Episode #132: Do The Right Thing In Japan, Always

Why is reputation such a critical business asset in Japan?

For executives leading Japanese companies and foreign corporations in Tokyo, reputation is often more valuable than any single contract or quarterly result. In Japan’s interconnected business community—especially among foreign companies—news about your behavior, payment practices, and integrity travels quickly and quietly.

In this environment, “being honest, law-abiding, and treating business partners fairly” is not just a moral stance; it’s a strategic advantage. Leaders who pay on time, communicate openly during difficulties, and show respect for suppliers and partners build a reputation that attracts new opportunities and protects them when problems arise.

In short: In Japan, your reputation is a powerful currency—once damaged, it is slow and costly to rebuild.

Many executives assume that “serious trouble” is unlikely in Japan because crime levels are comparatively low. That assumption can be dangerously naïve. Even small lapses—shoplifting a low-value item while carrying cash and illegal substances, or joining a bar fight after a big night out in Roppongi—can escalate into severe legal consequences.

Japanese prisons are designed for punishment, not rehabilitation. Foreigners who end up incarcerated often experience intense fear, uncertainty, and isolation. Consulates and Embassies cannot “get you out”; their role is limited to ensuring you are treated under the law and, if you agree, informing your family.

Foreign business leaders, especially those from cultures with heavy drinking norms, must be acutely aware that alcohol does not excuse misconduct, and local law enforcement is unlikely to side with a foreigner in disputes with locals.

In short: Legal trouble in Japan is life-altering; prevention through self-discipline, sobriety, and ethical conduct is the only smart strategy.

Today, the reputational risk is not only legal—it’s digital. A single social media post can damage or even shred your standing in the market:

• A frustrated small business owner broadcasts a Facebook post naming a “bad debtor” to all their contacts.

• A fake Facebook page, convincingly designed, appears with a person’s name and a sensational tagline, listing alleged business misconduct and “evidence” of unethical behavior.

Whether the accusations are true, exaggerated, or completely fabricated, the impact can be enormous. In Tokyo’s relatively small “foreigner business village,” posts are quickly shared, screenshotted, and remembered. Prospective partners Google you and review your business social media before deciding to work with you—especially when large amounts are involved.

Once your name is associated with non-payment, deception, or scandal, future deals may quietly disappear. Even if you could prove your side, the stain is semi-permanent and time-consuming to remove.

In short: Social media makes reputational damage instant, borderless, and sticky—ethical, transparent behavior is your best defense.

Some companies rely on clever cash-flow tactics that may look smart in the short term but are reputationally toxic in the long term:

• “Too clever by half” debt tactics:
  When a business owes a significant sum, it may bet that the creditor won’t go to court because the amount is too big to ignore but not big enough to litigate. They then offer “pennies on the dollar,” knowing the other party might accept anything rather than nothing. This can solve a temporary cash-flow issue—but labels the debtor as untrustworthy for years.

• Long payment terms that crush smaller suppliers:
  Large listed companies sometimes impose 60–90 day payment terms (or more) on small and medium-sized suppliers—the very businesses that most need prompt payment. The irony is that those who need free credit the least extract it from those who need it most. While this may improve the large company’s interest income and cash flexibility, it leaves suppliers feeling exploited and resentful.

For small business owners, this “stiff the small guy” pattern is all too familiar and leaves a lasting negative impression of big-brand ethics.

In short: Aggressive payment tactics may strengthen cash flow but weaken trust—something your brand and reputation can’t afford in Japan.

Celebrations in Tokyo—especially in nightlife districts like Roppongi—are part of many corporate cultures. However, high alcohol consumption, late hours, and crowded venues increase the risk of conflict.

Consider this scenario: After a night of heavy drinking, a fight breaks out between your group and some muscular locals or other foreigners. You jump in to help a colleague, things escalate, and the police arrive. If locals are involved, it’s unrealistic to expect that your side of the story (“They started it!”) will be treated favorably. The judicial system is likely to view your behavior harshly, especially if alcohol and violence are in the mix.

Executives and managers are role models. Their choices—especially in public, social, and alcohol-fueled contexts—directly influence how employees behave and how stakeholders perceive the organization’s culture and integrity.

In short: Manage your behavior and your team’s behavior in nightlife settings; one bad incident can outweigh years of good performance.

• Reputation is fragile and slow to rebuild—legal issues, payment tactics, and social media can damage your standing much faster than you can repair it.

• Japan’s legal and social environment is unforgiving of misconduct, especially when alcohol, violence, or deception are involved.

• Unethical payment and negotiation tactics may solve short-term cash problems but create long-term enemies and close off future opportunities.

• Ethical leadership, clear communication, and structured training in leadership, sales, presentation, executive coaching, and DEI are powerful tools for protecting and strengthening your reputation in Japan.

Founded in the U.S. in 1912, Dale Carnegie Training has supported individuals and companies worldwide for over a century in leadership, sales, presentation, executive coaching, and DEI. Our Tokyo office, established in 1963, has been empowering both Japanese and multinational corporate clients ever since.