Comparison of business system of China and Japan Essay

1. Introduction This research paper will concludes the comparison of similarities and differences of business system in China and Japan. It refers about institutional comparison and clusters and implications for varieties of capitalism and business systems theory by Michael A Witt and Gordon Redding and another one ‘s author is Zhang X & R Whitley : Changing Macro-structural Varieties of East Asian Capitalism. In general, because China and Japan both Asian country so that this two countries has many similar aspects such as culture, food, history†¦in the other hand there are exists differences between them. 2.Comparison of similarities The countries of China and Japan share numerous similarities other than their geographical proximity. They both have established extremely rich cultures and great senses of national identity.Their histories have crossed paths during several periods since both civilizations have existed for such a long times. The countries also share similar religions and value systems, which have influenced each other. In terms of Japan’s economic culture is the  idea that the firm exists to keep people employed, and that return on capital for advantage of shareholders is not a primary rationale for economic action. A casual review of publications suggests that most of the research in the field has focused on advanced industrialized nations in the West and, to a lesser extent(e.g.Berger &Dore,1996;Orr et al,1997:Redding 1990;Whitley,1992). At the same time,it implies that many questions remain fully or partially unanswered, and the field, wild open for further exploration.Whitley’s(1999) account of the emergence of six major business-system types likewise incorporates the role of culture, in the form of shared beliefs about authority, trust, and communitarian ideals. While he underlines that institutions mediate both trust and authority, the narratives included in his illustrate how cultural and historical forces lead to the emergence of some institutions. The similarities between Japan and China didn’t just happen on their own. When ambassadors from Japan visited Tang dynasty China in the 7th century, they found an empire that was much larger, wealthier and more unified politically than their own nation. When they returned home and reported what they’d seen, the Japanese imperial court became so enthusiastic about Chinese culture that they built a new capital city at Nara in imitation of the Tang capital at Chang’an. Between the years 710 and 794, the Japanese emperors reorganized the country and its legal system based on Chinese models. They also encouraged the adoption of Chinese philosophical and religious ideas. The connections between Japanese and Chinese culture began in this time period. China and Japan have both been strongly influenced by the philosophy of Confucius, who taught a system of thought based on the importance of relationships and educational achievement. In both China and Japan, parents tend to push their children to study hard because academic achievement is so closely tied to future economic success. The Confucian emphasis on relationships has also influenced both countries, but in slightly different ways. In China, people tend to be loyal to their family relationships more than to any other personal connection. In Japan, on the other hand, people are encouraged to be loyal to whatever group they belong to, such as the company they work for. Most people probably think of Zen Buddhism as being characteristically Japanese, but Zen was actually borrowed from the Ch’an sect of Chinese Buddhism. Several of the major Buddhist sects in Japan have Chinese origins.  For instance, Japanese Tendai Buddhism was based on Chinese T’ien Tai Buddhism, and the Kegon sect was founded by a Chinese immigrant during the Nara period. Defining features of traditional Japanese culture such as the tea ceremony developed through the influence of Chinese Ch’an on Japanese Zen. Japanese artists borrowed themes and techniques from the Chinese for centuries. For example, the Japanese painter Ike Taiga based his 18th-century ink paintings on Chinese instructional manuals. Japan also borrowed the use of Chinese characters, but had to modify them due to the great differences between the two languages. Shodo, or traditional Japanese calligraphy, uses Chinese characters to express the artist’s emotional and spiritual state. Although traditional Japanese artistic styles show clear Chinese influences, they are also distinct from Chinese styles. For instance, though the Japanese admired classical Chinese poetry, they also invented their own poetic forms such as the waka and haiku. 3.Comparison of differences Despite all of similarities the recent history of these two countries has caused them to diverge into two very distinct modern civilizations. A great factor in this divergence is the extreme differences in the evolution of each country’s economic policy. For China, philosopher Confucious developed a pattern of thought which was key informing a sense of national identity. His ideas have had a profound impact on the evolution of Chinese culture, government, and economics. â€Å"He believed in and practiced the highest standards of morality, yet did it all in the spirit of moderation and harmony so admired by the Chinese.† (Morton, 33). Although his ancestors may have been aristocracy, Confucious was born into a rather plebeian family in 551 B.C. He wanted to eliminate the moral relativism of his time. â€Å"In contrast to the spirit of Confucious’s age and to the behavior of those addicted to the pursuit of selfish whims, the gentleman must banish from his conduct and even from his manner or expression anything savoring of violence, arrogance, or impropriety.†(Morton, 37). Confucious stressed five virtues: humanity, courtesy, honesty, knowledge, and integrity. This laid the foundation for a restructuring of the Chinese moral value system. This foundation still lies under present day China’s heightened sense of morality. While Confucious’ teachings may have helped structure a stronger  moral code in China, it may have actually hindered the evolution of Chinese economics.First Confucianism stressed agriculture while giving commerce an inconsequential role.Also, Confucianism saw profit-making as a selfish endeavor making competition in markets almost sinful. The way of life prescribed by Confucious included renouncing assets and pursuing the Way.All of these aspects of Confucious’ thought contributed to the inept economy preceding the revolution in China. On the other hand, Japan’s value system was formed with an inherent emphasis on refined work ethic. This value worked to help rather than hinder Japan’s evolution into an Economic Power in the modern world. The aforementioned sense of loyalty to work stems from an internalized sense of responsibility in Japanese citizens to work for one another’s well-being. â€Å"Here, more than in the family, work is self –validating in the sense of affirming one’s personal achievement and maturity, and in validating one’s belonging and participation in a social group.†(Eisenstadt, 538). When they are away from their work, they identify themselves as part of their company different to others who work elsewhere. In this way work is another family- type unit to which the citizen belongs and gains a sense of identity from. Since family and work are so similarly structured in life, individuals cannot help but equate to some degree their sense of membership to each and relish their ties to each in a similar manner. The organization and unity of Japanese companies can be seen in rituals performed at work in the morning. The rituals reinforce the collectivity between co-workers and give the group a sense of belonging. Differences between Japanese and Chinese economic statistics can be traced to the different economic systems employed by each country. For example, the GDP real growth rate in China was about 8%, while in Japan it was 1.3% both for year 2000. (1) Saving is mostly an individual decision under a market capitalism system similar to Japan’s. When this decision is left up to the individuals in the economy it usually results in a lower savings rate and, in turn, investment than under a mixed socialist system like China’s.Chinese government has the ability to control investment rate unlike the capitalist system which deflates the role of government in economic activity. The discrepancy between these two countries in terms of GDP real growth can also be the result of Japan’s extreme growth in past decades and its leveling off. China on the other hand still has much room for economic  growth even though they too have experienced impressive growth. Economic systems’ impact on hard data can also be seen within China’s history.Japan has shown the advantages of the capitalist system in trying to recover from its late 90s recession. According to the mofa internet source, Japan has helped create new businesses and industries through deregulation. (2) This shows how the economic system’s flexibility allows for further gradual decentralization. China’s reforms have come through major revolution such as the 1978 revolution which was introduced by government. This is characteristic of socialist economies in which changes begin through government introduced package reform. Japan’s GDP per capita in 2000 was around $24,500 while China’s was around $3600 for the same year. (1) This can be linked to differences in unemployment rates (China’s was more than double that of Japan) especially in China’s expansive rural areas.In 2000, Japan’s inflation rate was negative while China experienced a .4% rate. This shows the socialist economy government’s ability to control rates more effectively. Health is the essential aspect of standard of living. Life expectancy in China is relatively high at 62.3 years (61.2 for males and 63.3 for females). (3) The population control mechanism implemented by government in 1979 which limited each family to one child . This is an example of the socialist economy working positively. The program has dropped China’s population growth to under 1%. Japan maintains the highest life expectancy of 74.5 years (71.9 for males and 77.2 for females). Another new indicator of relative standard of living, the Human Development Index includes several factors such as longevity, education, and economic standard of living in it calculation. Japan ranks 9th,which places it in the high human development category. China ranks 87th placing it in the medium human development category. China scores significantly lower than Japan in the education value of the HDI . Free public schooling through junior high is provided for all children in Japan which could be the reason behind the education discrepancy. Japan’s 99% literacy rate is one of the highest in the world.The Chinese government implemented a minimum standard of living program in the 1990s. This is similar to a social security program and helps poverty stricken citizens in urban areas. This system exemplifies the socialism within the economy. In 2000 an extension of the program offered unemployment insurance and pension for retired workers. China also increased  investment education, libraries, museums and broadcasting stations. In summarize,although these countries share many things such as geographical location, major religions, philosophies,etc.they have diverged partly due to the different economic systems they have employed thr oughout their histories. Both countries have enjoyed tremendous growth in the second half of the twentieth century but their modes have been very different. Japan utilized a market capitalism which was introduced by America after World War II. This has led to a present day Japanese culture which in many ways is very similar to American culture. They have a desire for material wealth, value-added goods and leisure. Hopefully they will not lose their rich culture and tradition in the midst of economic growth.China has taken a more conservative approach and has moved from planned socialism under Mao Zedong towards a functional market socialism.These countries exhibit the impact of an economic system on the people within a country as well as its impact on economic growth. References Witt, M & G Redding (2013). Asian Business Systems: Institutional Comparison, Clusters and Implications for Varieties of Capitalism and Business Systems Theory Zhang, X & R Whitley (2013). Changing Macro-structural Varieties of East Asian Capitalism Eisenstadt, S. N. Japanese Civilization. London: The University of Chicago Press, 1996. Morton, Scott W. China Its History and Culture. New York: McGraw-Hill, Gordon Redding , Michael Witt (2008).China’s Business System and its Future Trajectory