Comparison and contrast between business systems in Japan and China - Essay Example

Comparison and contrast between business systems in Japan and China Introduction Japan and China are countries found in Asia. There are certain similarities and differences in the way the countries run their businesses. Thus, to start off, it is relevant to understand the meaning of business systems and its applications. Business systems refer to those processes that are adapted by a business entity, to generate and deliver goods and services to its customers (Willoughby, 1981 p24). This entails the organization of resources, information and workforce, to ensure that the business applies the right mechanisms to generate and deliver the desired commodities to its customers. Therefore, business systems will differ from one business to the other and from one country to the other, based on the nature of the business, the industry in which it is operating, and the nature f the customers that the business is serving. All these factors combined, and coupled with the business objectives and targets, determine the mechanisms of the delivery that a business entity will apply to meet its customer’s needs. The business systems applied in a certain country also depends on the economic systems, the social and cultural orientation of the society, as well as other external forces that play a role in influencing the running and management of a business (Chen, 2004 p33). Factors such as religion and cultures of a people determine the business systems applied in a given country. Therefore, this study seeks to compare and contrast business systems applied in Japan and China, with a focus on understanding the factors behind their similarities and/or differences. Comparison between business systems in Japan and China There is a great similarity between the Chinese and the Japanese business systems. The business systems for these countries are centered on cultural values, where delivering value to the people is the key for business systems in both countries (Liao, 2009 p15). Both countries have the collectivist business culture, where there is a great deal of integration between the business and the family systems applied in the running and managing business. Thus, for both countries, businesses are focused on improving the family values, which are the core and origin of the business concepts. Thus, to deliver value to their customers, the business systems of the two countries are organized on networking as the fundamental principle of earning trust and developing business interactions, with the main goal of carving large market share for the businesses (Chen, 2004 p37). Earned trust is therefore a core value for the business systems in both Japan and China, which acts as the source of business targets and future prospects. It therefore follows that information sharing between businesses, which have established the principle of earned trust, plays a great role in enhancing business connectivity and partnerships. Considering the nature of the business environment in the two countries, where there lacks proper business institutionalized protections, survival and prosperity is only achieved through the principle of earned trust shared between businesses, which has its roots in the cultural and family value systems (Gordon, 2012 p223). Another comparison in the business systems between Japan and China is identifiable in state intervention (Wei, 2002 p27). The state plays a very pivotal role in enhancing the environment for business in both China and Japan. The state has maintained a direct involvement in the running of business, through state laws and regulations that guide the running of businesses in these countries. The states have provided policy guidelines that have seen both countries center their focus on the provision of value to their customers, an aspect that has enabled both the Chinese and Japanese businesses to operate successfully outside their domestic confinements (Hefner, 1998 p60). Through state regulation of business value systems, both countries have excelled in international trade, both in supply of goods and services and also in contracts for the development of major technological and infrastructural facilities. The Japanese and the Chinese governments have established state bureaucracy through certain arms of the government, which controls and monitors businesses running in the private sector. The control and state supervision has emphasized on the business systems based on collective ownership and responsibility, where the state controls most of the strategically important sectors of the economy, while privatization is open in the other economic sectors. Therefore, state intervention is an aspect that characterizes business systems both in Japan and China, aligning the provision of goods and services and their delivery to customers, towards the perceived state objective (Gordon, 2012 p225). Family business ownership characterizes the business systems for both Japan and China. The cultures of the two countries permit the continuation of business along the family line, where one generation passes on the trade secrets and vital information for the success of family business to the next generation (Liao, 2009 p13). Most significant is the continuation of business along the family line, due to the exodus of the states from the medium and small enterprises, creating an opportunity for the family line to take over. The Japanese and Chinese cultures are more centered on the family value systems. Therefore, it becomes a bit difficult for such cultures to welcome the concept of corporate governance, which is a characteristic of the western countries (Chen, 2004 p40). This is being the case; the cultures of the two countries mostly favor the system of family networking and interconnections, which retain the tradition of running a certain line of business, always transferring the traditions from one generation to the other. Therefore, in both Japan and China, some major medium and small business organizations are run under indigenous or family business ownerships (Saka, 2003 p70). To avoid external business control and ownership, most of the business in Japan and China are organized around the family system, with the collective family investment strategy scoring the shots. Therefore, to retain wealth within the family and continue to perpetuate family line presence in the line of business, the business systems for most medium and small businesses in both Japan and China apply and retain the in-house corporate strategy (Gordon, 2012 p230). External networks and alliances characterize the business systems in both Japan and China. While the family business line is retained domestically within China and Japan, external networks and connection enhances the creation of yet other family businesses and interests outside the territories of those countries (Redding & Witt, 2007 p31). This is a vital business system concept, which enables the business with their origin in either Japan or China to export their products and services or establish their subsidiaries in other countries, where they can take the advantage of the opportunities in these countries, and transfer them to their parent business. Therefore, it is common to get many medium-level and small enterprises operating their businesses in either Japan or China, but with their affiliates in other countries such as Hong Kong and Taiwan (Liao, 2009 p10). Such business utilizes the family and network connections, to channel business interests and restructure the economic activities of such businesses to suit the economic activity of the region. This has made it possible to have businesses that operate either in Japan or China, but whose interest is to serve the markets in other countries, where they have established their family and network connections. The benefit of such business systems is the channeling of the benefits obtainable from the business connections in the region to the mother countries. Thus, the family and network connections have played a greater role in channeling FDIs to China, with Hong Kong’s share of annual FDI to China reaching a high of 40%, while Taiwan’s share averaged close to 10% in 2007 (Gordon, 2012 p240). Business systems in both Japan and China are technologically oriented. Thus, the mechanism of developing and delivering goods and services to the customers is initiated and executed technologically. The internet plays a major role both as a source of market information and a driver of new product development (Liao, 2009 p18). Both countries operate on the basis of technology that is domestically devised or imported from the western countries. Information plays a pivotal role in business and products development for both Japanese and Chinese businesses, where the business carries out a thorough internet research to discover the opportunities that prevail in the world, in terms of needs and how such needs can be fulfilled. Therefore, the internet forms a core component of the business systems for both Japan and China (Chen, 2004 p62). Most of the commodities manufacture by the businesses in China and Japan are technologically oriented, ranging from automotives, to mobile phone devises. Additionally, most of these products have their origin in the internet research and other forms of technological searches that provide information regarding the market needs for certain products, which the businesses develop and present to the market. Technology is not only pivotal for researching, generating the market needs and developing the appropriate products, but also for the sale and distribution of such products (Hefner, 1998 p61). Therefore, most of the supply chain concepts and the customer delivery services for products and services generated in these countries are technologically based. Contrast between business systems in Japan and China Japan is a country in Asia that is somehow secluded from the other Asian countries, since it is found as an island. The two aspects that have shaped the Business systems in Japan include its societal and institutional organizations, as well as its cultural composition. First, Japan is among the countries in the world that have a homogenous ethnic composition (Bensley, 2010 p45). Therefore, the business systems for this country are organized around family systems and national integration, as opposed to individual orientation. The unique aspect about the Japanese business systems is the fact that they are organized around enhancing the sustainability of an organization and keeping the people employed, at the expense of earning huge profits. In Japan, profit is a secondary target for any organization, after it has sustained its workforce and delivered value to its customers (Bensley, 2010 p50). Therefore, the business systems in Japan are geared towards targeting, creating and sustaining a market share, at the expense of earning profits. Therefore, the business processes of many organizations in Japan are targeted towards giving value to the people through high quality products and services, which are coupled with high and personalized customer service, to ensure that the customers are fully satisfied (Bensley, 2010 p49). These mechanisms are established in line with the Japanese business culture, which upholds the customer and the market as the most vital concept of the business. This nature of Japanese business systems can be demonstrated by organizations such as Nissan Motors, which strives towards building a formidable market share in the automotive industry, both domestically and internationally, rather than aiming for high profits (Bensley, 2010 p51). In contrast, the nature of business systems in China is more capitalist oriented. This means that while the Japanese business value system is centered on sustainability and the provision of jobs to the people, the Chinese business system centers on profit motives (Redding & Witt, 2007 p55). On top of developing a large market share, the Chinese business systems aim at maximizing the profits obtainable from the business transactions, making the profit earning motive a primary function, as opposed to the Japanese business systems, which seeks market share as the primary target, with the profits coming as the derivative function of an already obtained expansive market (Chen, 2004 p54). Initially, the Chinese markets were being exploited by foreign businesses and organizations, based on the advantages they offered in terms of cheap labor and expansive markets. However, after a reasonable exploitation of these markets, the Chinese firms and businesses started emerging, to take place of the foreign-based firms. However, the central theme of efficiency management and profit making prospective of the foreign-based firms did not change, since the Chinese firms started operating alongside the foreign businesses, competing for the markets and profits. Thus, the Chinese firms developed their business and production management systems based on the efficiency and profit oriented objectives of the foreign based businesses, applying foreign business models as an exemplar (Liao, 2009 p9). Therefore, while the Japanese firms retained their culture and traditions based on sustainability and employment provision, the Chinese business systems were diverted towards profit making prospective, making them more capitalistic in nature (Gordon, 2012 p228). The other notable contrast between business systems in Japan and China is their emphasis on shareholders’ value. With its efficiency and profit making prospective as the major drive for the business systems, China puts a considerable emphasis on creating value for the shareholders (Redding & Witt, 2007 p50). This is achievable through targeting large markets shares for its products, while capitalizing on minimizing the costs associated, and enhancing the levels of profits obtainable from the businesses. However, the case is different for the Japanese business systems, where serving the society and the employees are the main priorities, making the profit making prospective and the consequent creation of the shareholders value, the secondary objectives (Westney, 1996 p80). The Japanese culture strongly advocates for the enhancement of the national welfare at the expense of personal gains. Considering the homogenous nature of the Japanese ethnic composition, any attempt to pursue individual gains at the expense of the welfare of others, become unethical, and thus socially and culturally unacceptable. The Japanese business systems operates on this basis, through ensuring quality provision of products and services to the society and provision of employment opportunities to the people, making the desire to create value for the shareholders less influential (Hefner, 1998 p58). This is however difficult for the Chinese business systems, owing to the presence of a large number of foreign-based firms and multinationals or their affiliates in this economy. Since the primary objective of the multinational and foreign firms is profit making as well as creating high value for the shareholders, the Chinese business system has to operate on these bases (Gordon, 2012 p245). Finally, the contrast between business systems in Japan and China is identifiable in the nature of specialization emphasized by the countries. While Japan has a more specialized business system, where they have specialized in either the automotive or the technology industry, the case is different for China. China has more diversified business systems, with a high engagement in different industries such as communication, technology, construction, service and trade industries (Redding & Witt, 2007 p36). Further, the nature of diversification under each individual category is higher in China than it is in Japan. The Japan business system is organized in such a way that most of the firms under each industry operate as individually managed firms, but with close and stable economic ties, which cements their operations into an almost uniform functionality (Chen, 2004 p42). However, the case in China is different, where the ownership of firms and their affiliates is independent of each other, since they have varied ownerships, ranging from domestically owned firms, to the foreign-based and the multinationals. This diverse ownership makes it difficult to standardize and unify the operational functionality (Whitley, 1994). Therefore, while the Japanese business systems are less varied in their operational functionality and connections, the Chinese firms are highly varied both in the industrial specialization and the business operational patterns. This make the business systems of Japan comprise of several major actors in a certain industry, such as the Nissan and the Toyota companies in the automotive industry. In contrast, the business systems for China does not allow for the existence of several major actors under any particular industry, making the industries saturated with a mixture of large firms, medium and small firms as the actors (p46Gordon, 2012 p244). Conclusion Japan and China has several aspects of business systems that are similar and yet others that highly differ. Business systems refer to the processes and the mechanisms by which a business deliver its products or services to its customers. The similarity between the business systems in Japan and China arise from the fact that the two countries have certain cultures that allow them to exhibit certain business systems traits that are similar. For example, the cultures and family values of the two countries are similar, allowing for the ownership and management of business along the family lines. External networks and alliances also characterize the business systems in these countries, where their firms also own other affiliates in other countries to attain the regional benefits, through the opportunities presented in their lines of business. However, the contrast between business systems in Japan and China arises from the fact that the Japanese ethnic composition is homogenous as opposed to the Chinese one, making the Japanese uphold the culture and tradition of serving the society and providing employment to the people as the priorities, with the profit making and creating shareholders value lagging behind as secondary objectives. This is different for China, where the economic system is more capitalistic, thus favoring the profit making motive and creating value for shareholders as the primary objectives of its business systems. References Bensley, T. (2010).Nissan: The Japanese Business System in a Globalised World. Cross-sections 8, 43-57. Chen, M. (2004). 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