Japan and China economy: Japanese unique social-business-government

system & hints to improve China growth

LOGO

Group members:Fang YuanCheng YvyaoLiu SiyanShao Qianrui

PreparationsWhen you see these countries what come to your mind first?

Japan Germany United State

Preparations

When you see China what come to your mind first?

introduction

• China and Japan has deep historical tie

• After World War II, the rapid rising Japanese economy became the second biggest economy in the world

• but after twrist and turns, China has leapfrogged Japan to become the world's second largest economy, a title Japan held for 40 years

8.227 trillion USD (2012)

1,351,000,000

introduction

• How Japanese unique social-business-government system as a unique factor to inject enterprises?

• Does China have such special thoughts to develop its domestic business and economy growth?

Japan economy

• The economy development reasons:

1. a typical export-oriented economy and the world economy trend drive

domestic resorce shortage-(the economy build on Trade) (1949-1961) the first internationize ： encourage to export control import (1960-1973) the second internationize: ☞limited foreign capital invade into domestic important

industry(mainly limited quantity and tax rate) (1970s-1990s) the third internationize

Japan economy in 20th century

• The internal country strategy drive• Government-oriented

• M arket activities closly relate to the government

1. government has power to control social resource allocation(government plan and fiscal policy to arrange resource)

2. Each industry structure exchange was lead by government

3. the protection policy made from gvernment to make sure firms invested and management in government’s expected way(sent government officers to work in firms)

Unique firm system

• the special enterprise function system drive:

1. combine the Neo-confucianism( team spirit ， Confucian businessman)

2. The relationship between firms—government & firms relate to each other(Industry associations and financial sector organizations), and relationship between enterprises(Zaibatsu, financial help from banks, small company & big company).

3. Capability driven strategy + Corporate culture combine and renew

Technology strategyMarket strategyManagement strategy

Globalization in Japan’s enterprise

http://www.chusho.meti.go.jp/sme_english/whitepaper/whitepaper.html

Utilization of organizations supporting management innovation

http://www.chusho.meti.go.jp/sme_english/whitepaper/whitepaper.html

Company case

• Panasonic• Career Long Employment Once you are hired by the

company, you will work for it until you retire

• Multidivisional structure You are assigned various

kinds of jobs in different departments within the company

• Wage system based on seniority

Salary goes higher as you get older

• Corporate culture

Reference-James Abegglen 1958: The Japanese Factory

Difference of salary you get and salary based on your performance

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

22 30 40 50 60

Salary you get

Salary base on yourperformance

Leadership Credo in Panasonic

Sense of purpose, strong values, self-discipline

Respect others, Builds community, Manifest honesty, shows justice

Staying focused on the Customer

http://www.nytimes.com/2012/11/09/technology/09iht-panasonic09.htmlReference by Kelly, T (Nov. 8 2012). A New Style of Leadership at Panasonic. New York, NY: The New York Times

Company case

• Confucian Entrepreneurs• the virtues of Confucianism: tolerance, sympathy,

empathy, and benevolence.• not run counter to the basic principles of the market

economy and democracy. • not compete for profit, but for excellence• create a win-win situation ,thus serve and influence society

at large

How Japanese company interpret Confucianism

• Elements of nature and ancestor worship1. The continuity if their family's good reputation-succession

of family business

2. Spiritual dimension-poor performance is most often seen as a spiritual failure—employees should chase from their hearts

Discipline and diligent practice-corporate training setting-employees have endurance, concentration and detachment

Networking-Keiretsu Paternalistic Leadership and Management-humanity-

effective function—trust-motivation Japanese work ethics-accepting controls--self-discipline-

competition

United enterprise group: Mitsubishi, Sumitomo, etc

Single family enterprise: Toyota & Panasonic

What Japanese enterprise face t0day

A under-estimate trade deficit in 2014 (already last 3 years—deficit)

Japanese Yen keep deflation—weaker, the weaker YenStill not stimulate export as expected. baby boomers start to retire in larger numbers from 2015(population issues) energy shortage (oil,fossil,etc)

 Reference-JAPANESE ENTERPRISE FACES THE 21ST CENTURYBy D. Eleanor WestneyM.I.T. Sloan School of Management(Forthcoming, Firm Futures edited by Paul DiMaggio, Princeton University Press)

China economy

• Three Cabs – Investment,Consumption,

Export imports and Exports as Leading

• Enough supply of factory production – high rate of capital accumulation, increasing of labors

and contiune improving of technologies

• Change of Social Insititution– open policy, urbanization plan

Problem in Chinese Economy- Urbanization Plan

- Labor Issues

- Lack of National Brands

The improvement strategy in Chinese Growth

• The 2014-2020 urbanization plan

Lack of National Brands

Enterprises which over 200 years

• - Japan ( 3146 )• - Germany ( 837 )• - Netherlands ( 222 )• - France ( 196 )• - China ( 5 )

• Average life of small business:2.5 years

• Average life of conglomerate:7-8 years

Company Case

Hero

- 1931 established in Shanghai- 1937 set up joint stock company- 1958 stirred "Pragmatic Innovation" enterprise spirit and surpass parker.- At end of 1980s, it occupied more than 70% market- During 1990s, it sold in more than 60 countries.

Company Case• At the end of 2012, it transferred 49% company's share to Parker,for the price of 2.5 million yuan

Case Anaysis

• Lack of asset• Did enhance brand value • Failure in company strategic transition• Lag in techologies

• Government pay less attention to help national companies

• People are crazy to buy foreigh products and ignore national brand

Comparison of China and Japan Economy

The similar of China and Japan economy in 20th centry

• In 20th centry, China and Japan had similar stage of economic development and growth partterns. There was no advantage of high-end product.

• China and Japan faced closed international environment and trade surplus with the United States increased. The exchange rate appreciated under external pressure.

Comparison of China and Japan Economy

The differences of China and Japan economy

• From the aspect of international market, Japan focus on produce their own brands. However, China pay more attention to the global industurial chain instead of own brands.

• Japan’s company pay more attention to combine the Neo-confucianism

Comparison of China and Japan Economy

• In the development of new technologies, China depends on the foreign production technology. Japan is focusing on the development of independent intellectural property rights.

• Japan is a country which is lack of resources. The utilization of resources is high though the resources are heavily dependent on import. China is rich in resources, but the efficiency is not high.

Comparison of China and Japan Economy• China and Japan’s survival rates are different

under a significant change of external condition. The survival rate of Japan is very high due to its strong independent innovation capability.

• China’s economic development relies on the support of foreign trade growth. Japan’s economy depends on the domestic support.

conclusion

• No permanent “miracle” economy model

• Japan as the leader in flying geese, still have to get rid of role of “medium” between Asia and US

• China still work on labor issues, social welfare issues, and cultivating more domestic enterprise(increase domestic demand),etc.

• Next decades, Is China the world's next superpower?

Thanks!

Q&A?