Comparing and Contrasting Business Systems in Japan and China - Essay Example

? Comparing and Contrasting Business Systems in Japan and China Introduction A business system can be defined as a methodical procedure or process used by owners of factors of production as a delivery mechanism for providing goods and services to customers. An efficient business system has the potential of accelerating economic growth in a country while still rewarding owners of the factors of production. On the other hand, a country that adopts inefficient business systems may lug behind in terms of economic growth. This calls for business systems analysts to be involved in the adoption and use of the various business systems in a country. This paper seeks to compare and contrast business systems in Japan and China. In order to do this, the paper will compare and contrast the various aspects of business management in the two countries. Nature of Economic Agent Japan’s market grew steadily in the 1970s and 1980s to make the country’s per capita income only second to that of the USA. The country has little and poor natural resources which meant that industrialization was the only way the country would experience significant economic growth. Japan is, therefore, regarded as an industrial country with its main economic sector being industries. The country, being capitalistic, has most of its businesses run by private individuals. This has encouraged competition in the country leading to a high rate of economic growth. China, on the other hand, can be described as a country whose financial system lies between communism and capitalism. The dominant presence of the government on how businesses are ran in the country remains to be observed (Sato, 2010). This has made China have extreme ends. Whereas there are people in the country who have indeed benefited from this state of economy, people still remain to be affected by this state. This state can be attributed to China’s rapid growth over the past few years. The government of China controls major corporate in the country with very few private owned corporations. This presents the socialistic part of the country. This includes those in the banking sector such as Agriculture Bank of China and China Guanfga Bank. There is, however, presence of privately owned businesses in the country which operate at a lower level than the corporations. The country’s economy is diverse unlike Japan’s which relies mostly on industries. China depends mostly on agriculture, industries and its cultural heritage (Zheng, 2013). The rate of economic change in China is relatively higher compared to that of Japan. Although Japan has had a significant growth in the late 20th century, China has improved its economic growth in the 21st century in a way that has made it among the best performers in the world. Natural disasters that have hit Japan for the last ten years have left the country at a loss in terms of its economic performance. The country, however, manages to retain a significant rate of economic growth. China has mostly relied on its population and size of the country for much of its improvement in terms of economic development (Blackford 2008, p. 25). China’s economic capabilities can be seen to be way ahead that of Japan. The country has more potential to grow into a super-economy. As mentioned earlier, the main challenge facing Japan remains the series of natural disasters that the country has faced. The disasters have left the country in economic turmoil considering the levels it managed to reach in the late 20th century. Japan can be seen to have employed the theory of development of management in a more efficient way than China (Zheng, 2013). This can be attributed to the capitalistic nature of the country. The theory underlines the fundamental guidelines that should be followed in order to have efficient management of businesses. This includes clearly outlining the goals of the business and distancing the business from its owner(s). The extent of owner involvement in the running of businesses in the two countries is relatively similar. Owners of businesses directly get involved in the running of their businesses. This mainly is in relation to financial matters of the business. However, China’s socialistic aspect of its economy restricts the involvement of owners in the management of businesses. This can be drawn from the fact that most of the businesses in China are owned by the government (Watson 1994, p. 21). In Japan, owners of factors of production in most cases get involved directly in the running of corporate affairs. Financial returns of companies must be approved by their owners. The involvement of owners in the management of business remains low since most of them prefer hiring professionals who carry out most of the management duties. These professionals get charged with most of the duties with owners mainly concerned with the financial performance of the business only (Blackford 2008, p. 25). Despite China’s tremendous steps in economic development, there are several risks that have started affecting the country’s business sector. One such risk has been the disruption of chain supplies due occurrence of disasters such as floods and earthquakes. This has led to the government calling for all stakeholders in the business sector to carry out research on how these risks can be neutralized. Chain supply disruption can also be attributed to the high level of interconnection of businesses in the country. Almost all businesses in the country depend on other business for raw materials as source of market or as business partners. Most businesses in China have reported a disruption in their supply chains over the last one year with over 85% reporting that their supply chains have had been disrupted at least once in this period (Nolan 2013, p. 2). Although Japan has experienced equally devastating risks in business management, the country has been thorough in its dealing with these risks. Most businesses in the country have managed to deal with operational risks in their businesses with relatively convincing outcomes. Through enforcement of comprehensive risk management plans, the country has been able to create a culture of managing its corporate risks. However, the series of disasters that the country has experienced continues to hinder these noble efforts. The main challenge to most of the businesses has been managing the effects of these disasters on the business’ infrastructure. This has not always been easy considering that most of these disasters have been natural. These disasters not only destroy a business’ infrastructure but also disrupt its supply chain (Nolan 2013, p. 4). Nature of Market The most boosting aspect of the Chinese market has been its size. The country is host to approximately 20% of the world’s population. This population provides a market to most of the products produced by companies in the country. China relies on its size to promote its vertical coordination in its market. Most of the products produced by businesses n the country get their market locally with the rest of the goods getting their markets abroad. Although China’s market in Africa has grown significantly over the past few years, the country’s own population remains its key market. Chinese people have a tradition of preferring goods produced locally over those imported from other countries. This has been a major boost of the many businesses that operate in the country (Yu 2002, p. 34). Japan, on the other hand, relies more on its overseas markets than its own local market. Most of the goods produced in the country are exported with Africa and Asia providing the large part of its market. The Toyota Company is a leading company in Japan which has its markets spread throughout the world. Japan, having the largest automobile industry in the world, is a leading provider of motor industry goods to Africa. Vertical coordination in the market is relatively low as compared to that in China. Most of the businesses in China tend to operate independently with little interdependence. The main reason provided by most business people in Japan for the country’s relatively low levels of vertical integration is that it tends to hinder specialization. It further creates intra-organizational complexities and brings politics to the corporate world. As such, most companies in Japan do not prefer vertical integration. This state of the Japanese market makes it hard for companies to share outputs and risks (Sato, 2010). Although Japan’s strategy has at times worked against its economy. The culture of independence in business management has brought satisfying levels of success to the business sector in the country. Independence in business management has enabled most of the businesses to manage their production processes in a way that does not involve much politics. This is unlike China, whose business sector is constantly faced by political interferences (Nolan 2013, p. 8). Nature of Work Coordination The centralization of decision making is a trend in both countries business sectors. The use of contingency theory in both countries has helped improve business management. This can be taken from the fact that managers in both countries take actions based on the current situation. Centralization of decision making processes has had tremendous benefits to the two countries. The Huawei Technologies in China, for example, has managed to centralize its decision making processes in a way that has been emulated by other companies not only in China but abroad. Through this process, this company has managed to grow tremendously as a technological powerhouse competing with the industry’s traditional powerhouses. Other companies can be seen to be following the same trend in their management. Although the process of centralizing decision making processes is time consuming, the level of success brought by the system has been quite tremendous. China’s major decisions on corporate affairs in most cases involve the approval of the government. The government must be made aware of such decisions and approve them. This further indicates the socialistic nature of the country. However, this has been blamed to hinder corporate independence in the country with most of the companies in the country lacking the capacity to run their affairs independent of the government intervention. Government intervention has been at times blamed bringing political wrangles into the running of companies in china. However, this is gradually changing with time. In Japan, centralization of decision making processes has not been faced with too much government interference as it has been the case in China. This has brought with it tremendous benefits with the country experiencing significant changes in its business management. Most of the companies in the country have managed to improve their efficiency in running their operations. This has been a major boost to the country’s robust growth over the last few years. Toyota Company in Japan has managed to centralize its decision making processes in all of its branches, not just in Japan but all over the world. The Company has set the pace for most of the other motor companies in the world with its efficient decision making processes which has put it as one of the leading motor companies in the world for quite a long time. Employer-employee relations in China are characteristically different from that in Japan. In China, employees can be seen to be less related to their employers than it is the case in Japan. The Japanese population is more attached to their work than their counterparts from China. In Japan, most of the workers have developed a culture of taking personal responsibility of their duties. Indeed, this has been applauded by many as the main reason behind Japan’s rapid economic growth. Most of the companies in Japan seek to develop a culture of hard work and devotion at work to cater as a way of ensuring production of goods continue even in very challenging work environments. Although this has been criticized by some observers as a hindrance to the social growth of these workers, this method has played a vital role in shaping the economy of the country. Employees depend on their employees for most of their needs while at the same time; they give back by committing themselves fully to their work. The system seems to work so efficiently such that labor unrest gets rarely heard off in the country (Chen 2004, p. 3). China’s business sector is different from Japan’s. The country relies on an establish authority that seeks to regulate employees’ salaries. The authority further protects employees from any form of exploitation from by their employers. There are a lot of rules put in place to regulate the labor sector in the country. As such, China’s labor sector has experienced wrangles in the past with workers going on strike to demand better working conditions. This has affected the relation between employees and their employers with most employees unwilling to commit themselves to their work. The level of employee-employer interdependence in the country has always been low in the country considering the apparent hostility between the two parties. Their relation has always remained professional unlike the case in Japan. Most employees in China have sought to create trade unions, which they can use in advocating for their rights. With these trade unions, employees have a better ground to address their issues to their employers and the government. However, the country’s lack of high level employee-employer interdependence has not impacted significantly on the growth of the business sector in the country. The country still remains to host major business firms in the region (Jakobsen et al 2001, p. 1). With improvement in technology, managers can now operate from long distances with equal efficiency as when operating from the company’s main premises. This has helped companies to retain highly skilled managers who can manage over a large firm with ease. Both China and Japan has followed this route with a satisfying level of success in both countries. The size of China’s size as a country has meant that the country’s business sector gets to adopt ways that can help the management of these businesses to operate from a distance. This has come with several advantages in terms of business management and performance. One such benefit is that businesses can now supervise a larger number of their employees through a common centralized management. When employees get required to report to a common management, they are able to improve on their work since they are assessed by the same authority (Chen 2004, p. 4). This has been the case in China where Samsung Company recorded an increased level of performance from their employees due to adoption of a common, centralized management. Although the management may operate from a distance, this factor enables workers to have a common sense of responsibility as they get to report to the same authority. The case has not been so different in Japan. Toyota Company has applied use of distant managers in their operations. With their headquarters in Tokyo Japan, the car manufacturing company continues to scale greater heights through this method of work coordination. The trend has been followed by other companies in Japan such as Alpine Electronics, Arai Helmet Ltd and Asahi Breweries. This method has further ensured that the company gets to reduce its operational costs consequently increasing on their profits (Saka 2003, p.26). The level of supervision in Japan is way below that in China. This can be attributed to the self-driven nature of workers in Japan. As earlier indicated earlier, Japan’s culture of hard work and self motivation in place of work has contributed greatly to this trend. Japanese people have been referred as industrious by many observers. Unlike the trend in most western countries where employees see to appear to distance themselves from supervisors, Japanese employees seem to pull themselves closer to their supervisors. This aspect ensures that little supervision is required from the management as workers carry out their duties. However, this does not rule out completely the aspect of supervisory control of workers. Supervisors are assigned with duties of controlling production processes in the industrial country. In China, supervision of workers is given a priority as one of the key pillars to efficient management. Most companies in China have invested heavily on supervising their workers at their workplace. Supervision of employees working abroad has been poor, however. This has led to a decrease in the performance of the country’s companies that operate at an international level. Negligence of most management to supervise this group of employees has created a negative image of some of the country’s companies abroad. Internally, the country still remains to employ socialistic methods in its dealing with employees’ supervision (Blackford, 2008). Specialization as a way of improving production is probably best illustrated in Japan. The country’s workforce has specialized each on their own field to create one of the most efficient workforce in the world. Specialization starts at the learning stage and is advanced in the working field. Industrial companies employ this skill to ensure that their production processes run with little interruptions since every worker has a specific role to play. In a company that produces cars in Japan, workers in the painting section specialize in different roles from those who work in the assembly section. The result for this has been high level of production as well as high quality of goods produced (Nolan, 2013). Although specialization has been used as a way of improving on production, its level is still low. The country remains to use traditional skills in production processes. This has brought some benefits with it, however. Most of the country’s workforce is occupationally mobile. Employees can move from one area of work to another with relatively little difficulty in adapting to this new environment. If this gets changed, the country can experience more benefits that can with specialization. Conclusion Japan and China are two of the leading economies in Asia. The countries have both similarities and differences in their business systems. Japan is purely a capitalistic state. China, on the other hand, is both a socialistic and capitalistic state. Although Japan’s capitalistic system has helped it achieve major economic goals, the threat posed by natural disasters still remains a major concern to the country’s economy. China, on the other hand, should adopt a purely capitalistic system in order to realize its full potential in the business sector. This is realistic considering the tremendous levels it has reached with a system that does not work efficiently in the business sector. References List Blackford, M. G. (2008). Rise of Modern Business: Great Britain, the United States, Germany, Japan, and China, Chapel Hill, The University of North Carolina Press. p.25 Chen, M. (2004). Asian management systems: Chinese, Japanese and Korean styles of business, London, Thomson Learning. pp.3-5. Chen, Z., Wu, Z., & Xie, S. (2000). The extent of marketization of economic systems in China, Huntington, NY, Nova Science.p.17-22. Jakobsen, G., Torp, J. E., & International Workshop on Business Systems in the South. (2001). Understanding business systems in developing countries: [from an international workshop on 'Business Systems in the South' held in Skodsburg in January 1997 ; organized by the Copenhagen Business School], New Delhi [u.a., Sage Publ. p.2 Nolan, P. (2013). Is China the Buying World, London, John Wiley and Sons. Pp.1-10. Saka, A. (2003). Cross-national appropriation of work systems: Japanese firms in the UK, Cheltenham, UK, Edward Elgar. p.24-30. Sato, K. (2010). The anatomy of Japanese Business, New York, John Wiley & Sons. Watson, G. H. (1994). Business systems engineering: Managing breakthrough changes for productivity and profit, New York [u.a., Wiley. p.21 Yu, T. F.-L. (2002). East Asian business systems in the evolutionary perspective: Entrepreneurship and coordination, New York, Nova Science. p.34. Zheng, Y. (2013). Managing human resources in China: The view from inside multinationals, Cambridge, Cambridge University Press. Read More