the Japanese market, let us now discuss about the dark side of the market, the challenges which are there, which exist actually for all the markets in the world. But, yes, of course, the experience of the foreign investors is that Japan is a difficult market and the challenges are enormous. So later in this course, when I'll be discussing more deeper into the aspects of society, the Japanese society and the way Japanese government work. It will be more clear to you that what are the reasons of such challenges and how these challenges can be overcome. So, for instance, one of the biggest challenge of the Japanese market is that the customers in Japan are highly demanding in nature.

They look for very high quality products and the post services delivery require meticulous planning in Japan and the dealing with the customers can be really very expensive in Japan. One of the major reasons and challenge which results into this peculiar nature of the Japanese customers who are very highly demanding, is that they have very distinct and different types of tastes and needs, when you compare with the other rich countries, other industrialized nations, the culture of Japan is very, very different. The identity of the people is sort of isolated from the world. One of the reasons for which is their lack of knowledge of English. Only three to four percent of the Japanese people know and speak English. So they are largely isolated from what is happenings in the world of the English language, because the English language provides the best knowledge to the people of the world and what is happening in the world. So it is generally experienced and debated point that the reasons of their distinct tastes and distinct needs and very preserved type of culture is also because of the lack of the knowledge of the English speaking skills.

And then Friend, the requirements of the foreign investors who want to work within Japan, is very big in nature. What is the meaning of this? That you win big or you lose big, which means the scale which is required to operate in Japan is comparatively much larger, much bigger. So the resources differences which are required in Japan for settling down or to set up business are really high, big. So the stakes are high. So if you succeed, you make big profits, but if you fail, you make big losses. So these are some of the major barriers of entry of the foreign investors in Japan. But if understood well, it is not difficult to overcome such aspects.

Then Friend, another very important and very strong barrier for entry of the foreign investors into Japanese market is the existence of a very strong base of local companies which compete with each other very aggressively. And dealing with them for the foreign companies becomes difficult without proper preparation and knowledge of the market. So things like Keiretsu, which had become very popular in recent decades, but now in the declining phase, which means that the network of the local businesses which have the financial stakes in each of those companies, they buy back shares with each other and they form a kind of network of the cross investment in these companies and they try to do business within the group, which are called Kairetsu. So this practice had been very very common in Japan, which actually helps absorb the merger and acquisition within the Japanese market for the local companies and to absorb the share prices, fluctuations or the financial market fluctuations, by having the cross investments with each other. So that practice had been very, very common.

It is still there and the banks are also involved with such kind of kairetsu. But at present, their impact has reduced drastically. And the foreign investment entry into Japan requires that such kind of Kairetsu are having much less of an impact in the market. And the government is trying to reduce the impact of such kind of networks. Then Friend, another major challenge of Japanese market is that the winners of the past, investors in Japan, indicate that the usual knowledge of the management and management theory and the thinking and the methods which are taught in the top B Schools, like Harvard Business School or the Stanford or the Cambridge. So these kind of management knowledge actually does not fit in to the requirements of the Japanese market. So the Japanese market management requires an absolutely local type of new thinking, which has to be developed for the people who want to operate in Japan.

They have to be prepared for that. And one of the things which this course will do will give you the basic ideas about the management techniques and methods which will work in Japan and what are the differences of those methods and techniques which are different from the usual Western management thinking and methods which we know. So in this course, Friends, I will tell you a little more detail about these differences, which will give you an idea that what kind of new thinking is required to succeed in managing the people in Japan. So Friend, one of the major reasons of such differences and challenges which exist in Japan is that Japan was never a Western colony. So in Asian continent, only other market, which was not a western colony was Thailand.

Japan was also in that category. So they have been able to pursue their own original culture, their own original thinking, and they were stuck to those things. It is only when the Japanese industry and financial bubble bust in 1980s that they understood that they need to change, they need to learn from the world, and they need to assimilate themselves with the world. And then finally, Friend, the globalization and Internet, which was unexpected for the Japanese society and the government of Japan, when it came and got imposed on the people of Japan, they had to open up their economy. They had to change with the world. So these three factors that in the 1980s financial bubble and the globalization and the Internet and the very fact that Japan is a democracy, it's a capitalistic society, which is very much part of the world globalization, and they want to remain that way.

The impact of their own identity because of the fact that they were never a Western colony and they are different from many other Asian nations. So Friend, all these things has made a major difference. And it is a mix of the opportunities and challenges in Japan because of these reasons. Now Friend, the major challenge which is experienced by the foreign companies which want to operate in Japan, they find that making a market entry in Japan is very, very difficult. There are many, many factors for that, which I'll be going into more detail later in this course, but the two major factors which has been experienced by the past cases of the foreign companies which operated in Japan, in the areas of telecommunications, in the area of consumer electronics, in the areas of education and many other areas, there are so many case studies available of the successes and the failures of the past market entry of the foreign companies in Japan, 2 major factors have been highlighted in this difficulty of market entry into Japan, one being the highly bureaucratic system of the different types of permission which are given by the Japanese government to the foreign companies who want to operate in Japan. So while the system had been very complex and very time consuming in the past several years, but New legislation, a new approach of the Japanese government has made things much better.

Now the bureaucratic systems are changing in Japan, permissions are taking much lesser time now and things are looking better now. But still, the bureaucracy remains the time taken by the different authorities in Japan for giving different types of permissions. And the existence of many, many procedures to set up companies in Japan still remains on paper, at least. So this becomes one of the difficult markets. But at the same time, let me tell you that Japan has moved many places in the 'ease of doing' index in recent years, and it is now in the top 10 countries of the world of 'ease of doing' business. So this is a major moment for the country, towards the ease of doing business. So definitely things have become better now. But the second factor, which still remains, is the cultural differences. And because of these cultural differences comes the differences in the management style, differences in the management of the people, differences of the consumers, the stakeholders of the businesses which would like to operate in Japan and originating from overseas. So these cultural differences, different tastes, different habits still remain a major challenge for the market entry of the overseas companies, which require some pondering, some support and knowledge.

Then friends. there are a few minor challenges which are there in the Japanese market, which include the high cost of settling down, especially in larger cities like Tokyo, where the real estate is still very costly and the settling on cost are really, really high. And then working environment in Japan, again, is quite different from the other region. In industrialized countries where the 40 hour week is there, in many of the industries countries, while on paper in Japan also it is 40 hour work week. But in most of the cases, the companies demand more than 80 hours extra work per month from the from the employees. And in many cases, they don't even pay the overtime compensation. So it's a quite different type of capitalism, which is practiced in Japan, very much different from the other industrialized and rich nations in Western Europe and American continent.

But yes, it can be taken care of if understood well. And then finally Friend, the lack of knowledge of English. As I told you that very few Japanese people know English and speak English. And of course, a very limited type of food options available for the foreigners in Japan, also makes it a little difficult to work in Japan. But with proper preparation and basic knowledge and the type of knowledge which I'm going to give you in this course, these many of the challenges can be taken care of.

Hello, Friends, welcome to this documentary on the places and cities in Japan. Friends, this documentary series is part of the course on how to do business with Japan, the course which is live on UDEMY platform. So this is the first documentary of the course, which is about approximately 10 to 15 minutes long. So you will find many such documentaries in this course which will look at the different aspects of Japanese culture, Japanese places, Japanese business and the Day-To-Day life of Japanese people. So the purpose of these documentaries is to give you an overview of the several aspects of the country, which is Japan. And and these documentaries will help you understand the different dimensions of Japan. So Friends, this first documentary, I'm going to give you a sketch of the geography of Japan, and I will take you to these different cities on Virtual Bike. So I'll be using virtual tour bike to move from one city to another city and I will tell you about the cities. I will go quickly because I want to cover some of these cities in this documentary to give you a glimpse of these cities and their incredible infrastructure and the places of interest and the people and the famous places in these cities.

And also, I will talk to you about what these cities are famous for. So Friends, first I will explain the geography of Japan. Japan is a country of islands which has got almost close to seven thousand islands in this country. And the main islands are four islands, which are called Hokkaido, Honshu, Shikoku and Kyushu. And then there are several small islands on the periphery of Japan. And one very famous area of Japan is at the south most tip of Japan, which is a collection of almost one hundred and fifty islands. And the city, which is very, very famous in these islands, is called Okinawa. So Japan has some major cities like Tokyo, which is the largest city of Japan, and it is the world's biggest metropolitan area with 35 million population.

Then these cities like Osaka, Nagoya, Kyoto, Hiroshima, Fukuoka, Sapporo, these are all major cities of Japan. So friends in this documentary, I will take you on a virtual bike journey to these cities and I will give you an overview of these cities. I will show you some interesting places which are very, very famous in these cities and towns. So my plan is that we will start our journey with Tokyo, which will be our first stop. And from Tokyo, we will go to Osaka, which is a big city, then from Osaka will go to Hiroshima. So as I have just mentioned to you, that Japan is made up of the 47 prefectures which resembles the states in many other countries, like we have states in India, almost twenty eight states in India. And the US has many states. Similarly, Japan has 47 prefectures, which are the first administrative layer of the first layer of the administration, which is done by Japan. Then there are some sub prefectures also, but will not go to that extent. I will just show you that the famous prefectures are like Tokyo Prefecture, Toyama, then Osaka Prefecture, then Okinawa, which is the southernmost tip of Japan and of course, a very big prefecture, which is Hokkaido and many others. So Friends, we will not go to the prefecture level, but in this documentary, I will take you to some major cities of Japan. Let us go to, let us start our journey with Tokyo. Friends before we start our journey from Tokyo.

I just want to show you that I just want to show you that Japan is made up of almost three fourths of its area, which are mountainous, which you can see in these green areas. So these mountainous areas have very less population of Japan and most of the population are squeezed in the cities, which are mostly in the coastal areas or the non mountainous areas of Japan or on the islands in the sea. So Friends, the Japan geography is very, very unique, major portion of which is mountainous. Many places you find snow for almost the entire 12 months. You get snow in some places. And there is a lot of natural sites which are there in Japan. And because of the squeezing of the population on the coastal areas, some of the cities are really very dense. For example, Tokyo is one of the most dense place of the world. So let us start our journey with Tokyo. So Friends, we start our journey with the most iconic place of Tokyo, which is called Tokyo Tower, as you can see here. So we are starting our journey with Tokyo. And the most iconic place in Tokyo is the Tokyo Tower, which is there in the middle of the city. Very famous spot, tourist place. You can go on the top of the tower. So from Tokyo Tower, you can see, the whole city, which is a very, very big city. So friends with more than 35 million population, Tokyo has the busiest railway station.

In Shinjuku station, so we'll go there, but look at the whole city from the top of the tower. So we are going to Shibuya, which has the world's most busy pedestrian crossing, I will show you. It is very, very famous. And after that, we will go to Shinjuku, which is the busiest railway station in the world. So that is our plan for Tokyo today. So let's first go to Shibuya. So we are in the city of Tokyo and Friends, this particular square is very famous for being the world's busiest pedestrian crossing and the name of this particular crossing is Shibuya Scramble Square, which is based on the name of this particular building, which is the Shibuya Commercial Square building. So this crossing is this Shibyua Scramble Crossing, the world's busiest pedestrian crossing. So now we're at the Shinjuku railway station, which is supposed to be the world's busiest railway station, so this is the main crossing, pedestrian crossing through which you can reach the station. So we'll go to the station. You can see it's a very busy station. So this is the main entry of the station building. We'll go there and from there we can catch trains also.

But since it is our bike tour so, we don't need to get into any train. We don't need to catch anything. I just wanted to show you the station, because it is supposed to be the world's busiest railway station. So there are a lot of shopping areas around this station in the station premises. Also, there are various shopping malls. So we are just outside the Shinjuku Station and there are so many shopping areas and within which you have the entry to go to the platforms and the area around the station, as you can see here, just in front there is this Lumine 2 shopping mall. So this is Shinjuku Railway Station, which joins five lines and connects to every place in Japan from Tokyo. So this is a very busy station, but because of the corona virus scare, you hardly see people at this time. OK, Friends, now we are very near to the other iconic place of Japan, it is called the Tokyo Sky Tree.

This is the second most famous tower in Tokyo. And I will just show you around the area. So Friends, settling down in Tokyo is very, very expensive, a 2 bhk apartment can cost almost 8,00,000 yen per month rent and the initial deposit may run into more than 15,00,000 yen. So settling down in Tokyo as an expat is very, very expensive when it comes to the stay. But rest of the things are usual, the travelling cost and the utilities cost and the food cost. You will find they are very competitive like in any other city in Japan. But otherwise, Tokyo is a very difficult city, very expensive city. Taxi charges are very, very high in Tokyo. The most famous food place for cheap food, food on the go is 7-Eleven, which has the maximum number of outlets in all of Japan. So you can actually get some very good items in the 7-Eleven. In another documentary, later, I will tell you about the different types of foods and their prices in Japan.

And I will take you to some of the outlets of 7-Eleven in that documentary. So you'll get an idea that what kind of food is famous in Japan because Japan is the birthplace of the most famous dish in the world. That is Sushi. But there are many other dishes and snacks and the food on the go, in Japan, which I'll talk to you about, in that particular documentary.

Choose the one that is the best

In the next few videos, Dr. Jain has shared his researched and practiced ideas to understand the culture of Japan better. Also discussed are tips and techniques to deal with it. At the end of the section you will find the second interpretation documentary on Japan.

Hello, Friends, welcome back to the course. Friends, I can tell from my own experience with the Japan market, dealing with the people, business people in Japan, in my view, as per my understanding, the most intriguing part of the Japanese market is their unique culture. So, for instance, there are many theories why Japanese culture is unique. I will talk about it. But before I talk about the reasons of the unique culture of Japan, I will first describe to you the uniqueness of the Japanese culture. So Friends, you will soon find in this course, that the major factor in the main challenges, related to Japanese market, doing business with Japan, relate to the cultural uniqueness of Japan. So, for Friends, I will try to explain to you about the Japanese culture. I will describe the Japanese culture and how it is different from other cultures. So in this particular slide, I will compare the cultural dimensions which was suggested by Geert Hofstede, the renowned researcher and scientist in the cross-cultural comparison of the cultures of different countries. So Friends, as per the dimensions suggested by Geert Hofstede, I will compare the Japanese culture with the culture of US. So you will find the scores of US culture on this column and the Japan culture.

You will find the scores on different dimensions, mainly the Geert Hofstede cultural dimensions. I will explain and I will compare the scores of Japan with those of US. So if we talk about the cultural dimension, which is called uncertainty avoidance, the meaning of which is, that the higher score on the uncertainty avoidance indicate the high level of avoidance of the awkward results or uncertainty related to any action, any projects, any businesses. So the cultures with high uncertainty avoidance index score, display high level of the pre - project work research and ensuring that everything is perfect and it is as per plan. There is no deviation in the implementation of the projects or business and the focus is on avoiding the awkward results or the negative results. So you will find that on this dimension, the score of Japanese culture is 92. When we compare the same score of the American culture, US culture, the score of US culture is 46. So as against what 46 score, the score of Japanese culture in Uncertainty Avoidance Index is extremely high. It is among the highest in the world. So because of this, there is a peculiarity, uniqueness, in the Japanese culture because that kind of deviation is not very common. It is very rare. Looking at the second dimension, suggested by Geert Hofstede and which is called Power Distance Index, PDI, in short, it is called, which indicates the acceptance of the hierarchical status of every individual in the society in a particular culture. How acceptable is it to the society, the existence of powerful people and which dominate the other people in the society.

They have got the privileged status due to the existence of strong hierarchies in the society. So higher score would indicate towards the existence of very, very strong hierarchical positions and the status of the individuals in the society. So if we compare the Japanese cultural score on this dimension with that of US, you find that in US, the score is much below average on PDI, which means that the US society is not really hierarchical, while in the case of Japan, it is somewhat hierarchical. And you can see it is the borderline hierarchical society. And definitely it is better than many other Asian societies, the societies in the neighborhood like South Korea or China, which are much more hierarchical societies. The P.D.I score of these countries are much higher than Japan. So to that extent we can see that the Japanese culture is hierarchical from the Western standards, but perhaps not hierarchical from the Asian standards.

But the third dimension of Geert Hofstede, which is called the Masculinity vs. Femininity Index score. So you find that the Japanese culture is highly masculine. In fact, it is the most masculine culture in the world. And if you compare the score with the the U.S. culture, which actually should be masculine because of the high level of individualism in American culture, still the score of US is just 62, while the score of Japanese culture is 95. So what it indicates that there is a higher level of competition among the people in Japan. But this particular aspect of the competition among the individual does not exist in Japan because of the high level of pluralism, because of the existence of the collective society, because of the low score on the individualism index in the fourth dimension of Geert Hofstede, that which compared with the US, is much lower. Because in the U.S. culture, the individualism index score of Geert Hofstede, is 91. So to a greater extent, Japanese society is collective in nature and the competition still exists because of the high level of masculinity in Japan, among the groups, among the companies, among the business houses. So that competition is extremely high because of which the Japanese culture is regarded as the most masculine culture in the world. Now Friends, the fifth dimension of Geert Hofstede, which refers to LTO scores that is the long term orientation, we find again that the score of Japanese culture, when compared with the US culture, is extremely high.

In fact, the score of US culture is much lower on this dimension. So the meaning of which is that the Japanese culture is highly long term oriented and their actions and their planning and their slow decision-making, there are so many aspects of the culture which are visible and which indicate the long term planning of the Japanese companies, including the focus on the market share rather than on the quarterly or year to year profits of the companies. So there are many, many aspects which I will discuss in little more details later. But this is very important dimension of the culture, which makes the Japanese culture very unique when compared with other cultures of the world. Now, finally, the sixth dimension of Geert Hofstede framework of the cultural dimensions, the comparison of the cultures of different countries, and that is the indulgence score which indicates the extent to which, a society tend to restrain their inherent desires and impulses and try to restrict their desires and impulses to indulge in the worldly comforts and the actions which may not be socially acceptable in any of the cultures. So what we find that the score of Japanese culture on the indulgence index is lower than the average, while if you compare with the US culture where the indulgence level is much higher. So I will talk in a little more detail about this particular dimension and what it means for the Japanese culture, because I want to really spend a good amount of time on making you understand that what are the uniqueness of the Japanese culture? Because that is the most important aspect of dealing with Japan and that's a very major success or failure factor, when doing business with Japan.

Then friends, finally, if we talk about the context of the culture, we find that the Japanese culture is a high context culture, while we compare with the US culture, which is a low context culture. So what you find that in a high context culture, the society work on the inherent rules and regulations which need to be understood. They need not be communicated verbally. While in the case of low context culture, people manage these societies and Day-To-Day life with a lot of communication, verbal expressions and the verbal discourse, it is easier to understand the low context culture. It is much more difficult to understand the high context culture for the outsiders. So that actually creates a lot of challenges and barriers for the outsiders to be successful in Japan.

But with the proper understanding of the Japanese culture, it is possible to succeed in the Japanese culture, the efforts of the Japanese government in present times and the overall resolve of the Japanese society to accept the outsiders and the cultures of the world at present is making it much more easier for the outsiders to operate in Japan.

So, now, I will take up these dimensions and their impact on the main characteristics of the Japanese culture. One by one. So if we start with the uncertainty avoidance score of Japan, what we find that the Japanese culture is more bureaucratic in nature. As we already mentioned, I had discussed this thing in my earlier episodes that the Japanese culture is indeed very bureaucratic. It takes a lot of time to get permissions for setting up businesses and to set up your factories construction. It takes long periods of time to get these permissions because of the high level of bureaucracy, which actually comes from the uncertainty avoidance score of the culture.

Now, Friend, the reason of this type of Japanese cultural aspect of the high uncertainty avoidance level of the Japanese culture comes from the historic encounter of the Japanese people with the natural disasters like tsunamis, typhoons, earthquakes. So Japan traditionally has seen major natural disasters and they have found ways of dealing with such disasters, with the high level of planning, high level of S.O.P, standard operating procedures and the readiness to deal with any eventuality. So it has become the inherent part of the Japanese culture. And because of which you find that the Japanese culture is characterized by high level of uncertainty avoidance score and because of which emerges the characteristics of the Japanese society as more bureaucratic in nature. And these reasons delays the implementation of the plans and the projects and the setting up of the businesses. They expect people to do all due diligence before any new business is set up. Any construction is carried out. So it has become the most implicit and inherent part of the Japanese culture to carry out the business this way.

And the another characteristics which emerges from this type of display of high level of uncertainty avoidance by the Japanese culture, results in to the strict rules and regulations which prevails in the Japanese societies. And definitely because of these standard operating procedures and the tradition of the readiness of the people and the hierarchy of the society which has been created to deal with the eventualities, the natural disasters and the high score of uncertainty avoidance, the result is that the Japanese society is highly ritualized society.

So you find the long prevalence, the strong prevalence of the rituals and ceremonies and the way of life, which is based on certain regular frequent events. The acceptance of the common practices to carry out such events is very high in the Japanese culture. Now friends, if we talk about the second aspect of the Japanese culture, which we had discussed in the last slide, and which it refers to the high score on the P.D.I, that is the power distance index of Geert Hofstede cultural dimensions, what we find that the score of PDI of Japan is not very high. So the result of which is that it is regarded as the borderline hierarchical society. So somewhat hierarchical from the Western standards, but from the Asian standards, it may not be hierarchical because there is hardly any predence of extended families or large families. In Japan. You find the nuclear families, which is quite different from the characteristics of typical hierarchical Asian societies and the Asian neighbors like China and Korea, which are much more hierarchical societies.

Then because of the borderline P.D.I score, above average score, the existence of meritocracy is there in the Japanese society. So the idea is that if you deserve it, if you can work for it, you can show the merits, either individually or collectively, you will get the benefits, you will get rewarded in the society. So that meritocracy exists in the Japanese society, Then of course the thinking is that hard work pays. From the birth, the Japanese kids are trained in such a way that if they work hard, they are going to be rewarded for the hard work.

They will get the better status. And whatever the hierarchical status exists in the Japanese society, the hard work will provide those status, those positions to the individuals in Japanese societies. But the overall result of the more than average PDI score is that the Japanese decision making process is much slower, which is also influenced by the highest level of UAI score of Geert Hofstede, that is the high level of uncertainty avoidance, which also contribute to the slow decision making process in every aspect of the Japanese society. Ok

Now, Friend, if we talk about the Japanese cultural aspect of the individualism, the score of Japanese culture is 46, which is below average. So it is regarded more as a collective society in connection with the other scores of the Geert Hofstede's dimensions. What we find that the overall Japanese culture is collective in nature, especially in the case of business and the professions.

You will find Japanese culture as more collective in nature. On the personal level, they may not be collective and you find nuclear families, but otherwise Japanese culture is more or less collective society. And there exists a strong sense of shame among the Japanese individuals because of their relationship and the association with the collective groups and their position in the society. It makes the situation very awkward for the Japanese people if there are certain actions which are socially unacceptable and the prevalence of the strong sense of shame exists in the Japanese society.

And then Friend, because of the collective nature of the society, the loyalty to the employers is very high in the Japanese culture. For example, if we compare with the Chinese culture in China, the individuals are hopping jobs much more frequently, when we compare with the situation in Japan. So, loyalty with the employers exists in a very visible way, in the Japanese culture. And of course, the society is collective from the Western standards, but it may not be collective from the Asian standards, because if you compare with the neighbors like Korea, China and many other Asian nations, the Japanese culture is not really that much collective.

So some extent of the individualism exist in the Japanese society, which is displayed by the strong sense of shame and the individual excellence and perfection. So those things does indicate some degree of individualism which exist when compared with the other Asian nations.

And friends, if we talk about the masculinity index of Japan, it is supposed to be the highest in the world, actually, so it is the most masculine society in the world. And there exist because of this, very severe group competition. So low score on the individualism results into the groups in Japan and because of the high masculinity, in fact the highest in the world, results into the existence of severe group competition among the Japanese society. And it also is manifested in the social behavior of the Japanese people towards extreme focus and drive to excellence and perfection in every aspect of the things which they do.

If you take the example of, for example, in Japan, if you look at their gifts, their gift wrapping and art and everything, ceremonies, you will find the highest level of perfection in every aspect of the Japanese life. And that is manifested in the business also and also in the Japanese products, which are regarded as the most quality conscious manufactured products and the existence of several industries in Japan, which is based on perfection and excellence. And they are among the best in the world. So this is the reason more than one third of the industrially produced goods of high quality are produced in Japan.

And Friend, because of this highest level of masculinity, it is also manifested in the display of the strong workaholism among the Japanese people and the Japanese society. So there are various aspects of the collective impact of these cultural dimension, which I just talked to you about.

So Friend, talking about the long term orientation score, which is visibly quite high in the case of Japan and Japanese culture. The thinking among Japan's culture is that the life is a short moment in the long history of humankind. So this is the thinking which prevails in the Japanese psych, mythology and the mythological stories. And in general, it is visible in the thought process of the Japanese, typical Japanese people. And the focus is on the personal virtues, practical, good examples and life with examples. personal examples because the focus is on the long term results of the actions which should be based on the high level of personal virtues and the practical good of the society and the families and the people around the Japanese individuals.

And it is also manifested, especially in the business and science, the constant inflow and spending of the big investments in research and development for the products, for the solutions, the things like the administration of the Japanese society, the infrastructure and the transportation. You will find the constant inflow of high investment in the R&D efforts which exist in Japan, and the data can be obtained to understand that, what is this level of high investment in all these research and development. And because of the long term orientation, businesses tend to focus more on the increasing of the market share of their products, whether domestically or internationally, rather than looking at the short term profits, quarterly profits or six monthly profits or annual profits.

So this Long-Term orientation is manifested very much in the business style and the management thinking and about the type of management thinking and the management practices which work in Japan. I will take up this aspect in my later episodes, which is a very important part of understanding and becoming a highly successful person while doing business with Japan. Ok

Then finally, the Geert Hofstede's sixth dimension, which indicates the extent to which society tends to restrain themselves for indulging into the inner desires and impulses. So the result is that the Japanese culture is the culture of restraint, the tendencies are towards, of course, because of the restraint, towards cynicism and pessimism and friends, this has resulted into one major challenge for the Japanese society, which is the high rate of suicides. So when we talk of the high rate of suicides, if you go to the urban areas like Tokyo and Osaka, you will find the posters on the road, mind your sky, which would indicate that you should be careful about your sky above.

Somebody may fall because of somebody doing suicide and jumping off from the buildings, high rise building and the person may fall on you. So this is the extent of the challenge which the Japanese government is facing, that they have created a separate ministry, the Ministry of Loneliness, and one of the most talented person has been recently appointed as the cabinet minister of this particular ministry to find ways of reducing the number of suicides among the Japanese people. So not only the indulgence aspect, many other aspects which I would just discuss about the Japanese study, they contribute to this high level of suicide rate in Japan.

Now, of course, because of the lack of indulgence, there is a less focus on the finding of the leisure time for the Japanese people. And probably that is a result that you find that Japanese people, Japanese society has notoriously high workaholism. And of course, because of this lack of indulgence, there exists high social norms in a society which works on rules and regulations. And then finally, friends, as I have mentioned to you, that the Japanese culture is a high context culture wherein it is expected that nobody will actually explain to you or teach you or the spoon feed you the type of behavior, dressing type and the etiquette and actions which are socially acceptable in a society like Japan.

Those has to be understood by yourself. So you should be able to 'sense the air' when working with Japan. Your own IQ level, your own understanding of the culture will help you in aligning yourself with the context culture, which the Japanese society is.

Now friends, I will take you to a very interesting place in Japan, which is the sports area of Japan where the sumo games are played and this particular sports area is called Kokugikan. This is the world's largest sumo game hall. And I will take you to this place inside. We will visit this world's biggest hall for sumo games, sumo wrestling. So we are just outside Kokugikan, which is in the heart of Tokyo. And you can see that this is a very good office area and some residences are also there. So let's go to Kokugikan. So we just entered Kokugikan. So friends, you can see here it is the world's largest. Sumo wrestling Hall. So that was Tokyo, so Tokyo is also famous for some religious places, the places like Sensoji Temple or Meiji Shrine. So we will not be able to cover those places in this documentary. But Tokyo is very famous for these places, which I just showed you. And of course, Tokyo infrastructure is very good. The commuting is very easy in Tokyo. It has got one of the finest subway infrastructure, transportation within the city. But it is a very, very large metropolitan area. In fact, it is the world's largest metropolitan area. Hello, Friends.

Welcome back to the second documentary of this incredible course. So Friends, in this second part, we are planning to go to Osaka from Tokyo, as you can see from here. So Friends, what we are trying to do, is that we are trying to go for a bike ride from Tokyo to Osaka. And as you can see here, Tokyo is a very big metropolitan area. In fact, it is the largest metropolitan area and it will take a lot of time to come out of the metropolitan area of Tokyo. We are presently at the suburbs of Tokyo and it is taking some time to come out of Tokyo and we are heading towards Osaka. The total journey should take around six to seven hours. And as you are aware, that this is a virtual tour, Friends, the main idea of the virtual tour as a documentary in this course is to make you conversant with the Japanese people, Japanese culture, Japan as a country, cities, places and the lifestyle and Day-To-Day activities of the people.

So Friends, in this journey, you can see that we are moving on the E1 expressway, which goes from Tokyo to Osaka. So we are just entering the Kanagawa Prefecture, which is just adjacent to Tokyo. And this is a interesting place. At a certain time it was in its heydays and it was the main center of Japan. But today the main center is Tokyo. And Kanagawa Prefecture contains the most populous areas, which are also part of the Tokyo metropolitan area. So, Friends, we are just moving in the Kanagawa residential area. I just wanted to show you, I have taken this detour from the E1 Expressway. We will come back to E1 Expressway, which is going from Tokyo to Osaka. I just want to show you that the lifestyle of the people in Kanagawa Prefecture, which is just adjacent to the Tokyo Prefecture. So friends, we are back on E1 expressway and we are moving towards Osaka. I will take another detour on this E1 expressway and I will show you the Mount Fuji. And when we approach Mount Fuji on the expressway, it looks like it's a beautiful sight to see. So you can take this detour. It is not going to add too much of the distance from Tokyo to Osaka. So, now, this is the detour I was talking about. So we are on a parallel road to E1 Expressway, which is going to Osaka. And you can see on this detour, this expressway you can see in the horizons, Mount Fuji and how it looks like. So as you can see that the view of the Mount Fuji is really picturesque and the journey is beautiful from Tokyo to Osaka. So right now, I am stopping by the Kyoto city, which is very near to Osaka. It has already taken six hours and I'm looking for some food, maybe in Seven-Eleven, which is very, very popular in Japan. And you can find many, many outlets of 7-Eleven. So I'm trying to find some food, which I would like and I would like to have, but I really could not find very good vegetarian food today. So I had very small snacks, little snacks. But I have decided to stop by the food court on the E1 expressway, which is going to Osaka, have some coffee and some snacks, maybe some bread. So this is the food court. I'm stopped by on E1 Expressway on my way to Osaka.

It is already 7 hours. So now after having my coffee at the food court, I entered the Osaka city took another one hour time from Kyoto to Osaka. So we are now in Osaka, Osaka City, which is our destination. So my bike ride was very smooth and this journey had been really very exciting. I saw Mount Fuji on the way. So right now I have already booked one single room in one of the hotels in Osaka on my way to that hotel. So some very interesting sites are there on the way. So I'm very near to my hotel. So friends know that we have reached Osaka. I will give you a little bit idea about the city, Friends, the Osaka city is among the largest cities of Japan, and it's a very big urban area. The uniqueness of this urban area is that it has a lively character and charm. It is famous for its unique dialect. The people have a unique dialect and the cuisine. So the famous foods in Osaka like Takoyaki or Kitsune Udon. I will show you Kitsune Udon, which is also available in the vegetarian version, very famous. Very good food is there.

Very famous and it is the exclusive food of Osaka because this is the specialty of Osaka. Then Friends, Taiko Manju, which is a sweet which is very famous in Osaka, it is a baked sweet, filled with the Azuki bean paste and the different types of paste are used. It's like the American Pancake. I will show you that this is what is also available all over Osaka. In fact, they are a specialty shops selling this particular sweet. So we will look at the famous foods of Osaka. The places of interest in Osaka include Universal Studios, Japan. So the city hosts the Universal Studios in Japan. Then it has got the world's largest aquarium. So I will take you there also. And the cultural heritage of Osaka is visible in Osaka Castle. I will take you there also. These are very nice places, but the best place where people want to go, which is the nightlife district, very charmful it is. It is famous for its neon signs of Japan, which are really very famous, is in this district, nightlife district, which is called the Dotonbori. So in the evening we will go to the Dotonbori also. So Friends, this Osaka is divided into several wards and there are certain areas in those wards. So I will take you to my hotel hotel Toyo, Friends, which is in Nishinari ward in the small colony, which is called Taishi. So I will take you to the hotel Toyo, where I could get a single room, Japanese style room, very small room with the shared bathroom.

I could negotiate the single bedroom there for 1000 yen, for the night stay Right. So there was a very good deal at present. So I will show you around this place where my hotel was there, I will take you to the nearby places and the I will just go around near the hotel and you will see the life of the people and what they do. How are these shops, what they sell? So we will try to explore the area around the hotel. So these things I'll be doing, it will give you an idea about the Japanese people, Japanese culture. We are just outside the hotel Toyo, where I had booked for this night. So I'm not sure about the night, next night, which means the night tomorrow because I'm not sure of my plan. So I have just booked for the one night at Hotel Toyo and negotiated the price to 1000 yen. This is the outside of this hotel, hotel Toyo, and this hotel. a single bedroom. I will just show you what type of room it is. So Friends, this is the interior of the room which I got for 1000 yen in Hotel Toyo. And it has got some basic facilities.

It has got air conditioning, also smaller conditioning. It is sufficient for this small room. So it's a good deal in Osaka because I never wanted to spend big money just for one night. I never wanted to spend more than that. In fact, you can get to the dormitory accommodation in this particular area in Nishinari Ward, Taishi region. You can easily get the dormitory accommodation where you will get the night stay on the bed, which would be the four bed kind of layout in one room. And you can get it for less than 500 yen also. So this particular 1000 yen room, single room was good enough, is a good deal because you have the privacy and you can keep some of your items with you. Otherwise in Taishi region, I will show you there are a lot of private shopkeepers who provide the coin lockers. So using the coins, you can set your own code of the lockers and you can put your valuables and some of the shops even provide the storage for the baggage. So what people do?

They keep their luggage in these shops and they have the coin system also and they have the manual system also. So they spend the night in the dormitories, which cost less than 500 yen per night and that is how people do the stay in Osaka City and save money. So this was a better deal, 1000 yen with a private room, small room with a single bed, so neat and clean, the linen was clean and it has got a shared bathroom, actually. So in dormitories also you have this shared bathroom. So I will show you around in this hotel. Before that, I will just show you the map of this area. So friends, this particular hotel, hotel Toyo is in this area, which is in the Nishinari ward of Osaka, very near to the Osaka Bay, which is here. And this Osaka city, the main place in Osaka City, can be approached from this particular area very easily, because I will just show you that this place has got very good transportation system. So if you look at this area so you can see that this is Hotel Toyo area, Taishi area and you have got the Shin Imamiya Main railway station of Japan, which connects the Japan railways lines. And you have the tram line also here.

And the other line is also there. So you have the main line, which is called Nankai Line. So Nankai Line is available. The railway station, which is called Shin Imamiya is there, which is the walking distance from this hotel. So this is a very good location. So friends, all the places which we want to go in Osaka city, like DotonBori, or the Osaka Castle or the Aquarium or the Universal Studios, Japan. So all these places are nearby and one museum is also there. Osaka Museum is also there, which is also very near to this place. So that is the reason I chose this particular place and this particular hotel, which was available at less than one 1000 yen per night. So my idea is to show you Osaka City, to show the life of the people and how they really do their daily activities. And I will take you to the different places in Osaka and you will get an idea of the life of people in Osaka.

Choose the one that is best

In the next few video lectures, Dr. Jain discusses the main features of the management style in Japan and how does it defer from the management style in other countries. At the end of this section you will find the 3rd interpretation documentary, familiarizing you deeper into the day to day life in Japan and its important cities.

So friends, we have discussed quite a few things about Japan and friends, you are now clear about it, that the Japanese market is quite different. It's different from the ways of doing business in many of the countries. It is unique. Its culture is unique. Overall the Japan market is different. So I wouldn't talk about it later. All the aspects related to why Japan is different from other markets. So I will put that particular section in the documentary section and you can look at that particular episode which talks about why Japan is different from others.

Now, friends, Let us now talk about the unique features, the different features. So let us first look at the differences which Japan has. And let us not be judgmental. Let us not judge the people of Japan. Let us not judge the government of Japan or their policies. Let us first look at what is different. And once we know what is different, we will discuss why Japan is different and what to do about it. So those things we will discuss later. So let us first look at the very distinctive to Japan management features.

So if we compare Japan and US management features, the characteristics of the management system which works there, so we if we talk about the aspects like lifetime employment, which is actually quite high in Japan and it is very low in the US, so people are not working in US companies for lifetime employment and the employers in the US are not giving the lifetime employment. But it is not the case in the case of Japan, which traditionally has this system of providing lifetime employment. They take care of the employees.

The welfare is very good of the employees and the systems are created in such a way that the people work with the organization for lifetime. Although in very recent time, let me tell you, be very clear with you that these characteristics are now diluting. So the line between these differences is blurring now, but still these features you can easily see when you work with Japan. So the second aspect is about the discrimination. So in general, there is no discrimination on caste or any races. Those things are not there in Japan, but there is a discrimination on the gender. So the discrimination in favor of the males and not in the favor of the females is there. And friends, let me tell you, it is generally said by the experts that the reason why the Japanese company discriminated against the women is because they generally have this idea that women will not work for them for a lifetime. So they will leave the companies if they are married or if they move from one city to another city or for various reasons.

They have the practical reality, which they generally fear is that the women leave the organization because they don't like actually, the system does not like that. So the main reason of the discrimination, as the experts have found out, is because of the this reason and this discrimination does exist. So you can say that the level of discrimination in Japanese companies is minimal, while in the case of the US companies, it is very low. But in US, it is generally complained that there do exist racism and the discrimination against the black people so that that part is there in the US. But of course, you cannot compare the apples and oranges. There are two different thing. But in general, if we talk about the experts opinion, yes, discrimination exists in the Japanese system on a modest scale, while it is very low in the US companies. So friends, why I am talking about these differences is because most of the people are aware of the ways of doing business in the US or in some of the English speaking European countries. So a comparison on these parameters on the main management features. When we compare Japan and US, it will definitely help you to understand the Japanese market. Now friends, if we talk about the third dimension of the management features, which we are comparing with US. If we look at the recruitment procedures.

So friends in the Japanese management system, the Japanese management feature is that the recruitment procedure of the Japanese H.R. departments is very, very rigorous for the simple reason they are looking for the cream and cream only. The best companies in Japan, they look for cream. So they will do a lot of churning, interviews, several interviews to be absolutely sure that the person who is being recruited is the cream. And it also emanates from the high score of uncertainty avoidance. As you know that the Japanese score on the Japanese cultural score on high uncertainty avoidance is very very high. So they do not want any bad results or the awkward results. So they will take a lot of time to decide and work out things. And, you know, so the that particular cultural aspect does come in the recruitment process also. So what happens that the recruitment procedure becomes very rigorous.

While in the case of US, as we understand from what we know about doing business with US and the other English speaking countries, the recruitment processes and the procedures are low to medium, actually, so it's more on the need based. So if we talk about the need based recruitment, if we talk about the Japanese style of working, even if the need is there, even if it is urgent need, they will not dilute their different processes, different steps of recruitment. They will keep it rigorous. And even though the position is left empty, they will not recruit a person whom they are not satisfied at the recruitment stage itself. Now, friends if we talk of the fourth dimension of the management style of management working style of any country when we are competing, so we are talking about the level of employee training, the people who already are employed in the organizations, what is the level of training provided by the company, the investment made on the employees, by the company, and the focus and the conviction that training is required, to what extent it is required. So in the case of friends, Japanese companies, Japanese style of working, it is a continuous process why it is continuous because Japanese people think that the employees whom they are likely to expect working for lifetime are Key Success Factors. So that is how they differentiate themselves from other companies by having good employees, well-trained employees. So. it is in the nature of the Japanese companies to resort to and to invest into the continuous training of its employees, while in the case of if we talk of the US companies, we find that the training process is as and when required. So US companies are not having the continuous training.

It is just the application of mind, because one reason of that is that in the US companies, generally, the employees have the individual freedom and they can easily be expected to leave the company whenever they find a better job somewhere else. So it really makes no business sense for the for the business people at the top level in the US companies to invest heavily on the continuous training of the employees. So obviously this difference does exist. If we talk of the 5th parameter of comparing the management style of Japan with US, let us talk about the workers union. So what type of unions exist? What is the worker's protective environment or the things to protest or to complain about or go to some organization in the case of becoming a victim of certain unexpected behavior by the employer. So friends Workers Union, the job of union is to look after the welfare of the workers, especially the blue collar workers, shop floor workers. So friends in the Japanese system of management generally expected workers union are the single unions with which they have a kind of agreement, enterprise agreement. So generally the well accepted fact is that each big company in Japan has the recognition of a single workers union, generally created by the companies themselves. And they are not really the Independent Workers Union, which actually exist in the case of, for example, in the US and many other English speaking countries in Europe. So, friends, it is quite different.

It is kind of enterprise unionism. So this enterprise unionism exists in Japan, which is quite different, but it works very well. Friends you should not say that this is kind of a monopoly which is has been created by the Japanese companies to exploit the employees. That is not true, actually. Rather, the enterprise unions take the middle way, keeping the interests of the organization as well as the interests of the workers, which works very well because both are happy the thing will work for a longer time. It will be more sustainable, the relationship will be more cordial, and that is what actually is happening. But it is debatable whether this enterprise unionism is really the correct protection of the labor force. So a lot of debate takes place on this issue. There are a lot of research papers which are there on the union system in Japan, which is quite different from many other advanced countries. Now, friends, if we talk of the workers position and their status in the organization. So generally when we talk about the worker status, we generally focus on the status of the blue collar workers versus the white collar workers. So if we talk about the Japanese style of functioning, we see that the blue collar workers and the white collar workers have single status. For all practical purposes, the status is single for the simple reason that by these management style of the Japan, each white collar worker have to start with becoming the blue collar workers. So they have to spend time on shop floor.

They have to eat the same thing which other shop floor workers eat. They have to be with them until they are graduated into the white collar job. So the difference cannot exist. So the system is like that. The difference between the blue collar and the white collar workers is not there in Japanese management style. So it's a single status. And in the case of US also, to a great extent, there is hardly any discrimination between the blue collar workers and the white collar workers, but yes, their income levels are different and definitely the difference exist, although there is a lot of shortages today in the US industries for blue collar workers. So their status actually has gone up in present day. So if we talk of the seventh parameter on understanding of the Japanese management style versus US, we are talking of the decision making, how the Decision-Making take place in organizations, medium to large organizations in Japan versus how it is taken, how it is done in the US. So friends in management jargon, we would say that the decision making process in Japanese companies is bottoms up, which means generally the ideas and suggestions starts from the shop floor. And a lot of importance is given to those kind of suggestions and the ideas.

And generally the top management people are very powerful people, but they do not involve themselves in the day to day activities. They only come into picture when it is really required and at the right time if some decision making has to be done at their level. But generally, generally speaking, it is based on the bottom up approach and the things which are collected in a particular period of the ideas and sessions. In fact they really work very fast on those ideas because with the friends, with time, Japanese system has evolved and they have learned that it works very well. It improves the product features, it improves the efficiency, it improves the output. If you hear from the bottom line at the shop floor, at the supervisor level, what are the difficulties they are facing? So it actually really helps for the company to create a strategic advantage vis a vis other companies. So that is the learning which Japanese people already have, and they are very proud of it. While in the case of US companies, generally speaking, the approach is normally tops down, although there is a lot of emphasis on the individual freedom. So the people at all the levels have the opportunity to speak up or to put their complaints or even suggest and give ideas. And generally the ideas are listened to, The concerns are listened to in US companies. But finally, it is well accepted that the most powerful people at the top, their ideas and what they say, their decision making prevails.

Although the meaning of the top level in US companies is more to do with the profits and the shares and the compensation, which the top person receives and the numbers statistics he is able to generate for the companies. And generally what happens, it is the individual preference of the top person in US companies, whether he wants a top down approach and the bottoms up approach. And generally what happens, depending on the different types of industries, the type of industry and the nature of the business which the company is into in US companies, they choose between the bottoms up approach and tops down approach or something in between. So this is what we already know. I need to tell you about the management style of US companies. Most of us, most of the people who are in the English speaking countries, they know the main features of the US American management and working style.

Now friends, only a few of the other parameters we will discuss when we are talking about the differences in the management style of Japan, and if we compare those things with the US companies, the three parameters which are remaining, which will be talking about is the nature of the workers group. What kind of workers are there? The categories of the workers? I'm not talking about the blue collar or white collar. I'm talking about the permanent workers, the temporary workers or a mix of it. What actually is the method of dealing with the workers, how the labor is managed? So we are talking with the labor laws. We are talking about so many things in this. When we talk of the workers group and the employee welfare and the Internal recruitment, friends in Japan generally comprise of the core workers who actually are expected to be working for the lifetime. And the peripheral workers.

So peripheral workers system has evolved in recent times in Japan, which is the not so permanent staff, and depending on the need of the companies, they may be increased or decreased as the requirement and there is hire and fire in the peripheral workers category. So there do exist these kind of two categories, which generally in the US companies, it is not the case. So generally U.S. companies do not work like that, at least in the US market itself, although U.S. companies in other markets, overseas markets, they do follow the system of core and peripheral, two types of permanent and temporary workers group. But in Japan it is very, very common. Now friends. If we talk of the employee welfare, the type of welfare, the focus of the companies towards employees, what type of welfare we are talking about. So when we say the Japanese management style of providing the employees with the best of the working environment and the competition and many other things, so I would say that basically the focus of the Japanese companies is not on competition, which is actually based on the seniority and the number of years somebody has worked in the Japanese companies. But they do provide a complete package of the welfare, which includes low interest rate loans or cheaper housing facilities.

The conveyance, free conveyance, free food in the companies, in many of the companies, they provide free lunch and many other facilities like medical facilities at almost no cost. And the loan system interest free or low interest rate loan system actually helps the Japanese companies to have a better control on the employees. So they treat it as a as a driving hurdle to be able to have a better control, better grip on the employees. So it is very, very prevalent, providing the interest free or the low interest loans to the employees when the need arises.

And finally, when we are talking with the management style of Japan versus US, we are talking about the another aspect of the management style, and that is the internal recruitment, which means if the vacancies exist at some certain higher levels. So it is a very, very common practice in Japan and it is very, very much prevalent that they recruit somebody internally from within the organization and that will become their first priority if they are not able to get somebody to fill that particular post, only then they go outside. So the focus and the first choice of Japanese style of Japanese management style of working is and for the Japanese companies to go for the internal recruitment, while in the case of US, it is purely based on the the profile and the requirement of the job, the right match with the job. And they definitely do not differentiate between the internal employees or somebody coming from other companies.

It purely depends on the HR people and the HR consultants that for what most what profile is required, whether it will be filled internally or from outside. So in many cases, it happens that the general consensus is that the particular post has to be filled by somebody from the 3rd organization, outside. It is very, very common. So friends, management working style of Japan definitely is unique, but there is nothing to get alarmed with it. There is nothing really wrong with the Japanese management style of working. It is just that the understanding of the management style is very, very important to succeed in doing business with Japan.

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In the next video Dr. Jain discusses his analysis of the common mistakes which most businesses do when investing their time and money in Japan market. They generally have the habit of blaming the country for their own failures and lack of preparation.

So friends, whatever we have just talked in the earlier episodes, I talked about the highlights of the market, I give you some basic knowledge of the merits and demerits of the Japanese market, the challenges, the opportunities and the different types of treatment which is required in this market for the foreign businessmen who want to work within Japan or want to trade with Japan. So these things I just discussed and the failure rate, I indicated is high. If you look at the past cases of the foreign investors who invested in Japan and did business with Japan, they failed many times. And it is very pertinent to tell you about the common mistakes which are made by different investors to start with so that we can take off with the course better with better understanding and the proper goal of what we want to learn in this course. So let's let us now discuss what are the common mistakes which are made by these foreign business people while dealing with Japan. One of the major mistake, which is made by the foreign businesspersons and the companies when dealing with Japan, many of the cases indicate this thing.

I'll be also taking some of the case studies in the course later, in the later episodes, and these things will emerge again and again in those cases. So one of the most common mistake made by the foreign business people and the companies who want to operate in Japan is their lack of preparation about the country. So what happens that there are many assumptions which they make, that they need not do any kind of preparation because it's a democratic country. It's a large, rich country, a very mature country. So even if you don't make any preparation, you will learn things and the people in Japan will try to adjust with your way of working and rather they would be able to prepare themselves. So this is a very major mistake and assumption which is made by most of the investors in Japan. So a lot of time is wasted in waiting for the Japanese people to change to your ways of working. It doesn't happen. So lack of preparation is a very big mistake. So things like whether you know, what is required to be successful in Japan, are you ready to think differently? Have you prepare yourself to think differently? And what are the different thinking which is required?

And do you know the procedures of operating in Japan? So beforehand, have you done the right research? So many of the things I'm going to teach you in this course will help you tackle this lack of preparation and things like whether you understand the sophisticated consumers, which Japanese are and are different types of habits and needs. Are you already prepared and have you done your homework, which is generally required and that is friends, one of the major mistakes which is made by the people who want to work with Japan and fail actually then friends very, very important. And it is actually a very specialized job, which I'm going to help you do in the schools is the lack of the foreign investors and foreign business people put their efforts to understand the peculiar high context culture of Japan. What are the methods of understanding the culture? Have they really done this study of understanding the Japanese culture. In this course, I'm going to take a very deeper look into the Japanese culture. Understanding the Japanese culture and the methods of understanding the Japanese culture. In fact, those methods can be applied to many other countries. But in the case of Japan, it is very, very useful to understand this method of understanding the Japanese culture, which I want to share with you later in this course, friends. So do you understand how to deal with the high context society which Japan is?

Do you know how to understand the peculiar culture which Japan is? And do you understand its people, people's culture, history, food, religion, habits, behavior, day to day life and the things associated with the defining of the thinking of the Japanese people? How do they think? Why do they think the way they think and how it is different from the typical type of thinking which is done by the people of the world? So that kind of cultural understanding is very, very important in the case of Japan and then finally friends, the basic lack of the basic knowledge itself about Japan, the basic facts about Japan, what Japan is, what is the demography of Japan, what is the geography of Japan? What is the political structure of Japan? What is the peculiar things about the Japanese economy, the Japanese industries, the different industrial sectors? So, for example, do you know the reasons of the failures and success of the past overseas investors in Japan?

What were the factors? What were the reasons because of which the success stories emerged for the foreign investors or the foreign business persons working in Japan or their failures. And do you know and understand the Japan as a country, its basic facts about its people, about its demography, geography, history, about its different cities with the starkly different populations, the cost of living, many aspects of the Japanese society which are there. So those basic facts, knowledge can be acquired. I'm going to definitely help you in this course and I'll be focusing very much in this course that you understand what is Japan? You understand the Japanese places, the cities, the facts about the people of Japan. I'll be focusing very deeply in this course.

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In the next two special documentaries prepared for this course, Dr. Jain provides first hand experience with Japan, its important places, food and culture.

Hello, friends, welcome back to our documentary series, The purpose of which, friends, is to make you understand about the culture, infrastructure, economy, business, etiquette, arts, everything about Japan, this series of documentaries in this course will help you to understand the Japanese market better. So in this particular episode, I will be talking about the Japan food in the range of 1000 yes. How do you have your lunch or dinner or breakfast in around 1000 yen and what are the things which you can buy in this particular range? So friends I will be talking about the common dishes of Japan and their names and their prices. But also I will be talking about the specialties of Osaka.

Why Osaka? Because friends Osaka is called the nation's kitchen, the meaning of which is that the food in Osaka is the most specialized food in Japan and people come to Osaka to eat. And friends, as you know that there are a lot of restaurants in Osaka and there is a complete district, the nightlife district, which is called the Dotonbori, that is very famous for the food, the different types of specialized dishes, which are a specialty of Osaka and the street food, which is famous in Osaka, although some of these foods are found in other parts of Japan also. But most of these dishes, which I'm going to discuss, is the specialty of Osaka. So DotonBori we had visited and I had discussed and I had shown you the glimpses of the evening in the Dotonbori district, and the same district is famous for that. So friends, first of all, let me show you two great options, combinations of the lunch. which you can buy under or approximately 1000 yen. So if you go to the convenience store, which are found in different places in Japan, all over Japan, actually it is not especially of Osaka only.

You go to, for example, the convenience stores like 7-Eleven, which is very, very common. I told you also in one of the earlier episodes that 7-Eleven is very, very popular convenience store and it is found in every nook and corner of all the big cities in Japan. So, friends, if you go to 7-Eleven, you can buy one set of the food, which is basically the fried rice Ramen set and which include the Japanese Ramen, which include the Gyoza. Gyoza is actually nothing but like Momos. So the dumplings of the floor batter, filled with the vegetables. So it's very similar to what we know as the Momos and Chahan, which is actually nothing but the fried rice. So it is called Chahan in the Japanese language and the sweet dish, which is Mitrashi Dango. What it is, this is nothing but the the rice patty flavored with the sweet soya gloaze. So friends, you can buy all these four items in less than twelve hundred yen and probably depending on what you take you may end up payinh less than one 1000 yen. So this is a very good option. I will give you the idea of another set, try you can try. Again. you can buy these sets from the convenience stores. Especially, you can go to 7-Eleven and this is the Onigiri set. So what is friends, Onigiri?

These are the very, very common thing actually, in Japan, all over Japan, in any city you go, you will find on Onigiri. In India, on every corner you have Samosa or Chhola Bhatura. So it's like. What is like the burgers in America, its Onigiri to Japan. So it's the rice balls which are either filled with filled with some bean pasta or some non veg items, meat items like crushed meat or crushed vegetable. So there are a lot of varieties which are available onigiri. And depending on what is available in a particular convenience store, you can buy it. And of course, Tonjiru, which is the miso soup, actually miso soup with a lot of vegetables, a lot of varieties available of Tonjiru, which you actually can buy from the any convenience store, including 7-Eleven and friends, you will have the facility of heating it up in all this convenience store. You will find the facility for microwave and you can just put it there and you can heat the miso soup or the Onigiri or whatever you want to heat up.

Then Nimono is the dish Japanese dish, very, very common dish of boiled vegetables, different types of boiled vegetables. So there are a lot of varieties of Nimono available. And of course, friends, you can add up the Mitirashi Dango, that is the sweet dish, which. Definitely these four items in lunch you can have and you definitely pay less than one 1000 yen. So friends these were two good suggestions for the travellers to Japan who want to try out. And many of these options, friends, you will have the vegetarian version also. So you can try or if you find it difficult in convenience store to get vegetarian version, then you can go to any other small eateries, neighborhood eateries, they will be able to prepare these items, customized to your needs, but they will charge a little extra for this. But you will approximately pay the same amount and you can have the veg version also. So these were the common food dishes of Japan. Now I will tell you some dishes, which are a specialty of Osaka.

And in places like the Dotonbori district, if you go in the evening, you can enjoy all these items. To start with, friends, the very, very common specialty of Osaka is Kushikatsu. You can see these Kushikatsu sticks are there. Every stick will cost you around USD around one dollar, which means hundred yes you have to pay for each stick of Kushikatsu. Kushikatsu are nothing but the crushed vegetables or crushed meat pieces which are deep fried. So this is very, very common and you can easily get these items. Then very delicious and very famous dish of Osaka. friends is the Kitsune Udon and approximately anything between 400 to 500 yen, you can get it. And you can definitely get the veg version of this, which is much easier to get. So what is Kitsune Udon is nothing but the noodles or Ramen in a very liquid form topped with two large pieces of generally two large pieces of the deep fried tofu So you can see there that this is tofu and the noodles are there and then small dressings of the beans are there or some green vegetables, some side spices. So this is what it's called Kitsune Udon, very affordable dish, very tasty. And it is easily available in Osaka, especially in the Dotonbori district. If you go for the evening stroll, you'll get it.

Then, friends, very, very famous product, very, very famous of very, very famous, specialized and most delicious dish of Osaka is Takoyaki. So Takoyaki are the deep fried balls of the flour batter paste, which contains either vegetables or the meat or seafood or even pasta. A lot of varieties are available and they are offered in these kind of settings and generally, three pieces of Takoyaki would cost around one hundred and fifty yes. Then friends, very interesting Sweet dish of Osaka. The speciality of Osaka is Taiko Manju. It is a Sweet dish. It's like American pancake of the Taiko shape, Drum shape and it has different types of filling. It can be some kind of Jam can be there or it could it could be Azuki beans paste will be there or many types of fillings are available to it are available and it cost generally less than 100 yen, then very famous. another dish of Osaka is Okonomiyaki. Okonomiyaki is also called a dish as you like it pancake.

So you can have the customized filling in the pancake like this, which is shown here and it is sweet. And if you don't want it sweet, that is also possible. So it's basically the filling of the crushed vegetable or crushed meat or seafood with the sweet flour batter and it can be fully customized and cost around 400 yen depending on what type of the ingredients and fillings you want. So friends, Japan is known for many things, but if you go a little deeper, you will find Japanese food and Japanese palate is very unique. And if you go to different cities of Japan, you will find the different specialties of food, but nothing like Osaka, which is the nation's kitchen.

So friends my stay in Osaka was really very eventful, very informative, and I really liked my stay in Osaka. So right now it is 6:00 a.m. in the morning and I just left with my bike to travel to Hiroshima. So I'll be just moving from Hotel Toyo and taking this route towards the north of Osaka and along the road No.11, which passes through the Yudo river. So this is Yudo River, Yodo River will be crossing here and will be passing through Osaka International Airport in Toyanaka. The Airport So friends, Osako is called the nation's kitchen, which means Japan's kitchen, because it is famous for the dishes and specialties which are associated with Osaka. So friends, we just crossed the Yudo river. So this was yudo river, we crossed here. So Yudo river We are moving towards Osaka International Airport in Toyonaka.

This is International Airport. And after will be meeting at E2 Expressway, which is going to Hiroshima. So as I was telling you about the delicacies of Osaka and the Osaka is famous for food items and the Dotonbori district where I had taken you is famous for the street food. And many people go to the Dotonbori in the evening to enjoy the Osaka cuisines, delicacies. So I will be having a special session documentary on the Japanese food and the specialties of Osaka. So friends, we just passed from Osaka International Airport and will be crossing over another river, which is called Ina river. So we are on the bridge, which is over river Ina, near Osaka. So we are now out of the Osaka metropolitan area, which is quite a big. We've already crossed over Ina river and we are moving towards Hiroshima.

In between, we will be passing through some very famous places, small towns, but very famous like Fukuyama. So at present, we are in Ikeda. It should take around 5 hours to reach Hiroshima. So friends, this is called Kinki Expressway. It is actually E2 Road, E2 Expressway. So we are now in Hyogo and we have a stopover here for refreshment or relaxing, so you can see this is a beautiful place, beautiful trees in Hyogo. So friends, there are speed limits on Japanese highways, but people generally do not follow those speed. By legacy, Japan has very low speed limits, never more than 100 kilometers per hour, even on the expressways, but generally people drive much faster. So this is the stop for the bike. This is a paid parking for the bike. So I just park my bike here and have some refreshments. I will buy for some Onigiri, which is easy to find if I can find veg version of Onigiri, I'll have some coffee also. So generally prices in stopovers are not very high. I could have all these things, which I just mentioned for less than 500 yen So there are a couple of shops and a small superstore where you can buy plenty of things. And we also have the fuel station and I was really looking for the fuel station, because I want my bike tank full, just collected my bike from the parking lot and having a look at this fuel pump. What is the price they're offering for the petrol? So it's 170 yen per litre I'll get my bike tank full here.

So I paid approximately two thousand yen, got my bike tank full. And I'm just passing through Tsuyama. I'm near Okoyama and approaching Fukuyama Fukuyama actually is very near to Hiroshima. It's a suburb of Hiroshima. It is already four and a half hours I left from Tokyo and I'm very near to Hiroshima. So there is a turn here for Hiroshima, this E2 highway actually goes further. So I'll be taking a turn to Hiroshima Expressway. So friends, Japanese drivers are very disciplined, they keep themselves in the lane and they go by all the rules, but the speed limit generally people don't follow. So this is Fukuki tunnel on the Hiroshima Expressway. It is one kilometer. So in Japan, you will find many, many such tunnels everywhere, because as I told you, that three fourths of the land mass of Japan is mountainous. So you will get tunnels from half a kilometer to 53 kilometers, long tunnels. in Japan. So I have reached Hiroshima and you can see it's like any other small town. Family Mart is there, you can buy a few things and I'm facing some problem with my bike, so I will get it repaired in some place here.

Some small service things required for the bike to keep it going. Oh, yes, I have got this bike club here. This is my club. They will provide me the person mechanic to do some repairs of my bike. I was looking for something like this, so Honda, Kawasaki, Suzuki, Yamaha, So mine is Honda. So it's OK. So this is friends, Hiroshima Township.

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In the next few videos, Dr. Jain shares some important areas to focus and the tips and techniques of ensuring business success in Japan. At the end of this section, you will find an interesting case study on - Vodafone's failure in Japan.

So friends, having said that, you know, what is happening in the Japanese market is that a it is peculiar market having the unique characteristics and definitely it is much different from the many other markets of the advanced countries, similar advanced countries. But the fact remains that it is a very attractive large market and there are possibilities, good possibilities. So Freinds, what are the things to look out? Finally, the negative sides of Japan include observed strong bureaucracy which actually exist. And there are reasons of this bureaucratic nature of the Japanese government. So things like getting the permits, which delays the work or getting the utilities, electricity connection, water connection. So these things takes time and of course, the complexities of paying taxes also. So these are all the result of these strong bureaucracy in Japan, then Friends, contracts enforcement itself takes a lot of time. It can take more than one year time. So contract enforcement laws are not suitable for new businesses. And we have already discuss about the different type of culture of Japan, which is very distinctive in nature.

So nothing to get alarmed. It is just that one has to understand that what type of Japanese culture it is and how to deal with it. And then we already discussed about the local competition and the historically business network and the cartels existing in Japanese market. Not to that extent today, but they started long back in the form of Zaibatsu, which were the financial cartels, which actually were broken later on. But in very recent time there existed keiretsu and to some extent, many keiretsu still exist, wherein within the group, the companies would be dealing with business dealings, even if it means being the heavy price, extra price. Even if the products are available outside keiretsu, at cheaper price, companies would buy, deal with each other even at the poorer terms, but just because they are part of a particular keiretsu. So these things does exist even today. Not to that extent.

Things are moving for the change and for the better. And of course, the nature of the customers, which are the customers, are very demanding. They have a requirement of something. Your market research will not be able to pinpoint what really they want. You have to read the air. A different type of market research is required So nature of customer has to be understood. And of course, we have discussed about the Japanese management style, which is very, very unique. So these are the challenges. These makes the challenges which have to be dealt with. And it is not difficult to deal with these challenges, but there are many positives also. So, for example, getting loans and credits in Japan is much easier than many of the other countries, other markets.

There are very well-defined and strong investor protection laws in Japan. That is a positive thing, along with the intellectual property rights protection laws, which are very good, and they can be enforced much faster. And of course, Japan, being the archipelago of more than 6500 islands, trading across the border, is very well developed and much faster and very smooth. So these things are very positive about Japanese market and they can be handled much faster. And resolving insolvency is also better, much better than many of the other markets. Within 365 days, it is possible to resolve the insolvency of a company and the recovery rate in Japan for insolvent companies is almost 90 percent, much higher than the world average. The size of the market is big. The rich customers, although demanding but size is very big. he possibility, therefore, of expansion of the successful model is very, very high.

And a lot of mergers and acquisitions are at present taking place because of the overhaul of the Japanese economy and its business. Lot of mergers and acquisitions are happening, although most of the mergers and acquisitions are within the local companies and competitors. There are several grey areas where possibility of acquiring and merging, in Japanese businesses for foreign entities is much easier at present, so it is the right time Things are changing for positive.

Welcome back, Friends, so friends in this course. My objective was to give you a graphic description of the situation in Japan, the main characteristics of the Japanese market, and how it is different from the type of advanced markets which we know about. It's quite different, actually. There is no doubt about it. And this difference actually is an opportunity also. So this opportunity, how how this opportunity can be tapped. So what is required for success in Japan? That is what I want to discuss, now Friends. So Friends, not to be taken lightly, he most important quality a person can have in Japan is the common sense. It is important for one very important reason that nobody will guide you, nobody will tell you things. Even if they know something, they may look. Japanese may look friendly, they behave friendly. There is no doubt about it. But by nature they do not divulge many things. So you can learn things by asking people and assuming that whatever the person has not said is not there. So that doesn't work.

That is the reason why the knowledge of the facts about the market and the country, familiarity and very deep knowledge of the country is required for. That is one reason why in this course I have used documentaries, I've created some documentaries. The idea of these documentaries is to interpret the country, make you familiar with the country, make you the person who has as good as visited Japan. So the purpose of these documentaries is to orient you with the country, orient you with the infrastructure and the life of the people, the culture, the food, the business, all these things I have discussed in the documentaries and this short documentaries main goal is to create that knowledge of facts and to familiarize you with the Japanese market. So with the facts, with the familiarity is the requirement of common sense. So Friends, this common sense is very important. And in this common sense, what is required is the capacity of the observation, very strong observation skills.

Then presence of mind. You will soon realized that saying presence of mind, because ultimately, as I have been telling you the culture is unique with your observation, your presence of mind, with interaction with the people will create the relationships. So relationship is very, very important. So friends, the presence of mind will help in building the relationship because that's the most important part for the Japanese market. You will soon realize when we go further on this topics that why building relationship is very very important. Now for what happens that the knowledge of local customs, all these things, along with the common sense, is very, very important for building the business relationships. But the problem, which I'm just repeating again, is that nobody will only communicate with you that what is to be done, what is the dress code, what has to be done in a particular situation? You have to observe, learn, have the presence of mind and read the air. So basically, you know, this is very typical of the Japanese market that you have to observe and read the air. So this air is not communicating you.

There is no voice in the air. You have to feel the air and know what has to be done. Initially it is difficult, but soon you will start learning the thing. So you really need to read the air there and make the Japanese understand that you can read the air. Actually, they will read you and will start gossiping with each other that this person cannot read the air. They are very smart in that. So. It's not that the Japanese people don't want outsiders, it's not that they are threatened by the it is not that they are threatened by the different cultures or the outsiders or the foreigners. It is not the case, actually. It is just that most of the foreigners do not understand, observe and read the air, in Japan. So that's why I told you that common sense is very, very important, along with the knowledge of facts about Japan, country familiarity, knowledge of local customs, and absolutely no no to the assumption that everything which you need to do, somebody will tell you, even if the person is employed with you, a local person you employ, he may not tell you many things which he knows he will assume he himself will assure that you will read the air and you will learn. So people will not tell you. And I will add here, even the foreigners, when they become successful in Japan, even they pick up this kind of style. You can say, if not nature, that they also will not communicate with you everything they know.

So these assumptions are very, very time consuming and expensive mistakes which companies make. I will take one case study of VODAFONE. And just at the end of the session itself, I'll take this case study and you will understand that how expensive it can be. So Friends, the experts agree that the three most important success mantras in Japan to do all this common sense thing or the Facts, Knowledge, country familiarity, local customs, the three success mantras are preparation, information gathering and planning. So preparation means that you know, the things about Japan, the procedures for setting up business, the getting the permissions from the government and how long it takes building the local local support of the legal matters and the financial matters. So those kind of preparation, whom to talk to deal with those preparation and of course, the information all about Japan being very much familiar with Japan, information on business, the market, how it works.

Now again, this marketing market research thing is also very, very peculiar in Japan, because, as I told you, that if you want to do market research in a country, the people should be able to talk to you and convey to you orally. That is what we are trained. Most of the people in the English speaking countries are trained to do the market research through the vocabulary, through the communication, verbal communication by the respondents, which does not exist in Japan. So you really cannot do the type of market research which is done in other countries or other advanced countries. You have to observe and read the air, and that's how you do the market research. So the type of market research, you cannot depend on those kind of market research, which we know. So information gathering itself is very tricky and then friends, of course, the planning. So even if you are able to understand 60 percent, 70 percent of the real thing, if you are able to read the air, 60, 70 percent by your intellectual mind and the presence of mind and your good common sense, the planning has to be done and planning includes the financial planning, the timelines, the level of involvement you want in the market and of course the local support, the local recruitment.

All this planning has to be done without which if you enter into the Japanese market, it is going to be really a lot of loss of the time and money. Then Friends, it is very, very specially important that the people who want to do business with Japan are very much conversant with the past, current and emerging trade policies of the government of Japan because government of Japan is evolving. After the bubble of 1980s, ten to twenty years were lost because the local industry thought that the bubble time levels of the estate prices and the stock prices will come back because they thought that their way of doing business and things were perfect, there are some other reasons because of which this bubble was bust in 1980s So 10, 20 years, nothing happened. So only Prime Minister Koizumi was the one who started widespread reforms in the overall economy, including the business part of it and the many other parts of the Japanese life. So he introduced many reforms which actually, after he was gone as the prime minister, the Japan faced low level of speed of the reforms introduced by Koizumi. So Abenomics further which came, also continued with that, but not to that pace as was in Koizumi time. So in spite of the pressure from the business not to go ahead with the Koizumi reforms, Mr. Abe of Japan as prime minister, he continued with the reforms of Koizumi, but maybe with a slower pace. So the overall, my idea of telling you is that the Japanese government understand that not everything what they know, what they do is in line with the globalization and the Internet technology, because the Internet has created a strong revolution in the way of life of Japan, which was not planned, actually, but it has happened. So the point is that how the government is forming the policies, how the government is developing the trade policies both internally as well as the external and which are the industries which they are open for foreign investments. So all these kinds of different types of information has to be very much in your mind.

You should follow it very religiously, because that is where you will understand that what strategies you have to follow, in order to be successful in Japan. So trade policies of the government of Japan, which are more and more becoming suitable for foreign investments and the entry of foreign business, things are changing in the right direction. But it has to be understood that which are the industries, which are the new industries, which Japan wants. Which the government of Japan has recognized or identified. So these things has to be followed up very religiously. So the idea is to focus on the new industries which the government of Japan want to set up in Japan and for which they are open. They are ready to give support. So your focus should be to start with, if possible, on those kind of industries, so-called new industries for Japan, maybe. So other thing is that from the existing industries, again, there are certain industrial areas and sectors where government of Japan has priority, for example, telecom.

In recent time, Japanese government has become very much open for investments and big-ticket investment actually happen in the telecom sector. And the very good example of the big investment was 20 billion dollar invested by Vodafone in Japan when it acquired 100 percent the third largest telecom operator of Japan digital. So I'll talk about it more later at the end of the session. So there are industries there are sectors which are having priority of the Japanese government and things will be much easier in those sectors. But again, I'm repeating this thing, that building of the relationships in Japan is very, very important because many things you really cannot read in the air. So by having the right relationships, you can read many things you have to be with them. And very importantly, in the business environment where the businesses know the advantages and disadvantages of the local competition and the local networks, local relationships in the form of a Zaibetsu and Keiretsu. So zaibetsu were financial grouping's network of these several businesses, which actually at present doesn't exist. But there is some element of keiretsu wherein the grouping of the different types of businesses are there based on business relationships, among them very strong local business relationships. So how to handle those keiretsu?

You really need to build the business relationship by showing them merit in your role in those kind of existing businesses. So it is a very, very complex topic in Japan. But you really need further training actually. Then, of course, the local help with the right attitude. You have to have the local help. Many of the things can be taken care by having the local help, especially in present situation when things are changing. The government of Japan is changing. New laws are being formed for the overseas workers, for their protection and their rights. So many things are changing. And Friends patience, Japanese market require patience, it requires big money also, which I told you, but with the big money also required is the patience. If the organization which want to do business with Japan is not having the patience and if they're looking for quick results, Japan market may not be a very good idea for such companies. And finally, Friends, knowing the business etiquette of Japan is very, very important. You'll find a lot of resources on this. I will give you a little information about the business etiquette of Japan in the next slide. So you'll get an idea what kind of business etiquette are important. But that is not the complete words, which I'm going to convey to you. There can be many other things, but that is easy to learn. So you need not worry about too much on the etiquette, but it is important. right?

So what are the common business attitudes, which are actually a little different from what we know in the other advanced countries of Europe and USA and many of the English speaking countries. So friends, very important thing is to keep lots and lots of business cards every time you go for any business activity in Japan. So in the first meeting, it is must to have the so-called Meishi. Maeishi means business card. In first meeting it is must and in general you have to use the business card. If you're not sure whether you're exchanging business card with the person, you should be ready to and freely share the business card like shaking hands every time you shake and probably you offer the business card.

This is very, very common in Japan and one of the expert conveyed that if you are not having a business card and you are never given the business card and you're going for a business meeting, it indicates that you are unemployed. So Friends business card is the important thing. Second, your documentation should be very intense and it should be very impressive. It should impress about your company whether what you want to do, you as a partner, it should give your statistics. Every documentation should be self-explanatory. And the Japanese people should not have any doubt about what you are talking about if you have the right documentation. So your documentation has to be really very much perfect. The Friends 3rd very important part is the preparation, now preparation require knowing about Japan, their way of working, and especially if you are going to the meeting, you have to plan and prepare for the travel, how you are going to travel. Most of the public transport is really very punctual, unless, for example, if you talk of the Japanese metro in cities like Tokyo, unless there is some suicide on the track, generally the schedules are met by the local subway. Why I talked about this. This is something I will tell you a little bit later.

But you should note down on this point that suicides are very common in Japan, actually. So we'll talk about it later in one of the episodes of this course. But this is an important part of the Japanese society. So preparation is very, very important. And of course, company website. So you can be rest sure that if you are going to see this meeting, your Japanese partner have really, truly looked and understood your website. So one very good tip for you is that your website, if possible, should have an option to get translated into Japanese language. If you can provide that have done a great job, you'll make the life easy of the partner. The meeting will go very good. So your company website with the Japanese language will do a great service to your efforts to do successful business with Japan. And then of course, the homework, homework about the company, about their history, homework, about all their products and the specifications, features of the products which you are going to discuss and about the people you are going to meet. You have to do some kind of homework to know about their credentials and their past experience and what all they know and the kind of experience they already have. So that kind of homework is very very important. and Friends.

Seating arrangements, little peculiar, but that's the fact that in Japanese so had business sitting, which means sitting in the meeting room or in a seminar or a webinar, there are protocols in Japan which has to be understood. Every situation has different seating and people will not tell you that you have to again read the air. But you can get some information on the net on this seating plans. Even the SEATING plan in the vehicle or passenger cars, you will be sitting with your partner. So relationship between the host and the guest, the guest is going a better seating. So those kind of things has to be learned about Japan. And there are certain daily little rules which actually exist in all the countries, not only in Japan, but Japan has their own peculiarities in the daily rules also for example rule of no kissing, because that is not really taken very positively in Japan and absolutely no no to throwing some object or some book or something, which is very, very common, for example, in the US market.

And people show affection by throwing a bottle of beer or some book or something just to allow the person to catch it and make it something humorous event. So, that thing is not acceptable or not taken, positively in Japan. And of course, sneezing in front of the people has to be fully avoided. How you can do it, you should be ready with your handkerchief in your pocket all the time if any of such things can happen. So sneezing is supposed to be a bad thing in Japan. So having said, all these business etiquette, you need not worry too much about the business etiquette. Things are changing in Japan, so best rule is to observe and learn the newly evolving business etiquette. There are changes happening in this etiquette. Also, they are learning the etiquette of the other candidates.

So a lot of changes are happening. So it is very, very important that these business etiquette has to be understood in the context of the evolving society, the changing society and the changing perspective of both the society as well as the Japanese government. Ok.

So Friends, as I just mentioned to you, let us take one small case study about the investment in Japan. As I told you already, that one of the major opportunity in Japan is the mergers and acquisitions which are happening. And that's a big opportunity, which is the federal government of Japan is also open for many industries M & A. in spite of the fact that the big chunk of the merger and acquisition, which are happening at this stage at this time in Japan, are among the local competitors itself, local companies itself. But still there, a lot of scope, a lot of gap and a lot of possibilities for foreign investments. So friends, Vodafone acquired J-Phone, somewhere in early 2000 and this J- Phone was the Japan's third largest telecom operator and the value of the transaction was almost 20 billion dollar. So it was a very big investment by Vodafone and 100 percent stake was there. So it was fully acquired by Vodafone. J - Phone was the first company in Japan to introduce camera phone. So that was a very major innovation of JPhone and which was a very big success, actually.

But Vodafone actually failed in Japan after years of making mistakes and wasting time, not understanding the market, making several assumptions about the Japanese market and the local people and the local recruited persons, making lot of assumptions and failing to do the preparation and understanding the Japanese customer, Vodafone failed in Japan and sold, finally, the Japan Telecom/ J Phone/Vodafone KK combine to Softbank at a much lower price and with no losses. Now, We have to look at most interesting part of this story, and that is the facts. The fact is that the Vodafone failure had nothing to do with the closed nature of the Japanese government, which is generally alleged. Most of the foreign companies, when they fail in Japan, they blame the Japanese government. So case to case, it has to be understood that what is the role of the closed nature of the Japanese government in the failure of the different companies and their involvement in Japanese business. But as far as the Vodafone case is concerned. It had nothing to do with the closed nature of the Japan government. So it was not there.

And the fact that the Softbank turned around the company within six months after acquiring. So it is not that Softbank had any special consideration for the Japanese government or it was planned like this. There was nothing of that sort. It was a purely commercial decision making where the Vodafone failed. So I will just tell you about the two main reasons why Vodafone failed in Japan. And you can read a lot of research papers on this topic, a lot of analysis. You can read most of these research papers & analysis, boils down to two main reasons why Vodafone failed. And those two reasons come from the lack of preparation, making lot of assumptions by Vodafone and not really understanding the Japanese market. So what went wrong?

The two reasons were the first reason was the Vodafone's failure to make further investment and where the further investment in creating a much larger mobile network infrastructure. So that was the failure. What was required was big coverage, lot of new investment in new equipment and technology, which Vodafone did not do, probably because they already had invested multi-billion dollar and they really never had the possibility of further investment. And that is again, the failure of the planning that you're paying handsomely to acquire a company. And it may be impulsive decision. And I really do not know the facts of the case. But whatever it is that after spending 20 billion dollars, there was no scope for Vodafone to do. This very, very important and very critical investment in the network infrastructure. And the second failure of Vodafone was the failure to offer the mobile handsets, as were expected by the Japanese customers who are very, very demanding.

So J Phone was known for introducing camera phone, so the in the mind of the Japanese customer was always that Vodafone has acquired J Phone, they will introduce even better features. And it was possible for Vodafone to observe and read the air and understand the what type of new mobile handsets are required to be offered to the Japanese customer in the light of the competitors and what is happening with the other two major operators? It was possible. So that was the failure. And what Softbank did? Softbank realized that very fast. And these are the two things. These were the two gaps where Softbank invested the money and offered the right type of mobile handset. And within six months the company turned around. So it was a very major success story of Softbank, very successful transaction of Softbank.

Choose the one that is best

In the next few videos, Dr. Jain has used the previous learning of this course, to build a practical profile of Japan as a high potential, large exports market.

Hello, Friends. Welcome back. So Friends, we have discussed several aspects of the Japanese market in the several sessions which we had, some documentaries were there in this course. Friends now, we are learning about Japan. We are trying to see Japan from several perspectives. We have seen the day to day life of the people. We have seen the challenges, the opportunities. We have seen the management style, the Japan culture. Now, let us review these things and look at Japan as an export market. So some people who are focusing on exporting to Japan and the mode of export can be of many types. It can be just selling the goods without really setting up any business in Japan, or it can be opening some branch office in Japan and then distributing your product or some deeper involvement. So there can be several ways of exporting goods to Japan. So if we look at from that perspective, Friends, the Japan as a country, as a potential export market. So what are the things which we need to see from this perspective is, first of all, that what is the business situation at present from the export point of view?

And secondly, what is the business culture of the people? When we say people, the business people, we are talking of the importers in Japan. So the people who matter to your products, who are likely to be of great help, of distributing your product, and they will have an active interest in your products, in distribution of your products in the Japanese market, depending on the customers demand and the business situation. And another thing is that what is the situation of the banking and finance? So what support you can get from the banking industry and from the finance industry of Japan and what type of organizations are available where you can look for some support either to the importer or to the exporter. So depending on some credit lines to the exporters or the credit line for the importer. So those facilities, whether they are available like in any other advanced country, these are the things which need to be looked into. When we talk of the perspective of Japan as an export market and the banking and finance sector there in Japan. And then what are the sources of information and the support which is available from any agency in Japan for setting up business in Japan? That's the point which we want to learn and we want to discuss that.

What all are these steps involved in setting up of the business? What are the costs? And these whether these costs are comparable to the international standards like the cost involved in other advanced countries, which is of the stature of Japan? Those information has to be understood. And finally and very importantly, the what are the different sources of the accurate and genuine information about Japan, the data, the market data, the government policies? What are the sources of this kind of information? Who are there? What agencies are there, who are likely to support you on collecting this data and information? And not to forget, what are the channels, news channels and the media and their presence in Japan? So these are some of the important dimensions of looking at Japan as an export market. And that is what we are going to discuss now.

So, friends, we have discussed several things of Japan from different other perspectives when we are talking of the business situation in Japan and we are talking about the business situation at this stage at this at this juncture of the geopolitics or the time we are talking of the covid-19 pandemic. And there are many new situations which the world is facing. And similarly, the impact is there on Japan also. So what is that situation? What is the business situation at present? So, Friends, one very important characteristics of the current business situation in Japan at present is that the government of Japan is opening up in spite of the fact that there had been certain political instability. Mr Abe stepped down from his position as prime minister and one of his deputy and a close aide became the prime minister. And he is likely to carry forward with the Abenomics, the so-called economics by Mr Abe.

So talking about the situation at present of the Japan market as an export market, Friends, the government of Japan is opening up. There is no doubt about it, in spite of the fact that there has been a political turmoil and Mr Abe has stepped down from his position and the policies may get some changes may come. But definitely the pressure on the Japanese government is to open up the economy more to foreign investment and foreign investors, etc. and the new Japan government will always open. It is just that there are certain barriers which were not properly understood by the foreign investors so that they don't do their homework. So otherwise, by design, there is no barrier which is created by the government of Japan. So it was always open, it is open and in future it is going to become even better. They are coming out with very good legislation for the protection of the foreign labor foreign employees and making the things easier in terms of the visa and the business operations if any company wants to do, including the traders who want to export to Japan. So government of Japan is doing a lot.

They have a full fledged department, they have a full fledged ministry. They have a full fledged organisation to provide information and help to anyone who is interested to invest in Japan and do business in Japan even as an exporter. So government of Japan, that much is opened up and it is opening. The customer, of course, is not in the hands of anybody, neither to the Japan government, nor to the exporter, nor to the marketer, nor to the distributor or the retail chains. So customer is a customer. The customer is made up of the local culture. He's made up of his thought process. He's made up of the legacy of that place and the history of that place. So Japanese customer is difficult. But Friends, this customer, in spite of being very demanding, it has a lot of disposable income and lot of assets. To the extent that government of Japan is finding it very difficult, it is not able to guide the people of Japan how to invest the huge assets and cash liquidity, which is lying in their accounts. So people are flush with liquidity, people are flush with money.

The interest rates are low in the banks. So it has become the duty of the Japanese government that how this money to be utilized. So one good thing about anybody who's interested to export to Japan, they will find that the customers they are dealing with are full of money. But what they want is something very good, very good quality, very durable thing and very, very innovative and high tech item. So if you can provide these things, high tech items with a lot of innovation and durability and you can assure that, how do you make it possible to understand for the Japanese customer that what you're offering is really of good quality? So that communication this requires homework, this requires planning. This requires a lot of information gathering. So that is what the people are not doing when they do business with Japan and they assume things. They think that Japanese market is like any other market, any advanced market. So Friends with this significant disposable income and assets, the Japan customer is one of the best customer for the exporting community from anywhere in the world, whether it is from Vietnam, from South Korea or. From China or European countries or even US or of course, India, Japan has a very good relationship with India and they're very much interested to buy goods from India. The customers only are looking for the good quality products from India and, of course, from other countries. So the countries like Australia, South Korea, Vietnam and China, they are the neighbors of Japan.

The logistics are much more developed for goods to move from these countries to Japan and of course, the Japanese importing points being in several islands. So they are all connected with water. So the cost of moving goods in the hinterland of Japan is very, very low. So and the time required for clearance of imported goods and the export goods is very, very fast in Japan. So for all these things, along with the high liquidity available with Japanese cash, what makes Japanese market one of the unique and top most market for the exporters and traders, whatever way they want to sell their goods. So, Friends, if we talk of the business situation at present in Japan, in spite of the fact that there is some kind of political uncertainty and the there are thinking, which is contrary to the world view and the status of Japan as a military power, which has already declared that they cannot they are already the reclused themselves from declaring war on any other country. But they are looking for changes in this declaration and charter's international charters, wherein they want the right to be able to maintain a significantly practical military, to deal with the with the threats, which emanates from the for example, from North Korea or other countries. So because of this, the political gestures and the political moves by the new prime ministers, these things will remain and many things will move politically, will move in a direction which may be counterproductive or it may not be accepted by the world. So looking at the history of Japan, there exist certain doubts in the mind of the people of the world. And, you know, these political uncertainty may not have a direct impact at the grassroots level for the exporters, the traders doing business with Japan.

To that extent, the political stability is there, the transition of the power, at least from Mr Koizumi to Mr. Abe and from Mr. Abe to now Mr. Suga. So what is happening is that the transition has been smooth and there has been no opposition from the Japanese people, in spite of the fact that this particular legislation, which Mr Abe had suggested about giving more power to Japan to maintain their army for the protection of Japan, the citizens of Japan objected to this, and they also said that they shouldn't be there. But the will of Mr Abe was prevailed. And this legislation was passed in the parliament. So there are certain dichotomies. There are certain difficult points on which the political drama in Japan is being played, which has certain concerns. So they are not likely to affect the business and the trading and the investments by the foreigners in Japan. Definitely not. Now Friends.

It has to be understood the uniqueness of the Japanese market, that their business decisions are normally made on the value proposition. So whether you are dealing with the importer, whether you are dealing with a retail chain in Japan or you are creating some new kind of relationship with the existing local relationship. So whatever you are doing, friends, you have to provide the value proposition to you to show the value in your proposition. And if you are able to show that value in your proposition, things will move ahead. That is what is the requirement of the current business situation, which is there at present in Japan. So, of course, the present government, as I just told you, that the present government of Japan policy is to encourage overseas investors and traders to operate from Japan. The only thing is that you have to read the air. You have to understand what is happening in Japan and you have to take your own decision. Nobody is going to guide you fully.

Friends talking about the business culture, we have already discussed a lot we have discussed about the Japanese culture, but yes, there are certain points which should be remembered and viewed as well as the business culture of Japan is concerned, which is very much based on the formal relationships and formal interaction and the relationship, the business relationship, the business partnerships are protocol based. So there are certain protocols, there are some planning, there are certain homework, which is the emphasis of the Japanese people. So that remains and that is a very key feature of the Japanese business culture. So another very important thing, which are practical person can tell you that during the day, what are the meetings happening which normally do not start early in the morning. Normally the afternoon meetings are there in the during the time, especially with the foreign parties, foreign overseas partners. So these meetings serve the general reluctance of the Japanese partners. Providing the description and useful information may not be there. So they would be displaying some kind of the reluctance to divulge many things, and they would expect you to understand those things by yourself. But the practical experience says that the evening dinners and drinking sessions, you actually can get certain kind of useful information. So that's a another very interesting and relevant part of the Japanese culture. So if you really want to make relationship with the existing local networks, so you have to focus on the post evening activities in Japan, which is one way of entering into the relationship network of Japanese businessmen. So this is a second very important part, very important feature of Japanese culture and practical tip of the business culture that, of course, we have discussed this several times, that the business culture, as well as the people of Japan, however indirect they are. They do not want any conflict with anybody, absolutely no conflict, direct conflict on any issues.

But their interaction is mostly indirect. So they will not say things very directly or in black and white. So there will be a lot of grey, whatever they say, if they if at all, they say something. So these will be grey. So you have to read the air, you have to understand things by experiencing it. And Friends, that is the reason in this course I have included certain documentaries to show you what Japan is so that you are able to read this air. You understand Japan, you talk things to the Japanese people, which is close to their heart. You show that, you know Japan, you have visited Japan, different places you have visited in Japan, you know the highways, you know the food joints, you know the main dishes of Japan. So there has to be things to talk about. Japan facts. This is one of the reasons why people shy away talking to foreigners because they are not able to tell many things about Japan. So what would they talk to the person? So business meeting is not purely on business. It is not purely on these specifications and terms and conditions of the contract.

They want be able to talk about Japan, whatever they know, not to talk of their country because they are really not very much interested in your country to such an extent. They are interested, but after some time they want you to know what is Japan? You talk to things which are close to their heart. You talk to things which they know in their world. You have to understand their point of view. So that this is the reason Friends, this this course has been developed in such a way to make you learn these things in that direction.

Then Friends if we talk about the business, business environment in the form of banking and finance support to the businesspersons, especially the foreign businesspersons, they should know that Japan financial support is very mature. The banking is very, very mature. There exist very big Japanese banks, which are either national or regional and many, many foreign banks, international banks, which we know about, which operate in the top countries. They are they are in Japan. And of course, three mega financial groups of Japan, which are national are Mitsubishi UFJ or Sumitomo Mitsui or Mizuno FG. These are the three major financial groups which are of national nature. And similarly, there are regional mega financial groups like Yokohama Financial Group or Fukuoka Financial Group, Chiba Financial Group or Hoku Hoku Financial Group.

They are the group's financial support they can provide. You can get loans, credit and many, many of have them. You have to understand this world of the different products which are available. As I told you, they are flush with money. They have liquidity. They are looking for people who can use that money. So this is the most opportunity part in Japan market to be able to get liquidity loans, credit, the products which are being offered by these banks. And there are more than 100 regional banks in Japan and more than 20, 25 international banks.

All big names are there. So competition of different international banks is with the local banks. So they are able to provide similar terms. Low interest rates , easy availability of loans and credit. And of course, Friends. This is one of the best possible financial support which the businessperson can get in a country like Japan, advanced countries like Japan.

Now Friends next question comes that where to go for setting up in Japan, where to get this information, where to learn what is to be done for starting a business in Japan. What are the different ways of starting a business in Japan? It will definitely depend on your product line. It will definitely depend on your vision, your method of entry into the Japan market, what kind of goods distribution you want, what kind of partnership you want. So with the complete knowledge of Japan, you have to design your own strategy, market entry strategy, and you have to set up accordingly. You will get all the windows which are available. So what is required to find out in this is that what are the steps to set up business, how to do this and just explain to you what are the resources which are available where you can get this information, the step by step flowchart of the various options where support is available. So how do you set up that?

And then what is the what are the cost of setting up business in Japan? So some example, some information you need to get it. And what is the cost of hiring people in Japan? Because you really need local people. You need personnel to operate in Japan. So what is the cost? Because cost is something which has to be discussed beforehand, much more in advance because everything starts with cost only. So what is that cost of hiring and where do the cost in Japan for all these things setting up, hiring, how does it compare with the similar cost for the similar kind of activities in other countries? So those companies comparisons, where do where do you find those comparisons? So, Friends, one of the best place to get information about setting up business is the organization which is sponsored by the Japanese government itself. And the name of that organization is Japan External Trade Organization, JETRO which has been working for many, many years to promote the investment and doing business with Japan. And their motto is to invest in Japan. It is becoming more and more important.

This organization is becoming more and more important for the international business persons. So they will tell you the steps for setting up the business in Japan. So you will get a lot of flowcharts here and through which you can see things like setting up the business of getting visas, setting up of an office. If you want to set up an office, you want certain hiring personnel related matters. So how do you hire the staff setting up an office or a place or a residence, or do you want to construct some factory there or some warehouse if you want to set up? So all this information is available. This is the flowchart. So this complete flowchart is available on the site. So starting of the business operations require certain work, which is mentioned in this flowchart. That what all has to be done and only after that you your date of start of the business comes. So when does it come? How does it come? All these things, steps have been explained, which are Japan specific. So they may be different from what you do, what you do in other countries, but these are the one which are Japan specific and these different windows of entry or the setting up of the business are available.

Different options are available. And this website gives that. And Friends, this website also tells you about the laws and regulations of setting up of the business in Japan. So they provide basic information about the laws and various procedures related to setting up a business in Japan. Or if you want to distribute your products, you will find that you will get that kind of information. Also, what are the laws and regulations which are available? I will tell you a little bit about the tariffs and non tariff barriers about Japan. So if you only want to export, you should have those. knowledge and JETRO will have a lot of information, which you can review. So they have references available. They have the consultation also available. You can consult the specialist in the business establishment and many of these services are free of cost. Then friends in the another section of this department, this particular organization which JETRO is, They also talks about the different types of visas, business visas, and what are the status, different status which are available for residence in Japan. So what are the entry procedures?

What is the status of the residence and the relationship between the visa that resident status, the process from application of a certificate of eligibility to the acquisition of visa. types of Work Statutes, Temporary visit visa, all the type of different visas, including the entry permission. All this information is available on JETRO website and you can contact by email and also there. Similarly, they will also talk about the taxes in Japan. What are the different type of taxes? So all this information which is available is just clicks away. So this Web site, which is the JETRO dot Japan or Japan dot -- website, you can go to the site and all this information is very easily available. Then similarly, Friends there are. Areas which are covered like human resource management, application of law, recruitment. So what are the different recruitment agencies which offer services to foreign investors with English language, consultations? So all these things. What is the template for the labor contracts? What are the approximate wages? All this information Friends have been provided on this website.

Then, The information about the trademark and design protection system, which actually is very good at the intellectual property rights laws, are one of the top quality laws of Japan. In fact, there are two things which I discussed in one of my earlier reports, also that apart from the intellectual property rights, the enforcement time is also much less so than many other countries. So these are some of the very important resources which are available on the JETRO website. And this is the best source you can get for this purpose.

Then there is things, some things which are really very good on JETRO website and those relate to the cost estimation in Japan. So Friends cost of setting up business, you have to really work out some ideas that what are the costs you will be incurring for setting up the business? And for this some basic model, some basic models have been explained on the JETRO website. For example, you take this example here, which is a model case and is based on most common type of new business operation established by foreign firms from entering the Japan market with an initial staff of two people only. So one person from the foreign firm, it is a model, who typically serves as the managing director or the person, country manager or a Japanese and a Japanese national, which will be a manager level person. so 2 persons staff, company makes use of temporary office to establish a corporate or branch office. This in this example, and then moves into a permanent office. And all these are rented actually rented properties, rented premises and Japan representative stays at a hotel or a monthly contractor apartment during the probation period, during the period when business is being set up for the pre - incorporation compliance there. And then he moves to a permanent residence upon completion of the company, registration, the incorporation and applications and notifications completed by the professional service providers.

What are the costs? So this is the example in this particular model, is there? So one of the features of this model. 2 person staff is there, office is a temporary office, for example, three months. Sizes given there in this model and this stay of the foreign representative in hotel or in some kind of contract or Leased accommodation. So the JETRO website says that the initial cost in Tokyo for a subsidiary company is about the U.S. dollar one hundred and twenty one thousand to one hundred and thirty one thousand. So this is the estimate. And for a branch office, this cost can be as high as 70000 to 80000. So for the establishment of a Japanese corporation or a branch, the costs generally are as follows. If you look at the break up, you will find that the different type of cost are there. Cost to register the company name seal of the company, professional fees for the company, registration and notification. So all these costs are given Friends. And so this particular table is for the company establishment and tax notices and the professional fees paid for that and then infusing the paid up capital, so paid up capital, that amount has to be as per the the protocols has to be added. Then the cost related to the visas. So those cost has been calculated.

Then setting up of the office is given there. Rent for temporary office includes this security deposit also. Monthly rent. And what is the monthly rent? This information is given and security deposit in the real estate brokerage. So this total amount is given there and hiring of the local personnel again is about 20000 U.S. dollar and the break up is given there for what purpose? This amount has to be paid. And of course, the setting up of the housing for the foreign national, the person in this example, there is one person. So his cost of setting up in USD is given there. total comes to six thousand, approximately six hundred dollars. So these costs are given there, which are based on the experience and the practical knowledge of the JETRO. And it says that in this model, their own research says, that when you compare the business cost in Japan, when compared with major cities in the world, you find that the costs are not huge. So this is, for example, the cost of Tokyo and in smaller cities, other cities which are not as big as Tokyo, Osaka, Nagoya, Yokohama, you will find that the cost even less. And you compare with cost, for example, in the Hong Kong office rent and the personal expenses you will find there comparable or maybe less like, for example, in Hong Kong, the real estate.

Office rents are much higher than Tokyo, even than Singapore is quite comparable, New York, if you compare with New York, the Japanese biggest city that is Tokyo, is much better. The costs are much less, even San Francisco. And if you compare with London also, it fares better even it fares better than the Paris. So these are the big cities where people set up business. They maintain their offices, they maintain their subsidiaries. And when you compare these things, so it's not a very, you know, prohibitive kind of city. So that is what the JETRO has learned from its experience and it has compared the office rent or the personal expenses for different cities. All this information has been provided. So Friends in this course. My idea was not to give you all these figures or the data on the Step-By-Step information.

My idea in this course is to tell you the resources and places where you can actually go and get this information in a very positive way and in a very accurate way. And the genuine information which is based on long years of research and prepared by the experts. So this information, for example, friend from JETRO is available absolutely free. You can even send emails and you will get answer to many of the queries which you may have, which you are not able to get on this website. So Friends, this is really good. And why it is there? Because Japanese government want the business people to do business with Japan, because Japan need foreign partners. In fact, the Japanese companies are best prepared for the international platforms. They are most internationally oriented companies.

So Friends, the next point, which I want to discuss with you, when we are considering Japan as a export market, potential export market, we are trying to learn that what are the different sources of information, because that is where you can do your research. As I mentioned to you, that the most critical action to be taken by anyone who is interested in Japan market is to do a lot of planning, a lot of information gathering and a lot of preparation. So to do that, the most important thing to learn and to get the information about is the different sources of the different types of information. For example, if we talk of the government, business and trade information, the information related to government policies, information related to the support which is available from the government of Japan and the business associations, the Chamber of Commerce, the support and the benefits of membership to the different associations and the particular trade, like, for example, automobile, electronics. So what are the sources of information related to a domain specific requirement or the business specific requirement or the government specific requirements? So the most useful resources for this, Friends, starts with Japan external trade organization.

That is JETRO. If you remember, I had to in my last session, I talked about the JETRO which is the finest and the longest serving organization for increasing the trade between the international investors and Japan. And it is the most authentic source of the information on Japan. So we had already gone to that website of JETRO. Let us look at this again. So this is JETRO website, which is also available in English language. So when you convert it into English language, you will get all the information in English Language. So JETRO is the one window source of all types of information, including that of exports or the overseas expansion or investment in Japan, which are related to WTO or the innovation startups, cross-border EC, or standard certification regulation, IPR, utilization of global human resources, B2B business and import. So everything at one place you get in JETRO and if you want some information which are specific to your country of your origin, you can go to Asia, you can go to North America, you can go to Europe and see if there are any specific requirement of certain countries or some agreements.

Are there any trade agreement, maybe there with some European country, some agreement maybe there in the Russian CIS. So those information, all this data statistics are available on JETRO website, and if you explore JETRO website, you will find a lot of information. It is the first stop for starting your preparation, planning as well as information gathering. Then Friends Ministry of Economy, Trade and Industry also provides a lot of information. So the link I have given for all these sources, if you look in the resources section of this lecture, you will find the external links to all these resources, then Minister of Finance, Ministry of Foreign Affairs, then Ministry of Internal Affairs and Communication, Indian Chamber of Commerce, Japan and for Indian exporters, Indian Trade Portal is also a very good portal where you can get a lot of information of not only Japan, but many of the countries trade with many of the countries of India. So as an exporter from India, you can take benefit of this particular website.

Now friends. If we look at the links and the sources which are related to banking, financial institutions and certain associations, Chamber of Commerce. So you will find the link for the Japanese Bankers Association, Regional Banks Association of Japan, the second Association of Regional Banks, International Bankers Association. As I told you that there are around 20 to 25 international banks of the world. The top names of the world are present in Japan. So you can get a lot of information of the member banks of the association, i.e. international. bankers association. Then commodities futures association, which is available for Japanese people only, so if you hire somebody locally from Japan, that person can gather information from this source also. Then General Insurance association of Japan, then Investment Trust association of Japan, then Japan Financial Services association, Japan Securities Dealers Association, Japan Venture Capital Association, the Life Insurance association, Japan Private Equity Association.

So there are so many associations. If you explore information with all these resources, friends, you will become very, very confident about Japan and doing business with Japan. So what you will learn in this course, you will be able to amplify your knowledge by going to these websites, these resources and very good information can be gathered. Tha=en friends. You should also subscribe to the English versions of the Japan Times, Asahi Shimbun, Japan today, News On Japan, metropolis. This is this is very, very important. So for example, I will show you the Japan Times. The English version is available online. So what type of information you can gather in, for example, Japan times. So as you can see here, friends, a lot of information is available and it can be very, very useful. National news is there. then opinions are there all about Japan. Very good place to learn about Japan and what is happening in Japan, the political situations, political changes, business changes or any government policy towards trade. And what actually is happening with regard to the business with other countries, neighboring countries, maybe China or the South Korea and what is actually happening in the geopolitics? All these editorials, articles are available, many of which are free, actually. But you can also subscribe to the paid version also and also for all these publications, online publications and newspapers. Then there are many printed resources also available for doing business with Japan. Some of the best printed versions of the sources which are available are from JETRO. That is the Japan external trade organization, so very famous directory, which is available for the purposes of doing business in Japan. And for example, in this case, this is available in business reading room in the US. But every country has their central trade libraries.

You you have to find out in your country where you can get the trade related information and the resources and you will get, definitely you will get the directory of doing business in Japan published by JETRO. And you can also go to any of your country Chamber of Commerce with Japan and you will get this printed version of directory for doing business in Japan. So this is one of the most authentic printed resource for doing research on Japan. Then friends, the problem with the printed versions, but mostly they are very old versions. You will generally not find the latest versions of the printed resources, but nevertheless, they are very, very important and very useful in getting the information, for example, Directory of Japanese databases in 1998/99. It is published by Database Promotion Center of Japan. And mostly you will find this particular printed resource in your country, specific central library or Trade Promotion Bureau or the Japan Chamber of Commerce with your country. So you'll definitely get this printed resource. Then Japan handbook, which is published in London, Chicago. So Japan Handbook has a regional series also, which is called Regional Handbooks of Economics Development Prospects on the 21st Century. So this provides an overview of the economic and social development of Japan, with particular emphasis on the second half of the twentieth century. So it is a little historical perspective. You will get on this, but you'll get to know Japan better. So what we have tried to do in this particular course, is something very similar that we try to acquaint you with Japan. So with the addition of the knowledge, which you gather from these printed sources, you can improve your knowledge about Japan. manyfolds So friends, you have another printed resource, which is called Japan Shinbun. This is very, very commonly available and it is a comprehensive data and useful descriptive information provided for all aspects of contemporary Japan. So it has got special reports. There may be little older. And this is a very, very interesting reading for understanding the Japanese economy, Then friends, Japan Trade Directory again published by JETRO. It is also generally available in your country, central trade library or Chamber of Commerce library. So you can find out if you search, you will easily get Japan Trade Directory. And then friends. Similarly, we have more resources. Japan Company Handbook, then directory of banks and companies registered in Japan and friends. Many, many such printed resources are available. If these resources which I have just shared with you are not enough. You can explore many, many resources.

The other Internet resources which I already mentioned. When you go there, they will explain to you that what are the printed resources they are offering in the market? And you try to get those information either from the Chamber of Commerce in your country or your country specific trade promotion bureau. Or you can also go to the trade consulates of the Japan in your country to get access to these printed resources. So, friends, these printed resources cannot be ignored, along with the Internet and online resources, which I already mentioned to you.

Now friends the next very important thing to understand is that what are the trade barriers for the exporting community from anywhere in the world, you may be originating from any country. We have to understand that what are the different trade barriers which are there in Japan and understanding of the tariff and non tariff barriers is very, very important. So if we talk about the tariff barriers in Japan, typically they are based on ITC HS code. They are based on the CIF value. That means the tariff rates are based on CIF value as per the INCOTERMS 2010 and 2020, and friends, Japan maintains tariffs and restrictions on items including agriculture items. So there are certain restrictions are available, for which import licences may be required. And in addition to these restrictions and these tariff rates, Japan has free trade agreements with many countries. For example, with India, they have India Japan Economic Partnership Agreement of 2011, which was valid for 10 years. That means it is valid till 2021. And the agreement abolishes duties on trade both sides, on almost, 90 percent of the items, which are traded between India and Japan. Similar free trade agreements exist for other countries also. So you have to find out with your specific country of origin what are the bilateral free trade agreement which exist with Japan. So against those agreement, you may get a lot of benefit of the import duties and the buyers will be interested if the value proposition of yours is better than other countries.

And friends GSP, that is a Generalized System of Preferences, is available as per the tariff policy of Japan, which means there are concessions in duties for the goods which are coming from developing countries. And friends, very, very interesting thing, and important thing to know about the Japanese tariff system is that, they have a system of self-assessment. Now, what happens because of this self-assessment system, the speed of clearance of the goods on Japanese ports for both exports as well as imports gets expedited. So Japan has one of the smoothest import export clearance systems, on the ports, and it takes a few hours to import goods and very limited time for exporting the goods. So friends, Japanese infrastructure is among the best in the world and the tariff barriers are not prohibitive. These are in line with the other countries and very much in line with the World Trade Organization guidelines. So, for example, if we look at the Japan Customs tariffs, we can have a little look on that. So, for example, you can see here that the Japan tariff schedule as per ITC HS classification, is confined to 97 chapters. And if we try to pick up any any product, like, for example, if we take the example of pharmaceutical products, so let us see what are the tariff rates and you will find that the tariff rates are country specific. Also, you can see the particular item here, which is shown here, the Singapore, if exports to Japan, the duty is free. Mexico exports, duty is free, Malaysia exports. duty is free Chile exports duty is free, Thailand exports duty is free. So country-specific tariffs are also there. GSP tariffs are also there. So WTO tariffs are also there. So all this classification has been done in the tariff system of Japan and this is accessible to everybody. So on this particular website, the link of which I have given in this lecture's resources section, you can go there and you can review all the tariff rates of different items, even up to eight digit of the ITC HS code. You can get the information. Now, talking about the non tariff barriers in Japan.

The market access barriers are there and it is generally perceived by the people, who do business with Japan, that there are a lot of market access barriers. But the fact remains they are mostly informal in nature. For example, I had already told you about the existence of the local relationships, local groups, and sometimes they are called as cartels. So penetrating into these relationships becomes little difficult for the outsiders, because of the lack of preparation. But they are not formal, so they are not recognized by the Japanese government. They are informal in nature. So local networks or the market share, like if some companies has better market share. So penetrating that market share may be difficult. It is not by design of the government of Japan, but it exists there and the product quality assurance, which actually the Japanese customer demand. So really, it is not in the control of the Japanese government or any other entity. So these market access barriers which exist and they are very unique and they are very distinctive, when compared with other markets, but they are the result of the Japanese culture, Japanese life, the Japanese legacy and the demography of Japan. So these barriers are definitely not the formal restrictions of the Japanese government.

It is not so. So to deal with these barriers, your preparation, your observation, your planning is very, very important. Now formal restrictions are there, but they are mostly in the agricultural products, which actually is the case of the most of the advanced countries. whether these are Western European countries or the North America. You will find restrictions in many of the agricultural items and it has become kind of norm in most of the advanced countries. Then friends, customs laws and regulations and import processes in Japan are strict in nature and therefore these need to be clearly understood, if you really want to succeed in Japanese business. Now, import licensing may be required for some imports. So that list you can get from the JETRO website. Foodstuffs must have a sticker attached to each package showing detailed description of the contents.

Many food and consumer products are subject to very specific labeling requirements. So these are some of the things which can be managed and handled. So, for example, the special labeling regulations apply to things like electrical appliances, soap, aluminum foil and plastic films, some kitchen utensils, cleaning materials, toilet and bath fittings, certain furniture, hot water bottles, cosmetics. So these are mainly the items which are subject to the special labeling regulations.

Now friends finally a note about the different types of business risks, which are there in Japan, apart from dealing with the very demanding customers, which I have already discussed with you. And the lack of preparation which can lead to major losses. Otherwise, if we talk of the main features of the business risks or opportunities, we can say that the intellectual property rights laws in Japan are very, very strong. So you are absolutely safe as far as the theft and copying of your trademark or copyright or your formula of the product.

That cannot happen in Japan. So that risk definitely is not there. So intellectual property rights. From the point of view of the IPR, you are absolutely safe in Japan. Dispute resolution means the contract enforcement can take a good amount of time in Japan. And this is a little barrier, if you compare with other advanced countries, it takes more time to enforce the contracts. So dispute resolution, comparatively, may be a slower process in Japan. So that risk is there. But insolvency proceedings take much less time than any other advanced country, and it is more strict.

So it is said that almost in six months to one year, the cases of insolvency can be managed. Looking at these features, the Japan market is not risky. If you are fully prepared, you understand Japan market and you have all the due diligence and you have a very good product, a very good quality product, which is durable. And you can prove about your product quality, the durability and long lasting nature and the innovative nature of your product. If you can prove all these things, then business risk in Japan are least.

Choose the one that is best

In the next few videos you will find a discussion on an interesting recent case study about establishing supply chains for premium quality of Tuna exports to Japan. At the end of the case study an assignment is provided for the students to review their learning about Japan through this course.

Hello, Friends, welcome. So Friends, in this episode, I'm going to discuss with you one case study, which is related to exports of Tuna fish from India to Japan. So Friends, this case study is about Mr. Gupta of Gupta Enterprises, who is based in Mumbai. So Friends, let me tell you that this particular case study is inspired by real events, but the names and the locations and other things have been changed. But the technical facts are based on the real incidents. So Friends, the idea of this case study is for education purposes, for learning and for better understanding of the concepts. So, Friends, this study is about the Tuna exports from India by Mr. Gupta of Gupta Enterprises, which is based in Mumbai. So Friends Mr. Gupta had been in the fish exports and the fish related products exports for last more than 15 years. And he was already exporting to countries like US, UK. But he was very, very keen to get into the Japanese market, which for some reason he was not able to get the business, he was trying to contact a lot of Japanese importers especially, he was interested in exporting Tuna because that was one thing which he was already exporting to US and UK and few other countries. And he got very good response of the overseas buyers for his Tuna business. So he wanted to expand his Tuna business to Japan and he was trying for the last four, five years, but he was not getting into the Japanese market. He was not able to understand, that why he's not getting the response. So later he realized that in order to enter into the Japanese market, he really need to understand the market. He has to understand the importers, the culture and things which may not be related to fish, but about the Japanese market, about the Japanese business, how business is done. So after a long time, he realized that he has to learn everything about Japan, then only he would be able to understand that how to get into the Japanese market. So Friends he studied about Japan, he studied about business culture of Japan. He studied about the Japanese government policies and several case studies about Japan market.

And within three, four months, he felt confident about dealing with the Japanese importers and how business happens in Japan. And then he realized that somewhere he was making a mistake, he was not able to create the right strategy of expanding his business into Japan, and he was now more concerned about it. So he was looking for a good opportunity, of the sense that he understood that the normal type of Tuna business, the Tuna fish, which was exporting of the quality, which ranges from 1.5 to 2 dollars per kg, that probably is not the product which is going to offer to Japan and to make an entry. So he understood that Japanese importers require premium quality with the value proposition. So he was looking for that very important formula and the product which he can convince the importers of Japan that it is a unique value proposition. So he was looking for a right supply side opportunity. So once he was looking at the business advertisements in one of the leading newspaper in India, He saw an advertisement of Lakshadweep Administration. India, which was trying to promote the Tuna fish exports of the Tuna fishes harvested in Lakshadweep. Friends, this Lakshadweep is a group of around 35 islands, which is the Union Territory of India, which is almost 250 to 400 kilometers away in the sea from the western coast of India.

So it's a very unique area, with the very small surface area, landmass just of 32 square km, if you include the area of all these 35 islands. It is a very, very small, Union territory of India. But the Lakshadweep population, only 10 islands of the 35 are inhabited. Rest are not having any human population. They are dependent on the fisheries. And there was a seminar which was going to happen in Lakshadweep, which is to be delivered by the Fisheries Department of the Lakshadweep Administration. And they invited the people who are involved in the Tuna exports and the fish exports. They were invited to that seminar, by the Lakshadweep Administration. So Gupta immediately sensed an opportunity. And he registered for the seminar, which was to be held in next one week time. And he booked his ticket to Agatti Island in Lakshadweep, one of the hotel there, in that particular island, where the seminar was to be held. So he visited Agatti and this Agatti Island had a airstrip, the airport is there. And this is the hotel where this seminar was to be held. And this island is a very, very small island, just 7.5 km in the length. And the width is just 1.5 kilometres. So it's a very, very small island. I will just show you that it is so small an island. You can see here.

This is Agatti Island. And you can see this is the one extreme of the island. And from this tip to the last tip, where the airstrip is there. So it is a small island and you have got Agatti Airport here at the end. So this, from one tip to another, it is just about 7.5 km. So it's a very small island. And this seminar was to be held on this island. And Gupta booked the Hotel for 2 days. It is the same hotel where this seminar was to be held And he took the opportunity to visit this place, which he had never visited, in the past. And he was very keen to attend the seminar. So friends, in the seminar, Mr. Gupta found that the things which were presented by the Lakshadweep Administration, Fisheries Department, was very, very interesting. What they said was that the Tuna, which is harvested from the 20,000 sq kilometre catchment area, the sea catchment area of the Lakshadweep Administration, which is quite a bit, and it has the potential to harvest approximately 100,000 tonnes of Tuna fish every year. The unique thing about this catch is that because of the lack of any industries in Lakshadweep on these islands, a very small population is there, just around 70,000 people out there, who are mostly doing the deep sea fishing. And this catchment area has Tuna and sharks. And almost 100,000 tonnes of tuna can be easily harvested in this area.

The beauty is that because of the lack of the industries, there is no pollution, there is no chemical contaminants in the sea, and it is absolutely organic harvesting of the fish. That is the tuna fish. Second point, what they told in the seminar, was that the methods used by the fishermen of Lakshadweep, are traditional in nature. And they are internationally certified as the organic and sustainable harvesting of Tuna fish. So this is a very good selling point, in spite of the fact that the price of Tuna from Lakshadweep is higher than the average price which is available from other places. So, for example, approximately on an average, if the price of Tuna, from other mainland places in India, if it is available for INR 125 per Kg, the price of Tuna fish in Lakshadweep would be anything near INR 200 per kg of Tuna. So it is definitely high price. But the quality is premium, the variety is premium, it is organic, absolutely free from chemical contaminants. And with a tag internationally recognized tag, that the fish, wild catch, is absolutely sustainable and traditional in nature. So this is something Gupta was actually looking for, This opportunity, Gupta was looking for. So he extended his stay. And after the seminar, he talked to the people how to go about it and what things has to be done. He did some research in Lakshadweep. He made friends with some of the people in the Fisheries Department of the Lakshadweep Administration. And with all the information and data, he came back to Mumbai.

And what he was trying to do now, was trying to share this information with his Japanese contacts, with whom he was in touch with a very long time. And one of the Japanese contacts, showed interest in this new opportunity, which was of Lakshadweep variety, organic Tuna. And he also said that according to his research, the handling, which is very, very important in Tuna fish, that as soon as it is caught, it has to be handled in a fashion that the skin color or any other feature of the fish does not change. It remains the original color. So these things when he mentioned to his counterparts in Tokyo. So one of the person invited Mr. Gupta to Tokyo for a presentation with his group of importers. So he realized that this is a good opportunity to present the whole idea and value proposition. He prepared himself and he proceeded to Tokyo with a direct flight from Mumbai to Tokyo, and he reached Tokyo and he reached Tokyo. So friends at Haneda airport in Tokyo, he was greeted by the person who had shown an interest in his proposal, and he was received by the person who took him to one of the hotels, in Tokyo, for a meeting cum presentation. And he had arranged the group of importers, a consortium of importers which were mostly based in the the world's biggest fish market that is Toyosu. So friends, Mr. Gupta, along with the person, went to the hotel and settled down for the day because it was already late. And he started preparing for the presentation next day. So Mr. Gupta went to this hotel. This hotel was in the airport complex only, Haneda airport complex only. And he started preparing for the presentation next day. So Friends, he was making sure that the presentation next day, would be perfect and he had really made his presentation in such a way that whatever he learned about the Japanese market, Japanese business, he wanted to incorporate the real value proposition and he really wanted to deal with Japanese importers. And this was his dream for the last more than five years. And tomorrow was the day when his presentation will make it possible to realize his dream.

Next day, he was picked up by the person, the partner who had shown interest in Mr Gupta's offer, and they were heading towards Toyosu market. Toyosu market in Tokyo, is the world's largest market, and it is very, very modern and sophisticated market complex, which was built in 2018, replacing the old old Tsijiki market. So the name was changed to Toyosu. And this market is very, very famous market. Finally, they reached this market, this market complex, very big complex. It is almost 400000 square meters complex is there, the new complex, new market. It is a very, very big complex with the auction halls and wholesale market and retail market. So this is Toyosu market, which is the world's largest complex of fish market. So Gupta was really impressed with this place and the person, the other person had arranged to have this presentation by Mr. Gupta in one of the conference rooms in this market, because most of these importers are having their offices in Toyosu market. So Friends, you can see from here that below this particular floor, you can see that the lot of fish stall are there.

These are wholesale stalls, actually friends. So from both sides, you can see these stalls. So the visitors are not allowed actually to go in the hall because of the hygiene reasons. But this is the viewing gallery from where you can see these stalls. So there are many booths there and auction also take place of the fish in this area. So you can have observation of these halls, from these type of windows, in this gallery. So this is a very, very big and very modern market of Japan, the largest fish market. So Mr. Gupta presented in front of about five, six importers of Toyosu market and explained that the Lakshadweep variety of Tuna, is organic in nature, without any chemicals, and he can offer the daily supply of at least 5 tons of fish, every day. And that was very, very attractive. Actually, there was visibly, there was interest in the Japanese importers, but they were not really divulging what is going on in their mind. So the presentation of Mr. Gupta went for almost three hours because Mr. Gupta had really given a lot of facts, lot of statistics. He explained that the Tuna exports from India to the world and the Japanese market, which is the biggest market for Tuna, for India, is almost 20 billion dollars per year. And it's a big business, he was talking about. And he also explained the details of his business, which he was already doing with the U.S. and UK on Tuna exports. And this particular Lakshadweep varieties is premium quality. It is little expensive And it is definitely going to be a very, very interesting business for the importers. And he can even offer the exclusive arrangement of selling the Lakshadweep variety, through his company, to this group of importers, if they assure 5 tons buying quantity for export by air from India. So with all these details, with all these facts, he tried his best to convince the Japanese importers and tell them the merits of the case and what is the value proposition. And he also indicated approximately what price he can give CIF Tokyo for the tuna of Lakshadweep,, which is of a premium quality. So after that, the Japanese people did not indicate what is going on in their mind. So the person who had invited Mr. Gupta, he joined Mr. Gupta and went with him to his hotel, back to the hotel. And on the way, he explained to Gupta that they require at least two days, to decide on any trial orders or initial orders or any commitments.

If Mr. Gupta was willing to wait for another two days, it will be a good idea for Mr. Gupta So since Mr. Gupta was trying this deal with Tokyo importers, because Tokyo is the biggest market for Tuna, in the world. And where he was here in Toyosu Market, which is the biggest market of Tuna in the world, of the not only the fish, actually, it is the biggest food market in the world, actually, most modern market in the world. So he was so much impressed with this and it was a dream for him to do business with Japan. So he said 'absolutely no problem'. He extended his stay for another two days and he said, I'm ready to wait for the final answer and if any negotiation has to be done. So this is what happened. Friends.

So friends, Mr. Gupta stayed in Tokyo for two days and he visited some very interesting places with some of his other business contacts and his visit to Tokyo was his first time. So he really wanted to see certain places in Tokyo and he spent good time in Tokyo, learning about Japan, about doing business with Japan. So it was a little longer wait. For two days, he was just waiting for any confirmation from the importers, from Toyosu Market. So, Friends, in the evening of the second day, he got a call from his main contact, the main importer, and he wanted to meet him on a dinner in one of the restaurants And Gupta went there, as was advised by the contact and the contact told Gupta that the Five Importers Consortium is willing to do this business. And he gave a sheet, the final sheet, which was finalized by all the five importers of Toyosu market. And they were keen to start business and they wanted to start the business with daily supply of 5 tons for 90 days. And if everything goes well, the duration will be extended further So this is what he told. So friends the the sales sheet, which was given by his contact in Japan, from the Toyosu market, it said that the consortium is willing to offer a price of yen 1000 per kg of the Tuna fish of the Lakshadweep variety, and they are willing to give the order for 5 tons daily supply which was to be sent by air with direct flight from any major Indian airport to Tokyo. And the validity of the contract is six months. But the supply is valid for 90 days only. So this is a trial order kind of thing. And if everything goes well, it was told orally that the same will be extended. Now the payment terms offered was 15 days supply value to be paid as advance on C&F basis and balance by direct bank transfer 15 days after the last AWB date of the 30 day supply. So every 30 day supply, whatever is the last day. the 30th date of the AWB, will be calculated and within 15 days the balance will be transferred directly to the bank. So there is no letter of credit in this. There were other conditions. Use of straw packing material is prohibited. Proposed packing should be cleared with importers as they have a definite preferences. And the same, he clarified, the person clarified, that it will be cleared by the importer, by some videos which will be sent by Mr. Gupta even before the shipment. So that thing will be cleared with the packing details. That has to be discussed. So goods should be marked according to normal commercial practices with Metric weights and measurement only. Japanese translation text to be faxed about the markings, on the packages. Certificate issued by any approved authority in the country of origin, which means India in this case, stating that the animals were free from designated infectious diseases. So that home work Gupta had already done And actually he knew about this formality because this similar formality he was already doing for USA and UK. Faxed signatures are not permitted. Typing and other errors in documents should be avoided at all cost, as these often result in serious delays and complications at the point of entry in Tokyo. Then the documentary requirement, as mentioned by the importers, the Commercial Invoice is required. A minimum of three copies. Must be signed by the supplier and include the following details: Marks and serial numbers of the packages, description and quantity of goods. CIF value actually there was a mistake here. So it is actually C&F value. So this correction was told by the contact. And he said that he will send the other copy. So this is C&F value. And the place and date of preparation, destination and consignee, name of the vessel, import license number, which will be provided by the importer. And conditions of contract relating to the determination of the value. It further says, that it is strongly recommended, whenever possible, to include the HS Commodity classification of the goods to be imported. Complete invoices and packing lists should be forwarded promptly to the importer by airmail. About the Insurance. The proposal said that air insurance from main Indian International Airport to Tokyo not to be paid by the seller. So that's why it is C&F. The copy of the insurance certificate against the recurring insurance policy will be provided by the importer. So Friends, the note further says that the AWB is required in 10 copies- one original and 9 copies of AWB, required to be sent by airmail, to the IMPORTER. fax copy to be sent without delay after shipment. Packing list 2 copies. Certificate of origin required for GSP concessions issued by the diplomatic officer in the Japanese Consulate in India.

Other requirements. Health certificate from the country of origin, by approved authority. In this case, it is Fisheries Department of the Lakshadweep Administration. Complete text and the representative video of the fish catch and and the video of the handling of the post catch was required. And this formality was only one time. No food additives to be used at any stage. Chemicals presence in the fish has to be analyzed and the requisite certificate has to be submitted. So this was the note, which was given to Mr. Gupta and it was said that this note is valid for 7 days and Mr. Gupta can review the note. And if he thinks that any discussions are required. So what he was told that after reaching India or wherever he is, he can enter into a zoom meeting. He can arrange a zoom meeting, in case any doubts are there or any further changes are required, in the note, You can either send by fax of the contact person can also arrange video conference meeting with the importers. So with this, Mr. Gupta was given this note and Mr. Gupta thanked the contact person, the main importer who was in touch with Mr. Gupta for very long time, and he knew him quite well. So Mr. Gupta left Tokyo the same night and came back to Mumbai. Now, friends, there were a lot of things which were going on in the mind of Mr. Gupta. He looked at this note several times and he was trying to understand that what would be the challenges in this particular offer. He had almost seven days to reply, to confirm the business And he was quite happy that at least he has got an offer from the importers. And that's a very concrete offer because it was on the proper letterhead of the importer's consortium and signed by all the importers. This note was signed by all the importer. So he was quite upbeat about this business and he never wanted to leave any stone unturned about this. So what he quickly did, he looked at the cost angle of this offer and he prepared this cost sheet. So according to this cost sheet, C&F Tokyo price offered was Yen 1000. So which comes to approximately INR 680. Cost of buying ex Agatti airport, export packing already included in this.

And with the requisite handling by the Lakshadweep fishermen, who are to be trained in the handling part, which Gupta had already discussed with the Lakshadweep Administration and the Administration fisheries department was ready to help Mr. Gupta in this. And this handling of the catch was very, very important part, and this training was also very important. But this was a one time training to a group of fishermen who were part of the cooperative of the fishermen in lakshadweep. So this price was likely to be definitely less than INR 200 per kg because it was just an indicative price. And he did some research on the price, which can be definitely kept below INR 200 in the foreseeable future. Unless there is some major jump in the price, there is no chance of exceeding the price of INR 200 per kg, after he discussed with the Lakshadweep Fishermen's Cooperative Incharge and the people who are the big fishermen. So this price was very much possible and doable. In fact, he could even negotiate further little bit on this. And he discussed with the airlines, which are operating from Agatti airport. And what he found, that a very comfortable price of INR 50 per kg INR 50 per kg is possible from Agatti to Bangalore airport by chartered flight. So the national carrier, that is the Air India Alliance was willing to do this and they were offering this concessional price, given the difficult cargo in this for the simple reason that they had the idea that the flights which will be chartered and going from Agatti to Bangalore, will return with the essential commodities for these 70,000 inhabitants of the various Lakshadweep islands. So they will be able to really cover the cost of a return flight. So that's why they offered a very attractive price of INR 50, which could be a little bit negotiated further.

There was a scope in this price. And Banglore to Tokyo cargo flight, Mr. Gupta was able to get the price of 360 Yen per kg. It is the initial price. There was a scope for negotiation in this, looking at the daily supplies and the bulk cargo. So he got the price of INR 245 per kg and he calculated the other incidental cost, training of the fishermen and the documentation charges, certification chanrges and the Fisheries Department formalities and all those things. He calculated that the price should not exceed INR 5 per kg, on the other costs. So total costs to Gupta, delivered at the Tokyo airport comes to INR 500 per kg, as against the receipt of INR 680. So Gupta was making a clean margin of INR 180 per kg, which comes to a daily profit for 5 tons supply, every day to around INR 900,000. That is 9 Lakh Rupees, for the daily shipment of 5 tons. So this was the very basic calculation. So there were challenges in this for the simple reason that this deal was being done for the first time. The customers in Japan are very demanding and he wanted to make sure that the order continues after 90 days. And he was now quite upbeat about this deal. And he was looking at this deal from both the future and the current profits. But he was in a dilemma about the possible challenges and the cost overruns or the documentation part which is mentioned in this note, which he got from the consortium. So friends, Mr. Gupta took almost two to three days to review the note and think over it and talk to many people. He even visited the island again and talked to the Fisheries Department there and talked about the difficulties and challenges which are likely to be there for the trial order, that is for 90 days. So focus was this 90 days at the time.

The Fisheries Department of Administration was willing to give all possible help in this regard. So now Mr. Gupta had to decide whether to go ahead with this deal. Or say yes or no. So friends, this particular case require a good brainstorming, looking at the Japanese market and the things which are learned in this course, I would like you to attempt the next assignment, which is given after this study, in the next lecture, and you attempt this assignment and submit your answer in the assignment section in the requisite area. And the same will be reviewed by me. And if you want to see the answer after my review, the answer and my own solution to this dilemma I have presented in this assignment. At the end of this assignment, you can see the video which I uploaded about my views on this deal and what could be the challenges and what is the opportunity in this deal. So these things you have to convey the challenges, the opportunity. And if you feel that this cost estimation is not correct.

If there are any errors or any overruns. So that thing you can mention in this assignment. And friends, also, about any challenges with regard to the documentation and procedure which is required for Tuna exports to Japan. And as mentioned in this, Proposal Sheet/Sales Sheet So those challenges also has to be analyzed and mentioned by you. Thank you very much.

Optional Assignment: Based on the case study on Exports of Tuna to Japan

Description: This assignment is based on the 2 parts case study as discussed in the previous 2 lectures - titled - Exports of Tuna to Japan. The assignment requires the students to watch these 2 lectures on the above case study and attempt the questions raised to analyze this case as suggested.

Estimated duration: 30 Min

Assignment Instructions

Watch the 2 previous lectures on the case study videos on - Exports of Tuna to Japan and analyze the case from the point of view of the documentation, payment terms, and other terms of trade offered by Japanese importers of Tuna in Tokyo. The sales offer sheet as provided by the Japanese importer to Mr. Gupta is attached below in the word file to review the case.

Please note that this assignment is not mandatory. You can write your answer and send it to the instructor through direct message or post the solution in the Q&A section.

Question

The case involves several twists and turns, in the efforts of Mr. Gupta to sell the premium quality of Tuna to Japan. One most important part of the offer made by the Japanese importer as per the case study relates to the documentary requirement and the terms of trade. Analyze the case in terms of these requirements to identify the problem areas if any. If there are no problem areas, submit your views on the fulfillment of all the requirements of the trade by Mr. Gupta. As an advisor to him, write what suggestions, tips, and guidance will you provide so that he can go ahead to finalize the deal.

Solution

For the answer to this case watch the video explaining step by step the merits and demerits of the case from the point of view of the documentation required, terms of the trade as well as the financials. Also, see the attached financials calculation sheet as used in the case study. The file is given in the downloadable files in the resource section of this lecture

Hello, friends. Welcome back. So, friends, I'm very thankful that you have watched this case study, very interesting case study of the Tuna exports of the premium quality of Tuna exports to Japan and especially to the Tokyo large market. The very best and the top market of fish in Tokyo, and the main variety which is imported is tuna. So Friends in general, I could say that the offer made by the Japanese importers is very good and most of the conditions which they're mentioned, although there are certain confusion, I will tell you where is the confusion? Otherwise the offer proposal, which is given by the importers to Mr. Gupta in Toyusu market, are on the absolutely business lines, the business practices and very important the special requirement of the Japanese government. The documentary requirement, the health certificate requirement are all based on the Japanese government regulations, rules and regulations for the documentary system. So there is absolutely no question of the price being not in favor of Mr. Gupta. It is very much in favor of Mr. Gupta. he's making a clean margin of almost INR 180 per kg, which is quite handsome, looking at the type of investment which he is making. Although there are challenges, but the profit margin is really, really very encouraging, very motivating. So he is likely to make approximately 900,000 Indian rupees every day. So that's very interesting. And the quantity, of course, five tons per day. Mr. Gupta himself has mentioned in the presentation he can supply these five tons per day, and he has done the complete background research supply-side research to find out whether this quantity can be supplied and the logistics for supplying five tons per day. He has already worked out. So I think there is no problem with the five-tonne quantity also. The validity of the contract is six months because the possibilities of delays from Mr. Gupta is there, although in this proposal, nowhere the importers have mentioned what happens if the delivery is not effected on a particular day or there are certain delays.

But nevertheless, the importers are also trying to see whether the performance of Mr. Gupta is good. So if one or two times it so happens that he's unable to dispatch the goods on a particular day that may be ignored by the importers, but overall they want to see that in these 90 days, how Mr. Gupta performs as far as the supply of the tuna fish is concerned by air. And payment terms again is little challenging in the sense that although the importers consortium has agreed to give 15 days supply value, which is to be paid in advance and Mr. Gupta will get a handsome amount. But the problem is that the rest of the payment will be made 15 days after the 30-day supply. So that is a little challenging in the sense that since Mr. Gupta is dealing for the first time with Japan, there may be certain risks involved, but Friends. These can be mitigated if Mr. Gupta insists on standby by LC or a bank guarantee that the balance payment will be made as indicated in the proposal. So once the sales contract, the detailed sales contract is drafted. This matter can be taken up there. But Mr. Gupta has to negotiate on this Standby LC or the bank guarantee for the rest of the payment. But the question of the use of straw packing material, which is prohibited that can be taken care of because Mr. Gupta had already done this exercise and there is no use of any straw packing in this particular case and proposed packing should be cleared with importers as they have definite preferences. Those preferences have to be already cleared and should be part of the contract, so it should not happen later on that the importer says that the packing was not as per what was preferred by the importer, so that thing has to be checked before the contract and it should be part of the contract. So goods should be marked according to the normal commercial practices with metric system only, so there is absolutely no problem. It is as per the Indian, as well as many countries which use metric weights and measurement. So there is no problem with that. Japanese translation of the text to be faxed about the markings, is also no problem. Certificate issued by an approved authority in the country of origin that is India stating that the animals were free from designated infectious disease, so the Fisheries Department has already agreed to help in this part, so there is no problem. Fax signature not permitted, no problem. Typing and other errors has to be avoided.

Mr Gupta has been doing this business for quite some time now with the US and UK, so he's very much aware of the fact that the errors, typing errors can lead to major delays. So he's very confident that there'll be no errors in the documentation and the export documents will be absolutely accurate and perfect. Then the documentary requirements, which are given in the proposal sheet, which was given by the Japanese importers refers to commercial invoice. The three copies are as per the regular and general practice, and it would be signed by the supplier and will include these details. And there are absolutely no problem to indicate these details. Quantity, description, C&F value, which is based on Incoterms 2020, place and date of preparation, destination, name of the vessel and the import license number which the importer will have to declare in the sales contract itself that it will be supplied before the shipments, so it will be a one-time exercise. The import license has to be mentioned in any communication which is done before the sales contract and import license number would be provided by the importer. Then conditions of contract relating to the determination of the value is also no problem, which has been already discussed actually. It is strongly recommended, wherever possible, to include the HS commodity classification of the goods to be imported and it is already there with Mr Gupta. So there is no problem. Complete invoice and packing list should be forwarded promptly to the importer by airmail and also by fax an email after the shipment, so there is no problem with that. Insurance, In the case of Japan, it is a very, very usual practice that the insurance is generally made by the importer. So as per the requirement of the Japanese government, it is the case. That is the reason why this condition has been provided in this proposal form. And Mr. Gupta will have absolutely have no problem with that until the importer does supply the certificate of insurance and there has to be a very clear cut timing for that and the modalities of supplying this certificate.

In fact, not just the certificate, rather the insurance policy itself, which is to be taken for the entire period in advance. So that has to be supplied by the importer in order to avoid any problem, then Friends Air way bill, 10 copies, one original and 9 copies will be supplied by the shipping line. So there is no problem. So Mr Gupta can keep the copy, non-negotiable copy of the document with himself and the rest he can send by airmail and can fax also to the importer. Then packing list of goods is no problem. It has to be signed by the seller. That means Mr Gupta. Certificate of origin again is not a problem. Mr Gupta has checked and it is very much possible to get this GSP concession certificate for certificate origin and he will be able to arrange easily. Other requirements include the health certificate from the country of origin that is India by a approved authority. In this case, it is the Fisheries Department of Lakshadweep administration, which have already assured Mr Gupta for all possible help to be done. And all these facilities can be easily provided to Mr Gupta about which Mr. Gupta already is very much conversant because of his past performance of the tuna business to US and UK. No food additives to be used at any stage and the same has been checked by Mr Gupta and there is no problem with that and this certificate of the analysis of the chemicals present in the fish. The protocol is there, the international protocol is there and the requisite labs are available in most major cities and especially in the cities which are near to the shores So Mr Gupta will have absolutely no problem in obtaining this particular certificate of the chemical analysis. So Friends Overall, this proposal is not having any major issues. Some minor issues are there, which can be easily discussed through Zoom meeting because the main importer has already assured Mr Gupta that he can arrange another meeting and Mr Gupta should not find many, many faults with this proposal.

Certain areas of the contract, which refers to maybe the balance payment and the guarantee for the payment, those things can be discussed. In certain cases if the proper sales contract is there, even if there is no bank guarantee or the standby LC available. The due diligence of the importers has already been done by Mr Gupta, and he has found that all the importers in the consortium are not new. They have been doing this business for a very, very long time and there shouldn't be any problem. Generally, Japanese importers, they do not default on the payments and very rarely they default on the payments. So that should not also be very risky. But still, Mr Gupta should try for the standby LC or a bank guarantee. So overall Friends I can tell you that this proposal is really a big opportunity for Mr Gupta, for the simple reason that the Japanese people are little slow in decision-making and forging the relationship. But once they forge the relationship, they continue that relationship and they believe in Long-Term relationship. One last thing I would say that the price which has been given by the importers, however good it may be, it is subject to the fluctuation of the price at the supply side.

Mr. Gupta should discuss this matter, that these prices are valid for these 90 shipments only. For the rest of the shipment, there has to be found some formula of taking care of any major fluctuations in the supply side price. So that factor has to be discussed by Mr Gupta with the consortium and certain flexibility on the pricing on the higher side or lower side, for example, may be plus or minus five percent or seven percent That has to be provided in the contract, and it is very much possible that the importer's consortium will agree on this. Thank you very much.