Entertaining in Japan Is Costly, Grueling, Essential

A minor executive of an immensely powerful Japanese bank invites you for a nightcap at “his bar,” where pretty young women in leather miniskirts snuggle your shoulder and pour whiskey.

Three hours later, the banker takes care of the $620 tab by handing the cashier a business card. As you walk into the neon glare of Tokyo’s Ginza, you wonder how the home office will react when you try to return the hospitality.

Welcome to the moderate end of business entertainment in Japan.

Dinner for four at a swank ryotei restaurant--where geisha entertain you with mournful ballads and witty stories while you feast on prawns so fresh they wriggle on the plate--can cost $6,900.

Yet many Japanese companies expect their executives to entertain clients several nights a week at such restaurants and hostess bars.

In 1989, the cost of entertaining climbed 8.7% to a record $31 billion, says the National Tax Administration, surpassing the $29 billion budgeted for Japan’s defense.

The rise occurred despite a call from Keidanren, a leading business group, for restraint in the aftermath of the notorious Recruit affair, a scandal over alleged bribery of numerous politicians, bureaucrats and businessmen.

The money is spent not so much on closing deals as building close relationships.

“Without liquor Japanese can’t be frank,” said Kazutaka Nakamura, an accountant who has crunched the numbers on expense accounts. “It’s a national characteristic.”

For small companies, entertainment expenses can make up 20% to 30% of project costs, he said. This kind of effort can hobble a foreign enterprise in Japan.

Robert J. Collins, president of the American Club in Japan and author of the satiric novel “Max Danger, The Adventures of an Ex-Pat in Tokyo,” cites golf as evidence.

“If a guy is really laying it on . . . golf can easily run to half a million yen ($3,500).”

Laying it on may include sending a limousine or even a helicopter for the guest and providing luxury accommodations by the green, he said.

Even a “no-frills golf excursion during the weekdays” costs about $1,000, said Collins, who has been an insurance executive and headhunter during his 12 years in Japan.

Expense is not the only burden.

With traffic jams snarling Tokyo highways every weekend, “you go out there the night before, stay up late drinking, get up at dawn, go out in the rain and play all day long. “Then you drive four hours back to Tokyo, and never once has anyone said a word about business,” Collins said.

Collins said the object is to endure an ordeal together.

Afterward, he said, “I can get on the phone to a company chairman and he’ll come out of a meeting to talk to his golfing buddy.”

The effort can create “a bond stronger than any contract,” although a company may have to absorb losses for a few years in hopes of long-term profits.