An Analysis of Japan and China - Assignment Example

? An Analysis of Japan and China Affiliation Table of contents Introduction 2• Technological Analysis 3• Environmental Analysis 4• Legal and regulations Analysis 5• Recommendation 6• Appendix An analysis of Japan and China Introduction The 21st century has experienced rapid rise of international integration through exchange of products, ideas and cultural practices. Advancements in infrastructure both in transport and telecommunication centers have enabled interdependence in economic and cultural activities. The major aspects of going global have been trade, transactions, and capital and investment movements. However, in a bid to go global, several factors must be considered among them the technological, environmental and legal systems that support the growth of business penetration. This topic is important as it analyses the strengths and opportunities offered by both China and Japan markets. It further provides recommendations for Australian companies willing to go global on the best country to invest in between China and Japan. Companies going global are faced with uncertainties about their growth in foreign nations. These include the business risks and cost of doing business in international markets (Brown, 2007). The specific purpose of this study is to provide advice and market intelligence for Australian companies interested in going global on the attractiveness offered by China and Japan. This study covers three major aspects of the macro environment, which are technological, environmental and legal systems that support business development in both China and Japan. The study however does not cover the microenvironment and the political, economical and social aspects of a macro environment. Technological analysis Technological factors of consideration are new purchasing mechanisms that comprise of intranet and extranet and new distribution mechanisms that utilize the internet and new methods of working enabled by mobile telecommunication. E-Commerce has rapidly grown in China due to favorable market conditions and increasing consumer acceptance on online shopping. The internet has largely been accepted as a source of information in China. According to the China National Resident Survey, 61.5% of respondents agreed to information search on the internet regarding products. China is the world’s second largest market for consumer goods after the US (Martinsons, 2002). On average, consumers spent an annual average of US$61 on FMCG online an increase of 9.8% from 2010. In 2011, on average, shoppers for FMCG products made three trips while shopping online against 97 offline shopping trips over the same period. The average online transaction amount per trip was US$21, 80% greater than an offline transaction that averaged US$11.50. Attitudes related to e commerce showed that 29.9% of people doing online shopping are comfortable while 17.9% felt it is safe to purchase online. This indicates that there is large potential in China’s e-commerce markets (Ke, 2010). Japan has been innovative in technology with shopping lists growing significantly due to lower costs of setting up businesses online. Japanese consumers who previously were reluctant to do online shopping have grown the online retailing business to a multi-billion dollar market (Fitzsimmons &Okada, 2002). According to Hamburg market research, the Japans B2C e commerce revenues are forecasted to grog annually by a low double digit percentage between 2012 and 2016 due to high average spending and growth in online shoppers (Herbig & Milam, 1994). Environmental analysis China’s environment has suffered degradation as the country reform its economy because of urbanization and industrial development. The environmental damage costs up to 8% of China’s GDP thus the development of China’s environment protection industry to respond to the environment degrading over the past two decades (Takao, 2012). China focuses its investment to environmentally friendly projects a shift form infrastructure. Energy conservation and environmental protection is the new pillar of China’s economic development. The government of China encourages hi tech and energy savings products by imposing low tariff rates (Lee, 2007). Like China, Japan rapid industrialization has affected negatively the environment. This led to the enactment of laws that control environmental pollution through the government environmental agency. Japan was ranked the fourth in carbon emissions from industries thus the government has been serious on curbing air pollution and water pollution (Sampei & Aoyagi, 2009). Laws that restrict industrial emissions, restriction of wastes, energy conservation measures and promotion of recycling are some of the measures that government of Japan is using to deal with environmental problems. Japan was also a signatory of the Kyoto protocol of 1997 that would see the protection of the ozone layer through reducing the usage of air conditioning use in government offices. Legal regulations During the past decade, the government of China has opened markets to world investors by enacting laws that are in line with the WTO guidelines encouraging foreign investments. The enactment of Sino-Foreign Equity Joint Venture Law marked the beginning of building legal structures that govern foreign investments in 1979 (Nzegwu & Emeagwali, 2006). Since then, favorable legal structures have been put in place to protect their rights as well as those of the foreign partners. The legal system in China is enforcing stricter legal systems that support freer commerce thereby embracing globalization. New rules have also been established to protect private personal property like property rights and corporate assets. Foreign enterprises hat have their head offices in China are taxed on their worldwide income. A tax credit is allowed for income taxes paid to other countries depending on the type of income (Austrade, 2013). Japan’s legal structures to foreign investors are bureaucratic and present legal hurdles. The main business structures that foreign companies open in Japan are representative office, branch office, and subsidiary company and limited liability partnerships. Representative offices are not allowed to engage in sales activities. Branch offices do not have independent decision-making abilities since they do not have legal corporate statuses. However, foreign investors can invest in Japan through joint ventures with Japanese companies. Corporate enterprise tax is the local tax levied on foreign companies conducting business in Japan. Corporate taxes levied on taxable income. Large corporations with a capital exceeding 100 million JPY fall under the size based taxation. Japan has formed treaties with 59 foreign countries to avoid double taxation on the same income (Herbi & Milam,1994) . Recommendations Based on this analysis, the researcher recommends interested Australian companies wishing to go international to invest in China. China is the world most populated nation with over 1.3 billion people compared to Japan, which has a population of approximately 128 million people. As such, China presents more chances of cheap labor and a ready market for the produced products and services. Growth in ecommerce is high in China than in Japan presenting an opportunity for investment. Both Japan and China have stringent environmental regulations. However, Japan being the most affected in emissions is more likely to pass stringent rules regarding pollution than China. China is well adapted for globalization by enacting laws that are in line with WTO guidelines. This puts it in a better position to attract foreign investment than Japan. References Austrade. (2013). Doing business. Austrade.gov.au. Australian Trade Commission.  Brown, D. (2007). Horizon scanning and the business environment — the implications for risk management. BT Technology Journal. Fitzsimmons, J. A., & Okada, J. (2002). Evolution Of B2C E-commerce In Japan. International Journal of Business Performance Management , 4(2/3/4), 202. Herbig, P. A., & Milam, R. (1994). When In Japan, Do As The Japanese Do; When In Rome, Do As The JapaneseDo:: The Achilles’ Heel Of Japanese Business Philosophy. Marketing Intelligence & Planning, 12(11), 26-35. Ke, X. K. X. (2010). Study on the situation and development mode of ecommerce in China. Advanced Computer Control (ICACC), 2010 2nd International Conference on. Lee, T. P. (2007). Rump Session 2: Market and Doing Business in China.2007 International Nano-Optoelectronics Workshop. Martinsons, M. G. (2002). Electronic commerce in China: emerging success stories. Information & Management. Nzegwu, Louis I.; Emeagwali, I. (2006). Doing Business in China: New Opportunities in a Rapidly Changing Market. Academy of World Business, Marketing & Management Development (Vol. 2, p. 2006). Sampei, Y., & Aoyagi-Usui, M. (2009). Mass-media Coverage, Its Influence On Public Awareness Of Climate-change Issues, And Implications For Japan’s National Campaign To Reduce Greenhouse Gas Emissions. Global Environmental Change, 19(2), 203-212. Takao, Y. (2012). The transformation of Japan?s environmental policy.Environmental Politics. Read More