Comparing And Contrasting Business Systems In Japan, China, And Korea

Discussions

Discuss about the Asia Pacific Business.

The business system is described as the framework that facilitates a company to formulate the set of movements most likely to accomplish this benefit. The business system charts every step involved to create and deliver products of a company. Managers have the choice of how to conduct a business that starts from development of a commodity to sales and service, at every link in the chain. The word system mostly stresses the importance of supporting at each step with the proposition of value (Zokaei et al. 2013).

The essay provides an overview by comparing and contrasting business systems in Korea, China and Japan. It provides an overview about Korean business conglomerate that is termed as chaebol whereas; in Japan Keiretsu formed the largest group of business. According to the present research on varieties of capitalism, a field termed as comparative business systems, owes much of its strength to the influential volume. The economic development of East Asia has been regarded as the most pleasing surprises in the world (Waldenberger 2016).

The essay compares the business systems between Japan, China and Korea. It shows that the market performance between China and Japan are far better as compared to their counterparts in the United States and Europe. In order compare and contrast the business system in Korea, China and Japan, it is required to make an understanding about the business system.

According to Palmer (2016), in Japan the largest business group is formed under its business conglomerate known as Keiretsu that is also considered as the major contributors to the economy of Japan. This business group mostly employs Japanese style of administration and system. Zaibatsu was the predecessor of Keiretsu, which are considered as family run. There are mainly two types of Keiretsu; the first one is the horizontally organized Keiretsu and the second is the vertically organized Keiretsu.

As opined by Yanase and Limpaphayom (2015), Fuyo Group is the largest Japanese Keiretsu that is considered as the corporate that descended from Yasuda zaibatsu. It was a key business group in Japan until the Second World War. However, in the year 1948 Yasuda was taken apart with its major monetary arm Yasuda Bank becoming Fuji Bank. Under this form of business conglomerate, both capital and human resources are knitted jointly together. The governing of the companies under this business conglomerate is handed to experts or agents in order to avoid disagreement among group members. The upright prearranged Keiretsu are mostly formed by a large parent company. Each flow and function of the companies follows a top to down procedure in order to control inventories as well as industrialized quality. Almost all the small and medium sized companies follow and utilize this system in Japan. 

On the other hand, in the year 1979 China started its reform program after the initiation of economic door policy by Deng Xiao Ping. The state government modernizes the major industries of China such as agriculture and technology. The state owned enterprise is also provided with the rights to form the structure of their company according to the requirements of leaner production procedure as well as maximization of market. The usage of profits and loss are also implemented by the state government of China (Yu 2014). With the help of this, a segment of the profits is donated to the state government however; the remaining profits can be kept by the state owned enterprise. The state government of China has also undertaking the downsizing of the state owned enterprise. This includes the development of stock exchange in Shanghai and Shenzhen and also transforms some imperative markets to shareholding industries in order to trade. As a result, it gives rise to the communist market economy in China whereby commercial way of administrating the economy is reinforced. 

Japan follows development of its own industries whereas; China follows foreign direct investment policy. Japan has determined to become a part of export-determined economy and as a result, Japanese have been quick to recuperate its economy by competing ferociously in the ever rousingly saturated market. The commodities they are agitating out are of superior dependability and they often demean its competitors by a large margin to win the contract. Japan endowed profoundly on research and development in order to generate high value commodities to make it advantageous to the world. The business systems of Japan have also introduced several methods to enhance efficiency in order to ensure profitability. As opined by Issar and Navon (2016), Toyota generated a system termed as Just-In-Time (JIT) that highlight on the unemployment of keeping live inventory. JIT was first created in the year 1950 that disseminated slowly into diverse industries and plants in Japan. It necessitates close collaborative association with all its suppliers for all its industries to work.

With good performance, it can make sure lean production with little drooping and good flow procedure. This procedure brings about the envy of the manufacturing world particularly in the United States. The companies of Japan also made the use of Total Quality Control (TQC) in production. Professor William Demming who belongs to the city of New York however introduced it; the companies of Japan mostly utilize TQC. The major notion of TQC is to have little or no tolerance at rework. This is mostly because; most of the companies consider reworking of a work as wastage of time (Deshpandé et al. 2013).

On the other hand, according to Wang (2013), the state government of China views foreign direct investment as a very imperative medium in order to enhance the economy. The state government also generated four Special Economic Zones in Fujian and Guangdong in order to persuade the facilitation of foreign direct investment. The state government comprehends that by generating four zones is not adequate to open up the market. Due to increasing manufacturing cost in the Japanese companies, Japan has started to pour overseas direct investment into China to reduce cost. As a result, the importance of foreign direct investment can be reflected in both the countries.

 Japan mostly benefits from the low cost of production however; on the other hand, China benefits from the capital inflow as well as technology transfer. The Peoples Republic of China mostly makes the use of the socialist market economy that is based on the governance of State owned enterprises as well as upholding a free market open market. During the early stage of monetary reform in China, socialism can be considered as the basis for the reform and therefore has to implement industrialist techniques in order to survive (Alba, Song and Wang 2013).

Japan mostly adopted the system of capitalist market economy that is quite similar to that of its western counterparts. With the help of this system, the business systems of Japan are encouraged to carry a free trade in the market. China adopted the market economy in the year 1980 that was coupled with the alleged reform and opening up policy, blocks of the market entry to the key Asian countries have in due course been erased. However, even though the market economy of China has been developing with large inflows of overseas investment as well as export, the political standing of China, which is one party controlled government, is dissimilar from that of US and other key western countries (Li, Cui and Lu 2014).

According to Murillo and Sung (2013), the business conglomerate of Korea is known as chaebol that is famous for its exclusive organizational structure as well as administration pattern. Every chaebol is composed of several companies thus being engaged in diverse types of economic activities. However, they are all combined jointly by a vertically federal command structure controlled by the proprietor and his family members. Hyundai is considered as the major chaebol that is considered as the corporate that was initiated by Chung Ju Yung who visited Seoul as a teenager in the year 1930. After the Second World War, he developed trade relation with the US military and won construction contracts from them. Hyundai was provided the contract to build the 260 mile highway between second largest city of South Korea, Pusan as well as the capital Seoul. Hyundai was involved in the construction of overseas projects.

The managerial authority of the owners is allegedly derived from his share of capitals. The major owner characteristically occupies the position of the group leadership, thus acting like a established patriarchy and authorizing control with the help of personal staff in the management of the overall chaebol group. However, the chaebol proprietor does not restrict the size of the business organization to the one that he can individually administer. Rather, he builds up a large officious structure that he dominates by making the use of his share of capital. The progression to the leadership of a chaebol is in accordance to patrimonial objectives. Chaebol mostly operates with a complicated officious decision making procedure that engages functionally dedicated offices as well as definite tasks (Choi et al. 2014).

The initial organizational structures and operation of the chaebol bear a resemblance to those of the states in Korea, with which it shares a close relation. Every chaebol function as a articulate group, in severe competition with other chaebol. However, the corporate recognition of the chaebol is much weaker as compared to the business organization in Japan. According to Yanase and Limpaphayom (2015), the business groups of Japan that is mostly referred to as keiretus, is mostly identical to that of the Korean chaebol both in terms of size as well as in terms of the importance to the economy of Japan.  However, both chaebol and keiretus operates on the principles quite diverse from those of their Korean counterpart. Most of the scholars distinguish keiretsu from chaebol based on their types. There are mainly two types of chaebol; the first is deals with the intermarket group while the second deals with independent groups.

The intermarket group mostly deals with the engagement of diverse industrial sectors. The correlation of the member firms under this type of keiretsu is more collegial rather than hierarchical. Under such keiretsu, control and coordination is accomplished with the help of dispersed networks of presidential clubs, mutual share holdings as well as interlocking directorships (Glattfelder 2013). On the other hand, independent groups are liable to be identical to member firms of the intermarket keiretsu. Each of the intermarket keiretsu consists of a large as well as highly successful parent company as well as vertically aligned subsidiary companies. Despite some connection with Korean chaebol, the Japanese keiretsu is distinguishing for the strong networks it promotes as well as networks that work to restrain the blunt and inept appliance of authority.

The ability pattern in China also diverges from that of proprietors of Korean Chaebol. In Korea, there are large hierarchically arranged sets of firms however; in China, there are mostly family firms where each firm consists of a small segment of the production chain. In Korea, the firms are directly controlled by the central holding company that is possessed by an individual or a family unit. On the other hand, the business groups in China are often conglomerates of disparate trades that are usually owned by an individual family. The intellectual layer of the Korean trade system illustrates a comparatively higher level of resemblance with that of China. The institutionalized trust in Korea is much more strongly enhanced as compared to that of China (Hasegawa and Noronha 2014).

As far as management of firm is concerned, the structures of the firms in China are centralized and interdependence between managers and workers are mostly weak. As far as networks are concerned, Korean chaebol are of self-sufficient size and they also demonstrate low dependence on suppliers and distributors. Either the organizational system of the companies in Korea is characterized as disciplined or hierarchical that in turn reflects the widespread social pattern.  Korea is a society that witness respect for authority and their job status is an established norm. Under the management business system in Korea, workers are expected to illustrate a high degree of loyalty towards their employer. Similarly, workers are professed to be a highly valued asset that is reflected by the professed importance of job training. On the other hand, managers are unenthusiastic to delegate to individuals who are not personally trusted that limits the complexity that is undertaken and implemented by a firm. Management of private firms in China mostly involves direct managerial control by the family proprietors (Lu et al. 2014).

As far as network is concerned, the dominant bargaining power related to chaebol dominates trade partners that mostly are small medium enterprises, which have adjusted its trade activities to individual corporate customers. On the other hand, the foreign Chinese business networks are structured hierarchically that is followed by the hierarchy of the family firm. There is mostly lack of business network in China due to limited requirement. According to Folk and Jomo (2013), intellectual protection of property is weak and as a result, the firms in China takes advantage of that to copy what they crave. Korea on the other hand, reflects corporate competition for a leading position that acts as the fundamental motivation behind many of the new investments. The adverse correlation and competition between chaebol can be exemplified by the relationship between Lucky Goldstar (LG) and Samsung as well as their ambition to dominate the electronics market in Korea. There has been low degree of alliance-based modes of incorporation in the post-war Korean business system. An increase of technological partnership between companies is mostly noticed under the Korean business system. Personal trust is critical for most of the Korean firms while building coalition with firms outside the business group.

Conclusion

It has been concluded that the bank of Zaibatsu merged with Taiyo Kobe bank after the year 1990 and then in the year 2002, it became associated with Sumitomo bank thus creating one of the largest financial groups in Japan. With the economic stagnation of the year 1990, a more crucial horizontal keiretsu has been formed. After 1990, zaibatsu dissolution became the major importance to the establishment of the so-called Japanese-style mixed economy. After 1990, both the chaebol Samsung and LG started flourishing among the top ten 10 companies in South Korea. The economic crisis in Japan in the late 1990s forced the companies of Japan to compete for price as well as quality by making the use of market-based systems. It can also be concluded that in South Korea, chaebol is comprised of multiple companies with robust internal transaction that are controlled by an individual enterprise. Zaibatsu is largely influences chaebol as both zaibatsu and chaebol are considered as family-owned multinational companies. Most of the chaebol trace their origin back to the period of the occupation of Japan of South Korea. Cooperation in trade requires patient building of inter-personal trust mostly between the proprietors. However, under the management business system in Korea, workers are expected to illustrate a high degree of loyalty towards their employer. 

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