Thursday, January 20, 2011

Groupon CEO Insults Japanese People With His Callous Apology - Pt. 2

Yesterday's blog that took the American CEO of Groupon,  to task for his cold and callous apology to the Japanese people was a very well received article. Thanks. I am especially glad for the comments of English speaking people who live in Japan supporting my arguments that Groupon fails to realize just how damaging this episode is to their reputation.

My Japanese wife (who speaks English very well, thank you) watched the apology video with me and remarked something along the lines of, "Typical dumb American," then she added, "He hasn't the faintest idea of how things are done in this country, so maybe it's understandable... But if he doesn't want to play by the rules of Japan, then he shouldn't be doing business here."

My wife is absolutely right.

Mr. Mason, the CEO of Groupon, doesn't seem to grasp how much this has damaged his business in this country. He has repeated the mistake of many many foreigners before him when dealing with Japan: He failed to understand the Japanese mindset and culture before he acted. He failed to make the effort to think things through while examining the problem through a different cultural lens than the one he was taught all his life.

He needs to hire a professional Japanese spokesman to do the talking in front of the Japanese media; someone with respect and experience. Not some silly "gaijin" making an idiotic Youtube video that's starts with, "Konnichi wa!" ("Hello!")

You don't start a sincere apology in Japan with a comment like "Konnichi wa!" Would the president of some food service related industry go on TV to apologize for some problem his company caused in the USA and start that apology with, "Hey dude!" ?

Any professional in Japan would have said, "Kono tabi no soudou ni tsuite owabi moshiagemasu..." Translation: "At this time, I must apologize and explain about this problem that was caused by our company..." This is an intelligent, professional, adult sounding beginning of a serious statement or apology. "Konnichi wa!" sounds like some dork foreigner who just got off the boat talking to his friends...

One of the comments that (definitely an American) left on that blog was:

"You know what? New Year's 2011 only comes once in a life time. "
If you believe this, you really need to study the condition of man throughout history. Bad food on New Years is hardly a tragedy. These people will recover from their disappointment.

To which regular reader, J.W. Chang responded:

(This commentator) Obviously knows nothing about the religious significance in Japan of Shintoism and New Year's. New Year's in Japan is not just a drunken bash like westerners have. New Year's in Japan is a significant religious ceremony in a country that is over 2,700 years old. 

Another commentator supports that argument; ht02135 writes:

that Groupon ceo need to be slapped for insulting Japanese and Japanese people's position regarding to food. 5000yen gift is another ultimate insult. is that idiotic ceo doing a sincere apology to Japanese people or try to infuriate them XD ? now even if ceo were to demonstrate harakiri is too late XD . (sic)

Also, ex-pat American and  longtime Japan resident Andy "in Japan" writes:

Look at that food plate. It's so revolting in terms of both presentation and food quality that you almost have to laugh. 5,000 Yen refund is an insult.

Mish Shedlock of Mish's Global Economic Trend Analysis posted a different take on the matter that I think you should read.

Here's a snip:

What's Groupon Worth?

In December, Google offered Groupon $4 billion, then upped it to $6 billion when Groupon balked. Groupon walked away from $6 billion as well.

I cannot conceive of rolling the dice on a $6 billion offer.

Look at Groupon’s Model. They tell clients that if they make money, their offer is priced too high. That's does wonders for Groupon's phenomenal margins, but how much repeat business will there be and for how long is the model sustainable?

Let’s sidetrack for a moment. Look at the offer Microsoft made for Yahoo, $32 a share. Yahoo turned it down. Yahoo’s share price is now $16.50.

Look at MySpace. It collapsed under the rising star of Facebook.

Might not Groupon do the same? My point is ‘Things Happen’.

Marketing wars in this space will become immense. With competition comes decreased margins. I guarantee it.

Look at the disaster in Japan. Those restaurants advertising the New Year’s deal wanted to make a profit but couldn’t, at least based on the images shown. So they offered something they could make a profit on, and look how it turned out. Customers are furious and Groupon did not even understand Japanese culture to know how to respond.

On a basic level, ignoring the disaster in Japan, Groupon is not doing its clients any favors if it bankrupts them in the process. Deals need to be win-win or clients will eventually tell Groupon to go to hell.

As I wrote in my post, this deal is going to become a bigger mess than what it is now because of the inept way it has been handled by Groupon. That someone like Mish Shedlock - who has well over 1.8 million readers a month - would post about it shows how big of a problem this has gotten in such a short amount of time.

But, instead of complaining about how it was handled, let me show western businessmen an example of how a Japanese firm would have handled this so that you can learn the lesson and not repeat this mistake (that, incredibly enough, has been repeated over and over by western businessmen in Japan over the last 4 decades).

This is a true story: When my oldest daughter turned one-year-old, her grandfather (bless his soul) bought her a strawberry cake from a famous confectionary in Japan named Fujiya. Fujiya has been around for over one century in Japan. Every little kid in this country knows, and loves, their mascot, Peko-chan.

Peko chan mascot stands in front of almost every Fujiya in Japan

I had just arrived in Japan, couldn't speak the language well, so I was pleasantly amused (as well as heart-warmed) by how seriously the Japanese (and my wife's parent's) took this first birthday occasion.  They prepared a feast, invited friends and family over; and we had a celebration... For the birthday cake, they ordered from the local Fujiya.

When it got time for my daughter to celebrate cake we all sang songs and helped her blow out candles... Then my mother in law removed one of the strawberries on the top of the cake to slice it, and there was a bit of green mold on the bottom of the strawberry.

Being a savage American, I thought, "Oh? That's no good... Just throw away that strawberry. The rest of the cake is fine." But my Japanese in-laws would have none of that!

My father-in-law got on the phone and called and complained to Fujiya. Now, keep in mind that these are Japanese people so they did not raise their voices and scream, but he made his displeasure known.

All the while, me - dumb American guy - kept thinking, "It's not that big of a deal." 

The key point to remember here is "dumb American guy."

Soon my father-in-law hung up the phone and we continued the celebrations sans cake. Like I said, I didn't speak Japanese so well so I didn't know exactly what had transpired nor what the outcome of the telephone conversation was. 

Thirty minutes or so passed and the doorbell rang. I went to answer it and there were two elder Japanese businessmen in suits, and one Fujiya store employee (I could tell by his uniform) standing at the door bowing profusely to me and saying, "We are very sorry!" over and over. They were the chief and assistant manager of the Fujiya, and, I gathered, the floor manager who took the order for the cake of the Fujiya where the cake was bought. 

I called my father-in-law and he and my mother-in-law came out with the cake and showed it to the two gentlemen. Once again, they profusely apologized and bowed very low (bowing your head low shows respect and humility - you must bow your head really low when you've messed up). This bowing and apologizing went on for a while with my father-in-law complaining to them the entire time.

Not once did these guys make any sort of excuses. All they said was "We are very sorry. It's all our fault." Regardless of how much my father-in-law complained repeatedly, they never once made excuses or acted like, "Hey! We already said, 'Sorry!'" (like most Americans would do).

They also brought with them, not one, but two replacement cakes and a couple of liters of ice cream as well as some Peko chan presents for the kids.

Sure the replacement cakes and presents are important, but what is most important is that these gentlemen showed that they cared and were sincere. This attitude shows dedication and sincerity. Those are two factors that are definitely necessary to do business in Japan. The attitude of the CEO of Groupon in the video was insolent and not humble at all. 

The management of Fujiya understand what reputation means to the Japanese. They know how tightly knit this society is (Hello CEO of Groupon? Google search, "Homogenous society") and they know how a bad reputation will damage them for a long time in Japan, that's why they go the extra thousand miles - not "mile" - to make sure their reputation is good.

That's why Fujiya has been around in Japan for over 100 years and is still going strong. 

Is there anyone reading this blog now who thinks that Groupon in Japan could last even 5 or 10 years doing things like they have been doing these last few weeks?

I certainly don't.

UPDATE: I also noticed that what the CEO says in English is not the same as what is written in Japanese subtitles. Here's a detailed explanation.


Ira Hata said...

Japan has been taken over by a good number of gaijins, Mike. Look at Sony and Nissan, both being run by a couple of gaijin idiots AND still being supported by Japanese investors (remember the idiotic remark Carlos Ghosn made to investors about his right to take a salary "that's in line with the rest of the world" even though Nissan was not posting a profit?).

Don't be surprised if Groupon continues to make progress in Japan. Unfortunately, the Japanese have gotten way too complacent and, unlike your father-in-law, don't demand proper apologies anymore. They just bend over and take up the butt...


Anonymous said...

@Ira Hata

Not forever...

Andy "In Japan" said...

I'm surprised he didn't start his unprofessional video with, moshi moshi. The apology would be seen as awkward and unprofessional even in America. My Japanese wife looked at the photo, heard what happened, and concluded that no one in Japan will want to do business with these people again. We'll see.

CuO3 said...

I think such apology is unsincere in almost each culture. However, I think that is the CEO's personal issue, not Americans'. "Dump Americans" comments from Japan housewife, seems to me, is also a kind prejudice and simplified way of looking at how U.S. people conduct business.

mike in tokyo rogers said...

Dear Cu03,

No way. Americans are world famous for self centered ethno centric thinking. What other country thinks it's OK to invade other countries to bring them "Democracy"... Americans deserve the bad reputation they have... Why? They've earned it. Especially since 2008.

Anonymous said...

Obviously an American.... There's no other people in the world who hold such wild delusions about themselves.

Mike, you are too nice. You should tell these clods the truth like max keiser does.

Unknown said...

Wow, I just knew that Groupon messed big time in Japan! In my country here, Indonesia, Groupon starts to grow rather rapidly, partnership with one of the local coupon vendor. I haven't bought any of their coupon yet, because I'm still wondering on how can they put the price to be so low without having loss out of it?

I'm agree with the quality of Japanese service, they're excellent! Nowadays, lots of Japanese set up companies here and they still live up to their discipline and strict standards.

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