Business systems in Japan and China Essay

IntroductionAfter the military personnel struggle Two, lacquer embarked on a journey of reviving its preservation. The fast industralisation serve up is nonhing short of spectacular. japans basic infrastructure was essentially destroyed in the war and she grew from a war-torn bea to a human race leading economy in a few decades. This requires well company and political sympathies governance, in order to achieve this emergence. japan is withal a major technology and export hub in Asia and she is currently the public third largest economy by Gross Domestic Product. (World Bank, 2014). Prior to the stinting elucidate of Deng Xiao Peng, the Chinese political science has total promise of all the differentiate own Enterprises (SOEs) under the communistic form. It is a very highly concentrate system that only the Chinese fix government has power and control over it.(Laaksonen, 1988)Under the reformation policy, individuals ar allowed to trade and sell senseless pro ducts in rural ara and minor(ip) businesses atomic number 18 allowed in urban or city. This marks the start of the chinas collectivist food securities industry economy. As a result of the open door policy, Chinese economy grew from a third military personnel country to the second largest economy of the world in less than four decades. (World Bank, 2014) Despite the great differences of these two economy, the feature that its governance and cultures are deeply influence by the idea of Confucianism. (Chan, 1986) Hereby, in this article, discussion will be separated into two parts that are based on the similarities and differences between the two business systems.Differences1. Keiretsu Vs Reform insuranceIn lacquer, Keiretsu formed the largest business group and its one of the key contributors to the Japans economy which usually employed Nipponese style of steering and system. Zaibatsu was the forerunner of Keiretsu which are family run and it is the main business system forwards Second World War. there are two types of Keiretsu namely horizontally organized Keiretsu and vertically organized Keiretsu. In horizontally organized Keiretsu, gravid and human resource are plasteredly knitted together and continue directorships and holding of stock among group members are not uncommon. The cross-holding of stock among the take place 6 corporate group was as high as 24% (capital of Japan Business cartridge holders, 1989) in the late eighties. This allows the group to be very closeand strong. Some of the manakins of company with this structure are Mitsubishi and Sumitomo. (Okumaru, 1976).The governing of company are handed to professionals or agents to prevent dispute among group members. In vertically organized Keiretsu, it is formed by a huge parent company.She has its suffer supply distributorships and suppliers. Every flow and operations of the company follows a vizor to down process so as to control inventories and manufacturing quality. Many small and medium sized enterprises in japan utilize this system. Some of the example of much(prenominal)(prenominal) company are Sony and Toyota. In 1979, mainland China started her reform program later the initiating of economic open door policy by Deng Xiao Ping. The country government vows to liberalise and modernised Chinas key persistence like agriculture, technology and defence. More autonomy are given to the present own Enterprise to manage their own division. For example The asseverate owned Enterprises are given the rights to form their company structure in compliance to the needs of leaner production process or food market place maximization. Hence, workers are now able to choose and change job with venerate to their refer and expertise. This highly promotes the effectiveness of the State possess Enterprises. (Lichtenstein, 1993)The stir government also implements the using up of Profit and Loss contract (yinkuibaokan) whereby a portion of the net are c ontributed to the bring up government and the remaining profit asshole be kept by the State owned Enterprise. Chinas state government also undertake a few other methods to reform, this includes the furlough of the State Owned Enterprises , setting up of stock exchange in Shanghai and Shenzhen and transformed some principal(prenominal) industry to shareholding companies so that it washstand trade. all(prenominal) in all, this gives rise to the collectivistic market economy in China whereby capitalism way of managing the economy is enforced. 2. Developing its own industries Vs inappropriate postulate Investment Ever since the Second World War, Japan has determined to become an export driven economy, and the Japanese have been fast to deduct its economy by competing fiercely in the ever increasingly perfect(a) market. The products they are churning emerge are of easily reliability and they a great deal undercut its competitors by a huge margin to win the contract.As ill ustrated in the case of Hitachi at a sales presentation in 1985, Hitachi stressed to undercut its competitors severely. (Fallows 1993) Japan owed its rapid industralisation process to the huge national exports. The export ranged from the early days textile toautomobiles and later on, high technologies products such as semiconductors. Japan invested hard on search and development to make up high value products to make it desirable to the world. As a result of the severe undercutting of competitors. Japans enterprise have to come out with several ways to enhance aptitude to ensure profitability. Toyota created a system called Just-In-Time (JIT) which emphasize on the redundancy of keeping live inventory. (Uno, 1987) It was first created in the 1950s and later slowly dispersed into the different industries and plants in Japan in the 1960s and 1970s. It requires close and collaborative relations with all suppliers for it to work.However, with good implementation, it heap ensure le an production with little slack and good flow process. This process brings intimately the envy of the industrialised world in particular in the United States. Other industrialised nations tried to emulate the conquest of JIT, but not always with positive results due to the poor implementation. Japanese companies also used extreme Quality Control(TQC) in manufacturing. It is first coined by Professor William Demming of New York City but it is the Japanese that utilize it.The ideas of Total Quality Control is to have no or little tolerance for rework. Reworking a product are deemed as a wastage of time. By adopting a do it once, do it well approach, further time and monetary value can be saved to make the production lean. After the 1979 economic reforms by the Chinese state government, the state government allow irrelevant institutionalise Investment (FDI) to enter into Chinese market.It is the movement of long term alien financing that allows a shareholding of at least 10% of the State Owned Enterprises. This usually includes the transfer of technology and know-hows to the host country from the Multi-Nationals Companies (MNCs). As a result of the transfer of technology, the host country in this case the State Owned Enterprises will have gained insights on the production process. Hence, further look for and development by the State Owned Enterprises is possible.Also, in 1979, the state government created four Special Economic Zones (SEZs) in Guangdong and Fujian province to make headway the facilitation of orthogonal demand Investment that mainly foreign investment will pillow in this four zones. The state government realizes that by creating four zones is not enough to open up the market. Therefore, in the 1980s wholly-owned foreign enterprises are allowed and also more east coast ports are opened up to encourage foreign trades and investment.China State government viewedForeign Direct Investment as a very important catalyst to modify its economy. Subsequently, foreign enterprises are given the same treatment as a State Owned Enterprise and the joining of World Trade boldness in November 2001 makes a very huge milestone in Chinas economic fib. Due to rising manufacturing cost Japan industries, Japan has begun to pour Foreign Direct Investment into China to cut cost. As evidenced by (Kunii et al., 2002) , during the period of first six months of 2002 , Japanese firms reason deals of $3.15 billion.This goes to show the importance of Foreign Direct Investment for both countries in a win-win situation. Japan can benefit from the low production cost and China can benefit from the capital inflow and technology transfer. As of 2012, China is the leading Foreign Direct Investment in the world. (Perkowski, 2012).3. Socialist Market Economy Vs Capitalist Market EconomyThe socialist market economy is the only model that are used by the good deals Republic of China (PRC). It is based on the dominance of State Owned Enterprises and ma intaining a promiscuous open market, its origins can be traced from the Chinese economic reforms introduced under Deng Xiao Ping. During the early stage of economic reform in China, socialism are deemed as the basis for the reform, and therefore has to adopt capitalist techniques to survive.It is also known as the social capitalism despite adopting the free market system of capitalism. (Schweickart, 2006) Japan adopted the system of capitalist market economy which got its influence from her western counterparts. Its a system that encourage free trading in the market in the forms of products, shares and commodities. Despite Japan uses Keiretsu in their business systems, it is even by large using a capitalist system. The need for consumption of luxury products and export of domestic shows the use of capitalist system. Similarities1. Intervention of government bodiesHistorically in Japan history since Meiji Restoration, Japanese government has always played a very important role in the industrialisation. To be able to play catch-up with the western nations, the government deemed the discussion necessary. It also enable the government to be strengthened done the lending of private funds and invest it in key industries such asshipbuilding, communication in the Meijis government. The intervention of government in financing benefited the big groups of zaibatsu and later on Keiretsu. After the Second World War, the Japanese government once again realised the importance of state curb for the companies and economies to grow quickly. (Johnson, 1982) In recent times, Japanese government agencies such as Ministry of multinational Trade and Industry (MITI) and Ministry of Finance (MOF) have been actively participated in business by giving funds and supports to industry that are of utmost national interest.On the other hand, big business can exert huge influence on the political scene by endorsing political candidate that are beneficial to the interest of the big corp oration. With respect to Japan, Korean government intervention of chaebols (big conglomerate) are largely similar to Japan. In the earlier days, the Korean government invested heavily and provide financial assist to chaebols such as Lucky Goldstar and Samsung. With the strong backing of the government, these companies are able to flourish. (Song, 1990) By 1990s, the reforming of State Owned Enterprises especially small and medium state enterprises became a top priority for the Chinese state government.After a carefully study by the state government, a new reform system formed under the name of the Regulations for Transforming Managerial Mechanisms of the State Owned Enterprises ( Liberation Daily, 1992). This includes of fourteen kinds of power to in close up self-management. Even though, its a move by the Chinese state government to liberalized State Owned Enterprises. But, government steps by steps intervention of the process is still very much needed. Especially, during the earl y periods of reforms, they are many uncertainties and fluctuations in the market that requires government intervention to ensure the reformations process is smooth and steady.2. Confucianism InfluenceAll the major tocopherol Asian management system have been influenced heavily by the Confucian tradition. (Oh, 1983). This includes China, South Korea and Japan which has some olden Chinese co-relation. It does not only has heavy influence towards these countries culturally but also economically. For example In Japan, huge emphasis is put on the length of service in both workplace or at home. Similarly, likewise for Korea. maintain are to be given to elders or person with high seniority. Individualisms and battle are notpart of the teaching of Confucianism.In the economy of these East Asian countries, they are generally competitive and placed a big money of emphasis on individual actualization. Though, these countries are influence deeply by Confucianism, its more applicable to the management level which is at micro level. At macro levels, the government efforts and communitarianism could be the explanation for the competition in the world market.ConclusionIn conclusion, this article has discussed about the similarities and differences between Japan and China. There are three main differences that are discussed in this article. Firstly, its Japans Keiretsu and Chinas reform policy. Japans Keiretsu was the predecessor of zaibatsu and its the dominant force of Japans economy. Deng Xiaoping pushes for economic reforms and turned its communist economy to a socialist economy. Secondly, Japan invested heavily in the research and development of technology as to become world major exports nations. with the process of undercutting its competitors, Japans enterprises utilize Just in Time process and Total Quality Management to ensure high efficiency and lean production cycle. On the other hand, China relied on Foreign Direct Investment to boost its economy.In the proce ss of Foreign Direct Investment, not only it creates jobs for the country but also learn about foreign technologies by means of technology transfer. Lastly, the Chinese employed a socialist economic models which is often referred as state capitalism whereby the government still practiced one party communism. Japan on the other hand, support a free trade market which is similar to the capitalist systems in the west. The article also discusses the importance of government or state intervention of the economy.For Japan, the government provides good infrastructure and financial aids to industry that are deemed promising. In china, the Chinese state government slowly guides its economy through intervals of reforms to prevent the reformation for being too fast or slow. Lastly, Confucianism plays a big role in influencing the management style of Japanese and Korean organization but not so much in China State Owned Enterprises.ReferencesBusinessweek, (2002). In Japan , China is Sexy. pp.22 -23.Chan, W. (1986). Chu Hsi and Neo-Confucianism. 1st ed. capital of Hawaii Universityof Hawaii Press. Johnson, C. (1982). 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