When you have started working in a Japanese company, you can sometimes get confused as you often hear terms that you haven’t encountered yet at university or language school. In this column, I will summarize some of the Japanese business terms that you need to remember, especially when working for a Japanese manufacturer.
信用供与枠 Shin’yō kyōyo-waku (Credit line)
Line of credit, or as it’s called in German: “kreditline,” is often used for trade between BtoB businesses. This is especially true when it comes to foreign trade since it’s an easy method for the person in charge of the trade.
Specifically, an insurance company calculates a credit limit for the counterparty in question, based on past cash flow and sales composition. If the counterparty refuses to pay after the transaction, the insurance company will guarantee a certain amount of money back to your company.
For example, if the credit check results show that the line of credit of counterparty A in Singapore is 100,000 EUR, there is no risk that you won’t be able to collect your account receivables – even if you ship to counterparty A without waiting for an advance payment (as long as the amount is up to this limit).
Other payment methods (that are discussed below) involve some risks for either the seller or buyer, or both, and can involve complicated processes such as L/C. Transactions based on line of credit are thus preferred.
注文確認書 Chūmon kakunin-sho (Order Confirmation)
A transaction can only be concluded after an order confirmation has been issued. An order confirmation or as it’s called in German; “Auftragsbestätigung” is, in general, issued by the manufacturer who has received a purchase order from a customer (usually in the form of an email).
In some cases, production begins after the initial payment is received – but in the case of credit transactions using a line of credit aka kreditlinie, once the order confirmation (the Auftragsbestätigung) is issued, the manufacturer begins to prepare the shipment and incurs a cancellation fee for packaging, documents, etc.
無償/有償 Yūshō/ mushō (Free/paid)
無償(mushō) means “for free” and 有償(Yūshō) means “for a fee”. In some cases, when you send sample products to your customers they pay for the samples and shipping costs. However, it differs depending on the policy of your company and the counterparty in question.
Japanese are generally not cost-conscious, and give counterparties free sample products in advance for the purpose of creating positive business relationships. This is because Japanese offices tend to value face-to-face interaction and long-term relations. It obviously depends on the policy of your company, however, giving away free samples to business partners and aiming to receive trust from those is common among Japanese workplaces.
最小オーダーロット Saishō ōdārotto
(Minimum order quantity)
最小オーダーロット(Saishō ōdārotto) means minimum order quantity, or MOQ, in English and Minimum-Bestellmenge in German. Although it depends on the product category, in order to change the specifications of a standard product this minimum order quantity must be met. In Japan, the products’ specifications or traits are pretty flexible in order to get more customers. Businesses are often open to consulting with the customers to change these. In those cases though, the order would require a minimum order quantity.
在庫 Zaiko (stock)
在庫 (Zaiko) is the Japanese word for “stock”, or “lagerbestand” in German. Manufacturers hold inventory for products with serial numbers in their catalogs, but the quantity of the products in stock depends on time and season. This inventory may be low and in such cases, they may not be able to fulfill large orders.
It still takes several weeks from the time the production is started at the factory to completion (depending on the product), hence placing an order after the stock has run out can result in a loss of time. Therefore, it is necessary to periodically check the operation status and inventory of the factory to be prepared for customer orders.
納期 Nōki (Lead time)
What in English is called “lead time”, and in German, “Lieferzeit” is the whole process of manufacturing (when there is no stock), inspection, packing, and delivery (it differs depending on the industry of the company in question though). Therefore, you have to consider and be careful when you estimate the delivery time, particularly when there is a shortage of stock.
商番/商品番号 Shō-ban/ shōhin bangō (Item number)
Shō-ban/ shōhin bangō is in English called an “item number”, or in German an “Artikelnummer”. When sending an order, the customer basically sends an order based on this item number. 商番 (Shō-ban) is a shorter form of the word “商品番号 (shōhin bangō)”, they, therefore, both mean the same thing. When something on the other hand is discontinued, the term 廃番 (Haiban), “discontinue” is used.
強み Tsuyomi (Unique Selling Proposition)
Even within a Japanese company, English terms are often used. One such term is “USP (Unique Selling Proposition)”. In Japanese, this is called “強み(Tsuyomi)” or “売り(Uri)”. In German, it is translated as Alleinstellungsmerkmal, but the term is not often used because it is too long.
“What is the USP of this product?” is often a topic when one is holding a presentation for a customer. Hence, you need to learn the different characteristics of your products and understand their strong points (unique characteristics) that will win your customers over.
希望小売価格 Kibō kouri kakaku (Recommended retail price)
When several shops get involved in the business between the manufacturer and the end-user recommended retail price (unverbindlicher Verkaufspreis in German) provides a certain recommended standard final price which helps the seller to develop their pricing strategy.
The direct translation of “希望 (Kibō)” in English is hope, expect, or wish, which can be interpreted as legally non-binding. Furthermore, “小売価格 (Kouri kakaku)” means “selling price at a retail store”. Thus, it’s really just a suggested retail price that is neither specified nor binding for the retailer.
