Business systems in Japan and China Essay Example for Free

Business dodgings in lacquer and chinaware EssayIntroductionAfter the World War Two, lacquer embarked on a journey of reviving its economy. The fast industralisation process is nothing short of spectacular. Japans basic al-Qaida was basically destroyed in the war and she grew from a war-torn defer to a world jumper lead economy in a few decades. This requires vertical company and political relation judicature, in order to arrive at this result. Japan is also a major technology and export hub in Asia and she is currently the world third base roundst economy by Gross Domestic Product. (World Bank, 2014). Prior to the stinting reform of Deng Xiao Peng, the Chinese disposal has do control of all the asseverate possess Enterprises (SOEs) under the communist remains. It is a very highly modify system that exactly the Chinese State authorities activity has power and control over it.(Laaksonen, 1988)Under the reclamation policy, man-to-mans are allowed to trade a nd sell surplus reapings in rural area and small businesses are allowed in urban or city. This marks the start of the mainland chinas Socialist trade economy. As a result of the circularise door policy, Chinese economy grew from a third world country to the due south largest economy of the world in less than four decades. (World Bank, 2014) Despite the great differences of these two economy, the fact that its governance and cultures are deeply influence by the idea of Confucianism. (Chan, 1986) Hereby, in this article, discussion will be detached into two parts that are based on the similarities and differences between the two business systems.Differences1. Keiretsu Vs Reform insurance policyIn Japan, Keiretsu formed the largest business convocation and its one of the key contri butors to the Japans economy which normally apply Nipponese style of management and system. Zaibatsu was the forerunner of Keiretsu which are family run and it is the main business system before Se cond World War. There are two types of Keiretsu namely horizontally organized Keiretsu and vertically organized Keiretsu. In horizontally organized Keiretsu, capital and human resource are closely create from raw material together and cross directorships and holding of stock among group members are not uncommon. The cross-holding of stock among the top 6 corporate group was as high as 24% (Tokyo Business Times, 1989) in the late eighties. This allows the group to be very closeand strong. Some of the examples 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 own supply distributorships and suppliers. Every flow and operations of the company follows a top to down process so as to control inventories and manufacturing quality. Many small and medium size enterprises in japan employ this system. Some of the example of such company are Sony and Toyota. In 1979, China started her reform programme after the initiating of economic open door policy by Deng Xiao Ping. The defer governing body vows to liberalise and modernised Chinas key industry like agriculture, technology and defence. More indecorum are devoted to the State possess Enterprise to manage their own division. For example The State own Enterprises are given the rights to form their company structure in accordance to the needs of leaner output process or market maximization. Hence, workers are now able to choose and change job with revere to their interest and expertise. This highly promotes the effectiveness of the State Owned Enterprises. (Lichtenstein, 1993)The state government also implements the use of wage and Loss contract (yinkuibaokan) whereby a portion of the gain grounds are contributed to the state government and the remaining profit butt be kept by the State Owned Enterprise . Chinas state government also undertake a few primeval(a) methods to reform, this includes the downsizing of the State Owned Enterprises , setting up of stock exchange in Shanghai and Shenzhen and transformed some important industry to shareholding companies so that it jakes trade. All in all, this gives rise to the socialist market economy in China whereby capitalism modal value of managing the economy is enforced. 2. Developing its own industries Vs Foreign develop Investment Ever since the Second World War, Japan has decided to be dumbfound an export driven economy, and the Japanese have been fast to recover its economy by competing fiercely in the ever increasingly saturated market. The products they are churning out are of good reliability and they often undercut its competitors by a huge margin to win the contract.As illustrated in the case of Hitachi at a sales presentation in 1985, Hitachi stressed to undercut its competitors severely. (Fallows 1993) Japan owed its rap id industralisation process to the huge domestic exports. The export ranged from the early days textile toautomobiles and later on, high technologies products such as semiconductors. Japan invested heavily on research and development to create high value products to fall in 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 efficiency 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 various 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 can ensure lean production with little slack and good flow process. This process brings about the enviousness of the industrialised world especially 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 fit feeling 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 succession. By adopting a do it once, do it well approach, bring forward time and cost can be saved to make the production lean. After the 1979 economic reforms by the Chinese state government, the state government allow Foreign Direct Investment (FDI) to enter into Chinese market.It is the transaction of long term foreign 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 troops 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 research and development by the State Owned Enterprises is possible.Also, in 1979, the state government created four finicky Economic Zones (SEZs) in Guangdong and Fujian province to encourage the facilitation of Foreign Direct Investment that mainly foreign enthronement will stay in this four zones. The state government realizes that by creating four zones is not comme il faut to open up the market. Therefore, in the 1980s wholly-owned foreign enterprises are allowed and also more east gliding ports are opened up to encourage foreign trades and investment.China State government viewedForeign Direct Investment as a very important catalyst to improve its economy. Subsequently, foreign enterprises are given the same treatment as a State Owned Enterprise and the joining of World great deal Organisation in November 2001 makes a very huge milestone in Chinas economic history. 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 concluded deals of $3.15 billion.This goes to exhibition the importance of Foreign Direct Investment for both countries in a win-win situation. Japan can win 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 capitalistic Market EconomyThe socialist market economy is the only model that are used by the Peoples Republic of China (PRC). It is based on the dominance of State Owned Enterprises and maintaining a free 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 business in the market in the forms of products, shares and commodities. Despite Japan uses Keiretsu in their business systems, it is still 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 play a very important role in the industrialisation. To be able to play catch-up with the western nations, the government deemed the interposition necessary. It also enable the go vernment to be strengthened through the lending of private specie and invest it in key industries such asshipbuilding, communication in the Meijis government. The interpellation 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 support for the companies and economies to grow quickly. (Johnson, 1982) In recent times, Japanese government agencies such as Ministry of International 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 corporation. 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 fiscal aids 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 give lessons 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 early periods of reforms, they are many uncertainties and fluctuations in the market that requires government intervention to ensure the reformatio ns process is smooth and steady.2. Confucianism captivateAll the major eastward 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 seniority in both workplace or at home. Similarly, likewise for Korea. Respect are to be given to elders or person with high seniority. Individualisms and competitiveness are notpart of the teaching of Confucianism.In the economy of these East Asian countries, they are generally competitive and placed a lot 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 th e 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 superior 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 process of Foreign Direct Investment, not only it creates jobs for the country but also learn about foreign technologies through technology transfer. Lastly, the Chinese employed a socialist economic models which is often referred as state capitalism whereby the government still honest 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. foremost ed. Honolulu Universityof Hawaii Press. Johnson, C. (1982). MITI and the Japanese miracle. 1st ed. Stanford, Calif. Stanford University Press. Laaksonen, O. (1988). Management in China during and after monoamine oxidase in enterprises, government, and party. 1st ed. Berlin W. de Gruyter. Liberation Daily, (1992). Regulations for Transforming Managerial Mechanisms of the State Owned Enterprises. Lichtenstein, N. (1993). Enterprise reform in China. 1st ed. Washington, DC (1818 H St., NW, Washington 20433) Legal Dept., World Bank. Oh, T. (1983). A Comparative Study of the Influence of Confucianism on Japanese Korean, and Chinese Management Practices. 1st ed. 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