Japanese Letter System

Japanese are less often use alphabetic character in their writing system. Yet, they use their own writing character. They are Hiragana (ひらがな), Katakana (カタカナ), and they also use Kanji (漢字) to simplify their writing.
  
    Hiragana (ひらがな)
Hiragana is the basic Japanese phonetic script. It represents every sound in the Japanese language. Therefore, you can theoretically write everything in Hiragana. However, because Japanese is written with no spaces, this will create nearly indecipherable text.
This are the character:

http://www.japan-guide.com/e/e2047.html

    Even though one can theoretically write the whole language in hiragana, it is usually used only for grammatical endings of verbs, nouns, and adjectives, as well as for particles, and several other original Japanese words (in contrast to loan word that are written in katakana) which are not written in kanji.
Hiragana is the first of all the writing systems taught to Japanese children. Many books for young children are, therefore, written in hiragana only.
   

    Katakana (カタカナ)

Katakana are used for write some word that originally are not Japanese. Katakana represents the same set of phonetic sounds as Hiragana except all the characters are different. Since foreign words must fit into this limited set of [consonants+vowel] sounds, they undergo many radical changes resulting in instances where English speakers can't understand words that are supposed to be derived from English! As a result, the use of Katakana is extremely difficult for English speakers because they expect English words to sound like... well... English. Instead, it is better to completely forget the original English word, and treat the word as an entirely separate Japanese word, otherwise you can run into the habit of saying English words with English pronunciations (whereupon a Japanese person may or may not understand what you are saying).

  

 http://www.japan-guide.com/e/e2048.html

     Kanji (漢字)

Between 5,000 and 10,000 characters, or kanji, are used in written Japanese. In 1981 in an effort to make it easier to read and write Japanese, the Japanese government introduced the 常用漢字表 (jōyō kanji hyō) or the "List of Chinese Characters for General Use", which includes 1,945 regular characters, plus additional characters used for people's names (人名用漢字 - jinmeiyô-kanji). This is based on the list of 1,850 regular use kanji (当用漢字 tôyô kanji) published in 1946. In 2010 an additional 196 commonly-used kanji were added to the jōyō kanji taking the total to 2,136.
Newpapers and other media and publications use mainly jōyō kanji and provide furigana (reading in kana) for non-jōyō kanji. Japanese children are expected to know all of the jōyō kanji by the end of high school but to read specialist publications and ordinary literature, they need to know another two or three thousand kanji.
The word kanji is the Japanese version of the Chinese word hànzì, which means "Han characters". Han refers to the Han Dynasty (206BC - 220AD) and is the name used by the Chinese for themselves.
When the Japanese adopted Chinese characters to write the Japanese language they also borrowed many Chinese words. Today about half the vocabulary of Japanese comes from Chinese and Japanese kanji are use to represent both Sino-Japanese words and native Japanese words with the same meaning.
For example, the native Japanese word for water is mizu while the Sino-Japanese word is sui. Both are written with the same character. The former is known as the kun yomi (Japanese reading) of the character while the latter is known as the on yomi (Chinese reading) of the character.

Another example: the native Japanese word for horse is uma while the Sino-Japanese words are ba and ma.

The characters in the word baka, which mean "horse deer", are used for their phonetic values alone. The word comes from the Sanskrit moha - ignorance, via the Chinese măhū. Click here to see how the character for horse is used in Chinese.
The general rule is that when a kanji appears on its own, it is given the kun yomi, but when two or more kanji appear together, they are given the on yomi. There are, of course, many exceptions to this rule. For example it is sometimes difficult to work out how to pronounce people's names because some of the kanji used for names have non-standard pronunciations.
Some kanji have multiple on yomi and kun yomi (the first three readings are on yomi, the last three are kun yomi):

In Mandarin Chinese this character is pronounced 'xíng' or 'háng'.
Multiple on yomi are often a result of borrowing words over a period of many centuries, during which Chinese pronunciation changed, and also borrowing words from different varieties of Chinese.
Some of the kanji have been simplified, although not always in the same way as characters have been simplified in China:

There are also a number of characters, kokuji (national characters) which were invented in Japan.

http://www.omniglot.com/writing/japanese_kanji.htm