Japanese Business Practices

5 U.S.-based multinational corporations have been unable to penetrate the Japanese market successfully for decades. Most executives blame a very uncompetitive distribution structure. The reality, moreover, is far worse as American companies face a Herculean task in Japan.
10 Japan has a unique characteristic that few corporate executives ever are willing to admit; business relationships in Japan are run by the zaibatsu (the large Japanese trading corporations). These companies borrow at ridiculously low interest rates and at more favorable terms than their Ameri- can counterparts. Furthermore, they control a labyrinth of distribution chains that are hostile to even Japanese entrepreneurship, let alone U.S.-based corporations.
15 American corporations face many expensive hurdles to compete effectively in Japan. Firstly, the zaibatsu will only trust the American company if it reveals sensitive manufacturing and trade data. Secondly, the American company must do business with the zaibatsu’s subsidiaries (separate com- panies owned or controlled by the zaibatsu) who are often more expensive than traditional American suppliers. Finally, an American competitor is still
20 required to build large plants and warehouses to assure Japanese custom- ers that they have a local presence in Japan. Consequently, American companies have to dig a very large expensive hole and then spend many years trying to climb out.
25 Zaibatsu consider these investments to be critical in order to assure the local customer they will be absolutely satisfied with their purchase. One critical mistake that many American executives make is that they fail to comprehend that Japanese appreciate the distribution system in Japan. Consumers endure the high costs of Japanese distribution because they expect the
30 local distributor to replace or repair a product for free, months after they have purchased it. This is unheard of in the United States where goods are only replaced if returned within two weeks or less of the purchase date and only if due to manufacturing defects. Thus, the Japanese regard failure to satisfy the customer completely as anathema to the way they do business.

11. What is the main idea of this passage?

  • l. Japan is an easy market for American business to penetrate.
  • m. Foreign corporations in Japan face few hurdles.
  • n. Japanese zaibatsu have limited influence in Japan.
  • o. American companies put the customer first.
  • p. The Japanese market is highly complex and has its own rules that American companies must adhere to in order to be successful.

12. The author contends that US corporations have difficulty doing business in Japan because

  • v. they cannot adhere to or accept Japanese rules of trade.
  • w. they cannot speak Japanese.
  • x. they can make more money in Singapore.
  • y. the Japanese prefer cheaper Taiwanese goods.
  • z. the Japanese use the metric system.

13. The zaibatsu will only trust the foreign corporation if it meets all of the following except:

  • l. build large infrastructure in Japan
  • m. share manufacturing data
  • n. put the corporation first over the customer
  • o. do business with the zaibatsu’s subsidiaries
  • p. share customer and trade data

14. The reader can infer from the last paragraph that American companies typically

  • v. believe Japanese return policies to be too generous.
  • w. never replace defective goods.
  • x. view defective goods as the customer’s responsibility.
  • y. never manufacture defective goods.
  • z. view the customer as an adversary after the sale.

15. By “American companies have to dig a very large expensive hole and then spend many years trying to climb out,” the author is describing

  • l. a horticultural procedure.
  • m. construction of a building’s foundation in Tokyo.
  • n. Japanese zaibatsu experience in penetrating the American market.
  • o. the very large investment needed by American corporations and the many years it will take to make a positive investment return in Japan.
  • p. the procedure that American corporations face in drilling for oil in the Bay of Bengal.