This paper researches a number of published books and journal articles that conduct a global business cultural analysis of Japan. It also studies its cultural elements, the way these elements affect business development, how they differ from culture and business in the USA, and the implications for US businesses that wish to enter the Japanese market. The goal of the paper is to show numerous cultural rules and rituals that the Japanese follow, to underline the level of importance of business etiquette in conducting business with the Japanese, and to admit that it is possible to overcome these cultural gaps. The Japanese investment market is very attractive, and those companies that can appreciate the Japanese manner of conducting business will get access to one of the strongest markets in the world.
Cultural Analysis of Japan
1. What are the major elements and dimensions of cultures in Japan?
Japanese culture is very complicated and not typical for the rest of the world. The major elements and dimensions of culture in Japan are language, communication, religious beliefs, ethical values, principles and behavior, social deportment and traditions, and social structures. It is important to know the major elements and dimensions of culture in Japan and how they influence the way the Japanese conduct business. When entrepreneurs do not understand Japanese culture, they may unknowingly offend their Japanese colleagues’ feelings and fail at conducting business in Japan.
Communication is a significant part of human life. The ability to express one’s thoughts with the help of language is a feature that distinguishes humans from animals. Communication is a very complex notion that includes verbal and non-verbal aspects. Language is strongly influenced by culture, and this is the main reason why people have different communication styles in different countries. The first thing a foreigner should know about the Japanese is that in a Japanese company the leader should not communicate with his subordinates in an informal or friendly manner, because they belong to different social groups. The social status of an individual is very important, and it mostly determines a person’s communication style (Martin, 2006). Second, people that occupy lower positions in the company should not start a conversation with a person of higher social status. Moreover, people that occupy leading positions in the company often do not speak directly to their subordinates. Third, the Japanese are not a very talkative nation. Although verbal communication is vital for them, it is not the only or even the main way to communicate. Words can have a number of meanings, which is caused by the peculiarities of the Japanese language. To catch the right variant of meaning, a foreigner may use the context and non-verbal signs that are often used by the Japanese and are of great importance.
The non-verbal aspect of language is an essential part of communication in Japan. As spoken phrase may have several meanings and can be interpreted in many ways, voice tone, gestures, and expressions of one’s face play a great role. For example, a frown can be understood as a sign of disagreement (Cooper-Chen, 2008). Such wide use of non-verbal methods of communication is determined by Japanese history and culture that regulate people’s behavior in all spheres of life. Even a quick glance of an individual may carry some idea. The use of gestures and facial expressions should not be emotional, because the Japanese do not like to show their feelings in public, either with the help of words or non-verbally. One’s face is the subject of personal pride, dignity, and social status, so it is unacceptable for a successful businessman to lose his face. The Japanese consider that an individual who cannot control his face and hands is weak and may refuse to conduct business with this person. During a meeting, the Japanese may stop talking and keep silent for some time. It is a normal occurrence and it does not mean that the silence should be broken, because that would be impolite. The Japanese use silence to find appropriate words and accurately shape their thoughts. They do not speak much, but always mean what they say.
1.1.2. Minimal physical contact/Bow and greet
The attitude of the Japanese to physical contact is completely different from what people are used to in many European countries. They do not accept touch in the process of communicating. Furthermore, the Japanese often keep with other people. Touches or other physical contacts are normal only between members of families or those who are in close relationships, but it is unacceptable to demonstrate this type of communication in public (Haruo, 2012). During formal communication, the Japanese culturally influenced protocol (being quite conservative) suggests a large distance between people. The handshake as a non-verbal element of communication is worth attention. Handshake is a common and normal way of greeting between different age groups of men and women in the majority of countries. It is very seldom used in Japan, but western countries influenced some changes in Japanese tradition. This makes handshakes acceptable on formal levels of communication.
Instead of a handshake, people usually bow to greet each other. The deeper and longer the bow, the more respect it expresses. The bow is not only a way to greet people, but it is also used to thank, ask for a favor, or to apologize. In Japan, one can often see the Japanese bowing over the phone, because the respectful attitude to each other is a tradition, and it does not matter for them that the counterpart cannot see them.
According to the Agency for Cultural Affairs, 105 million Japanese people described themselves as Shinto, 89 million think they are Buddhist, two million identify as Christian, and nine million comprise “other” religious groups (Inoue, 2014).
The Japanese vision of the world is specified by a practical approach to life, where the way of solving the problem is less vital than the fact of solving it. For example, a Japanese person who is ill may visit a doctor to get some medicine against virus infection and go to a Shinto shrine to heal his soul. The Japanese combine different beliefs and, unlike Europeans, do not think that they exclude each other.
Buddhism officially started to spread in Japan approximately in A.D. 538. The Emperor of Japan thought that this new religion could enrich their culture and unify the country. About 50 years later, Buddhism was adopted as the official religion (Snodglass, 2008). It has added the ideas of rebirth, karma, hard work, and meditation to the Japanese culture, and now these ideas are an integral part of the Japanese worldview. Buddhism emphasizes the importance of a teacher’s role, it gives a teacher a chance to help his pupil on his way to spiritual development. Buddhism also appreciates intuition more than logic.
Shinto is the native religion of Japan. It is the most popular religion in the country and very ancient. There are no writings that are considered sacred by Shinto followers. The Japanese worship the forces of nature and some abstract notions like gods why they call “kami”. After death, people also turn into kami, and the Japanese believe that their relatives become their protectors after passing. The most respected kami in the land of the rising sun is the Goddess of the Sun Amaterasu. Unlike many religions, Shinto accepts the fact that everything is relative in life, so there is no absolute right or wrong. According to Shinto, an individual is good by nature, and evil is done by evil spirits. The adoption of Buddhism did not make people refuse their native religion; instead, the two religions coexist successfully (Williams, 2006).
1.3. Social structure and organization
The feudal Japanese society included the nobility class and peasants. Peasants made up around 90 percent of the whole population. The Emperor and the Shogun stood at the top of the nobility class. The Emperor did not rule and was a formal leader, while the Shogun held real power. After Shogun, the most powerful people were Damiyo, rulers of the Damiyo provinces, who had land, peasants, and soldiers. Sometimes, if successful in his political career, the Damiyo could reach the status of Shogun. The Damiyo’s armies consisted of Samurai soldiers, who had a high social status and some privileges. Unlike peasants, Samurai had coats-of-arms and were allowed to have a surname and two swords. Samurai had a strict set of rules that even included ritual suicide.
Unlike many countries, modern Japan is not characterized by distinguished religious, ethnic, or social groups. Although the edges between the wealthy and the poor are blurred in Japan and more than 90 percent of the Japanese think that they belong to the middle class, descendants of Samurai families are still honored in Japan (Yoichiro, 2008).
For a long time, Japan has been separated into provinces and subdivisions, but over time the administrative division changed. Now it is informally divided into 8 regions that include some prefectures and autonomous territories (Tipton, 2008).
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Japan is a country with one of the most developed economies in the world. It is open for trade with many countries and, at the same time, it has been isolated from foreign influences for a long time. This fact is caused by the geopolitical position of Japan. This allowed it to create unique conditions for cultural and economic growth. Japan’s GDP is rather high and it is an attractive field for foreign investments. In automobile manufacturing, Japan takes third place. It has a record as the most technologically innovative country, and now it mostly specializes in robot technics, optic devices, and environment-friendly vehicle production. Japan owns 13.7 percent of personal funds in the world and is one of the most powerful countries. The tax rate is one of the lowest in the world, which makes the Japanese market favorable for foreign investments (Melville, 2012).
1.3.2. Political systems
Japan is a constitutional monarchy. The Emperor is the head of the Supreme Court. The Emperor can adopt laws and Amendments to it but can do nothing without the approval of the Diet, the legislative body of the government and the highest source of state power. The Diet appoints the Prime Minister, the head of the Cabinet. The Diet consists of two parts: the House of Representatives and the House of Councillors. The members are elected by the people, and one of Diet’s members is elected prime minister. The Diet also forms state budget and signs international agreements. There are 480 members in the House of Representatives that are appointed for a term of four years, but the Cabinet can dissolve it before the end of the term. In the House of Councilors, there are 242 members. They are elected for a six-year term. The Cabinet is the source of executive power in Japan. It consists of eleven ministries, the heads of which are appointed by the prime minister. The Supreme Court represents the judicial branch of power. The emperor is the Chief Judge of the Supreme Court, and the cabinet chooses another 14 judges. To become a judge, a person should be no less than 40 years of age. The political system of Japan is remarkable because its three branches of power are theoretically equal. Japan had experienced hard times, but now it has a developed successful political system and is on its way to a prosperous democratic society (Zakowski, 2011). 1.4.1. Elementary
The academic year in Japan begins in April. Children go to school from Monday to Friday or Saturday, depending on the school. Unlike secondary education, the elementary level of education is obligatory. The school year consists of three semesters with short breaks in winter and spring, and a one-month vacation in summer. Children begin to attend school at the age of six, and this event is of great importance for a child and their relatives. Almost all children attend public elementary schools. Private schools are more expensive and more prestigious and give an opportunity to enter prestigious secondary schools and then university, where competition is quite severe.
An elementary school class usually contains about 30 or even more students. During lessons, the class is divided into several groups. The courses include moral education, art, mathematics, the Japanese language, and physical education. The Japanese consider elementary school education a basic and essential part of an individual’s development that shapes their positive attitude to education (Mattig, 2011).
1.4.2. Middle school/High school
Japanese education and society in general value group interests over personal ones. In Japanese middle and high schools, students usually have about six lessons. They stay in the same room while teachers come to them. The middle school course of study includes history, science, economics, physical education, art, and foreign language. To improve international understanding, foreign literature and English were added to the curriculum. Many middle schools have a native-speaking English teacher who regularly teaches English and country studies. For the majority of students, their English teacher could be the only foreigner they see regularly.
High schools give their students information about the Japanese and English languages, history, geography, politics, economics, contemporary society, and Japanese calligraphic classes. The students learn about the global economy, international law, and ecology. Numerous high schools open English-speaking clubs for sharing experience and improving speaking skills. Some high schools organize tours to English-speaking countries and foreign student exchange programs. The time of preparing for university entrance exams in Japan is called “the examination hell”. The competition is very hard because many students want to enter leading universities, but about 60 percent of people will fail their exams because of the limited number of places. Japanese adults have a reputation of workaholics, but Japanese children are very hardworking too in their desire to attain a decent place in the world (Liu, 2014).
Japanese students study at the university for four years. The opportunity to enter the university depends on the results of the entrance exam. There is also a direct connection between the university and the future job of an individual. Students from wealthy families may buy their place in private and less prestigious universities. Students who are going to enter public universities pass two exams, and those who enter private ones pass one exam. The competition is very intense as the number of applicants increases from year to year. Students who failed entrance exams usually spend the following year studying for exams and try one more time.
After studying at the university for four years, students get a bachelor’s degree. In some universities, after six years of training, one can get a professional degree. Students can choose a course relevant to their future profession; this may be engineering, humanities, sociology, etc. The cost of higher education is rather high and parents have to pay about 80 percent of the expenses. Students usually work part-time or borrow money from the Scholarship Association to help pay for their education. Japan’s system of higher education has developed one of the most intelligent nations in the world, in which the illiteracy rate is zero percent (Tsou, 2015).
2. How are these elements and dimensions integrated by locals conducting business in Japan?
Following the Japanese business etiquette during the stage of negotiations can help foreigners find partners for business in Japan. When a foreigner shows general knowledge of Japanese traditions and culture, it means that the success of the meeting is of great importance to them. As it was already said above, the greeting is an important moment of a business meeting. Japanese businessmen are used to western traditions so they may offer a handshake to their foreign colleagues, but it will be good to return a bow if a Japanese person bows. During business meetings, it is unacceptable to put one’s hands in pockets or check something on the phone, as the Japanese see this as a sign of boredom. Nothing could be more important as the meeting and questions discussed during it.
The etiquette of exchanging business cards is one of the most crucial moments of the first business meeting. Business cards should be of good quality and must be carried in a special case. When receiving a business card, a person should thank and bow. The business card should be taken with two hands, and the name and other information is written on it should not be covered by fingers. The card should be put in a case, but not into the back pocket because this action will be considered disrespectful (Martin, 2006).
There are several explanations of why Japanese business people do not seem very communicative during multicultural business meetings. One of the basic reasons is connected to the language. The majority of Japanese are not very confident in their English speaking skills, and that is why they prefer to remain silent. Even those who are good at English feel uncomfortable.
Another reason why the Japanese sometimes seem to be silent and not very communicative lies in their traditional communication style and the roles of the speaker and listener. Japanese think that interrupting the speaker is impolite. The speaker, in turn, should leave enough time for listeners to ask questions and express their thoughts. Moreover, speakers should catch and interpret nonverbal messages, but conversations during multicultural meetings often happen too fast for the Japanese to participate in and interrupt politely (Martin, 2006).
In spite of the fact that young Japanese people do not know their religious heritage very well, the Shinto religion is the source of many rituals that still are relevant today. The notion of “kata” that means ”the right way of doing something” originates from Shinto. Japanese greet and bow to each other because of the Shinto belief in the magic power of words. Shinto is rich in purification rituals, that is why Japanese people pay so much attention to being clean and tidy. A foreigner should remember to remove their shoes and put slippers on when a business meeting takes place out of office.
Japanese are mostly superstitious. Students may come to a Shinto shrine to get an amulet that will help in passing entrance exams, while an ill person may come to the shrine to pray for recovery. Japanese businesspersons pray and donate money to the shrine and ask gods for success in business. The cars manufactured in Japan are often blessed and purified by Shinto priests. Shinto influences all aspects of life in Japan and business is not an exception.
Business ethics around the world have several features that are common in many countries, such as politeness, punctuality, professionalism, etc. Besides having these basic features, Japanese business ethics is more formal and contains a number of rituals and rules. During a business meeting, each person sits in a defined place. A foreigner should watch what his Japanese colleagues do and follow them. Places in the car are also arranged due to the hierarchy, with the most important person sitting behind the driver, while the subordinate sits next to the driver (Haruo, 2012).
According to the Japanese etiquette, men should wear dark suits and white shirts from October to April and gray suits from May to September. It is acceptable to wear shirts with short sleeves in summer. Black suits should not be combined with white shirts and black ties, because of the Japanese dress this way for funerals. As for women, the colors for clothes are the same as for men. It is important to note that Japanese businessmen often do not take business women seriously at first. In order not to look like a secretary, women are recommended to wear shorter and preferably dark hair, trouser suits, and shoes with medium heels.
2.4. Values and attitudes
The cultural values cannot but affect all aspects of life, and business relations are not an exception. For the Japanese, group interests are always more important than the interests of an individual. During a business meeting, while speaking to a Japanese colleague, a foreigner will hear the name of the company first and then the name of a person. The Japanese have borrowed the idea of the importance of silence from Zen Buddhism. They believe that truth cannot be expressed by words, but it exists in silence. They feel comfortable remaining silent for some time during business meetings. Additionally, as a result of Zen’s influence, the Japanese are very flexible and quickly adapt to any change and any situation. Striving for perfect results is typical for the Japanese. That is why they spend more time studying all the details of future cooperation, asking many questions, and taking notes before signing an agreement with foreign partners (Rice, 2007).
Japanese businesspeople prefer to have relationships with their business partners that are more personal in addition to being professional. They like to make visits or to invite their colleagues to their homes to see them in informal situations. They want to do business with friends and with people they can rely on. Before the Japanese will feel comfortable to do business with a foreign partner, they will spend some time watching them and studying their reactions to different situations.
A contract is an official document that describes in written form an agreement between two sides. Despite the fact that the Japanese use written contracts, they usually think that if there is no trust between partners then a signed contract will not help in case of business difficulties. The Japanese are sure that written contracts are created to make business relations more stable and reliable. In Japan, negotiations do not end after signing the contract because the Japanese are very flexible and they are ready for circumstances to change (Cellich, 2012).
When economists think about the reasons Japan is so powerful economically, they state that the Japanese people are active and diligent. There is a set of business customs, which leads to economic growth. The notion of “unpaid overtime” is a normal thing for Japanese workers. They come to work at 8 a.m. and return home at night. The custom of having vacations together with the whole country seems strange, but that is how the Japanese rest. The vacations are very short, and the highways are always blocked with cars and airplane tickets are more expensive than usual during this time. Another strange custom is that the Japanese often hesitate to say “no” because they do not want to offend their counterpart. This causes some difficulties in business when it is hard to say what a person means by always giving a positive answer (Prasol, 2010).
2.7. Social structures and organizations
Any Japanese company is a reflection of Japanese society. It has a hierarchical order where everyone knows their place and function. It is this sense of certainty and stability that explains the efficiency of Japanese companies. Group-oriented society and team-building programs are parts of the Japanese way of life, which encourages all kinds of corporate life at all levels. Unlike the western hierarchic model where decisions come from the top, the Japanese social and corporate system is based on agreement and cooperation. In other words, people feel that their opinions are important and they take part in the decision-making process. However, the disadvantage of this model is that it takes time to make decisions that are based on accurate analysis or large amounts of data. Western businesspeople often wonder how to make the Japanese make their decisions more quickly. The truth is that it is impossible because it is their nature and the main reason for their stability in society, business, and economy as a whole (Ishida & Slater, 2009).
Japanese schoolchildren know from their first days at school that the realization of human potential is more efficient in cooperation with others. Children learn to recognize themselves as details in the social mechanism, first in the family and later at school, university, and company. Uniforms, banners, songs, and other symbols develop team spirit and unity, and the Japanese children get used to them since school years. Different group activities serve to develop a sense of belonging of an individual to a definite group. It is normal when a person depends on the society, as every person is an essential part of society and its product at the same time (Liu, 2014).
2. How do both of the above items compare with US culture and business?
A difference in communication is the biggest issue in building business connections between Americans and the Japanese. A difference lies in the nature of the Japanese and English languages. In Japanese, any gesture or facial expression may alter the meaning of a phrase. In English, words carry the basic meaning. This explains why English speakers tend to gesticulate actively or not control their face. Another issue in conducting business between Americans and the Japanese is the way they arrange their businesses and sign agreements. Americans prefer everything to be done quickly, rely on the signed agreement, and believe that it wholly regulates their relations with the other party. The Japanese like to know more about their potential business partner before signing an agreement. They are never in a hurry, enjoy doing everything “in the right way”, and try to combine business and personal relationships. Speaking about religion, Christianity, Shinto, and Buddhism are completely different in their origins, but they develop similar qualities in people, such as tolerance to other people’s religious beliefs. Taking into account the previous idea, any conflicts or misunderstandings related to religion are not likely to occur. The Japanese social structure is different from that of the USA. In Japan, everyone knows their place in society and in the US social levels are more distinguishable. Americans are ambitious, so they take efforts to reach higher social positions and know that their future is in their own hands. Unlike Japanese women, American women now take leading positions in politics and business (D’Andrade, 2008).
3.1 Compare/Contrast Japan with the USA
As a nation, Americans are more informal than the Japanese. It is not a problem for Americans to talk to a stranger in a cafe and in the service industry, a warm and friendly attitude to customers is encouraged. In Japan, traditions, rituals, and protocols play a key role in society. Moderation, silence, and respect for other people’s personal space are social norms. Americans and Japanese are both very nationalistic countries. They are proud of their history, culture, and traditions. The difference lies in the fact that, unlike Americans who are politically active, the Japanese do not pay attention to politics and leave it to the government. Japan is an ethnically and culturally homogeneous country. It is the main reason why they expect everyone who lives or works in Japan to know Japanese traditions and see the lack of such knowledge as disrespect. The US as a melting pot of nations is very tolerant of every ethnic group of Americans and welcomes visitors from other countries. The Japanese society is group and community-oriented, while in the US people are more focused on their individual desires, needs, and achievements. Therefore, Americans usually build their career in different companies and change companies when they find better jobs, while the Japanese usually work for one company their whole life.
4. What are the implications for US businesses that wish to conduct business in that region?
The United States and Japan now have a close economic and military relationship. They are among the strongest economies of the world. These countries are the closest military and political allies and economic partners. Outside the North American continent, Japan is the second-largest importer of U.S. goods. Despite some misunderstandings concerning base relocation on Okinawa Island, the US and Japan are economically dependent on each other (Sloan, 2008). The Japanese economy has the third GDP in the world, but among the most favorable countries for foreign businesses, it takes the 114th place (Bebenroth, 2015). Despite its strong and stable economy, it is better to do business in cooperation with Japanese business people. However, a high level of competition, laws that regulate foreign business, and a long period of waiting for profit should be taken into account.
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4.1. Analysis of facts from prior three questions
The United States and Japan have gone through s period of military confrontation and misunderstandings and entered a new stage of mutual respect and cooperation. As for the two economically and culturally developed countries, conducting business between the USA and Japan will be highly profitable if all the implications will be kept in mind. First, American businesspeople should learn to live and do business at the Japanese speed while staying in Japan and should not expect their Japanese colleagues to make quick decisions. Both sides should be aware of their counterpart’s social differences and demonstrate loyalty and respect to them. Social norms concerning American women that occupy leading positions in business are different in Japan, and this may affect the results of business negotiations. It is also important to remember the etiquette of greeting, bowing, presenting business cards, removing shoes, business attire, the role of silence, and nonverbal communication. Cultural values, business etiquette, and language could be serious gaps on the way to building a business with Japanese partners but, by understanding the cultural background of the Japanese, it is possible to overcome all cultural difficulties and develop successful international businesses.
4.2. SWOT analysis
As it was already said above, Japan represents the third-largest economy of the world and one of the largest automobile producing countries. Among the reasons why the US could get a profit from doing business in Japan is that it has a reputation for new tendencies and creativity. Japanese consumers like to stay in trend and test new technologies. Therefore, there are some risks in investing in the Japanese economy and starting a business in Japan. Very high competition from Japanese and other companies and the high cost of entering the market are among them (Takeda, 2006).
4.2.1 Strengths-cognitive abilities
A favorable market where a number of the world’s most successful companies can be found is one of the strengths. The second point is Japanese consumers that enjoy trying new technologies. Hence, Japan offers an ideal market for testing new devices.
The third point is that in Japan there are many small companies with original technologies. Building a business with these young companies allows foreign businesspeople to enter the market. Forth, its geographical position and favorable economic environment make Japan a perfect place for regional offices. The Japanese investment infrastructure is very strong. Japan’s industrial structure and economic environment can be compared to Western markets.
4.2.2. Weaknesses – economic development
Nowadays, the cost reduction tendency is observed in many spheres of business, while manufacturing products from China are increasing. This may cause some troubles for Japanese companies as they offer products and services of better quality, but for a reasonably high price, because the labor cost is high.
Conducting business in Japan can be extremely risky if all expenditures are not accurately accounted for. Taxation laws complicate the development of foreign businesses. Some Japanese companies that are afraid of competition protest against the foreign business invasion. They suggest that because of a foreign companies’ invasion Japanese companies would lose their customers. Some Western business people do not even try to do business in Japan, because it would require much time and effort, and no one can guarantee a good profit.
4.2.3. Opportunities – profit for food from other countries
Besides traditional Japanese cuisine, the Japanese also enjoy foreign food. There are numerous newly opened restaurants of Italian, French, Turkish, Indian, and American food in Japan. The Japanese try spaghetti, pizza, kebabs, fresh vegetable salads, fried meat, and bread with great pleasure, though all these dishes are not typical for Japanese cuisine. The market for foreign food and drinks offers great opportunities for foreign business people. First, the density of the population in Japan is very high, so people’s food tastes are constantly changing and the Japanese try foreign food with pleasure. Second, the Japanese are a well off nation, so they require the best quality goods and services and appreciate the exquisite French or Italian cuisine (Just-food, 2006).
4.2.4. Threats – economic slowdowns
The first threat is the number of economically developing countries that will soon become attractive business destinations. The second threat is the high cost of labor. It is a serious issue, especially in the context of competition with China. The third threat is geographical disadvantages, as a lot of money would have to be spent on importing goods and equipment before launching a new business in Japan. The fourth threat is that with the Japanese high quality of goods and products, the price should be as democratic as possible to compete with the developing economies of neighboring countries (Taplin, 2007).
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4.3. FDI Analysis
Japan is very attractive for foreign investors because it has a huge domestic market that comprises about 15% of global GDP, a well-trained workforce and innovative technologies, a comfortable and stable living environment, and the possibility to use Japan as a business headquarters for the entire Asian economic region. Japan offers superior trustworthiness, security, and certainty to its investors. Built on these advantages, the Japanese market is a favorable place to attract more FDI. The Japanese economy shows constant increases in personal consumption and other fields. Japan is in the process of economic recovery. This recovery in the Japanese economy shows the potential for establishing new businesses and gives a sign to the businesses interested in joining the Japanese market (Grondine, 2009).