Japan

1
Japan

• Aim To give an overview of Japan, with
  particular reference to selected aspects of
  the business environment.

2

• In essence, we see ourselves as a cosy village
  society where consensus is the norm and where we
  all live by unspoken rules to make life tolerable
  in a green but crowded land with few natural
  resources.
• The Economist, 1996

3
Geography

• Total surface area 378,000 km ² (1½ UK area)
• four main islands Hokkaido, Honshu, Shikoku
  Kyushu (capital on largest island Honshu)
• a number of smaller islands
• 80 forest and mountains
• 14 agricultural land
• 5 urban
• few natural resources

4
Geography (cont.)

• Population 127 m (UK 59 m)
• population density 336/km² (UK 242/km²) ??
• Population concentrated along south-eastern coast
• Tokyo 12m inhabitants ? Ireland ?
• 20 of population in Tokyo area

5
History

• 17th-19th cent. Japan cut off from rest of the
  world
• 1885? Japan became an industrial nation
• 1945-52 American occupation
• 1947 constitution drawn up by American
  occupation forces
• 1953-73 economic growth of just under 10 p.a.
• 1973 first oil shock
• 1990 collapse of bubble economy (speculative
  investment in shares and land)
• 1990? economic growth of less than 1.5 p. a.

6
History (cont.)

• 1853 the first opening of Japan
• American warships landed in Tokyo, demanding
  that Japan open its doors to trade with the rest
  of the world.
• 1945 the second opening of Japan
• following Japans surrender and subsequent
  occupation by American forces.
• the third opening ???

7
Government and Business

• Emperor head of state but no executive power
• legislative powers vested in Diet
• - House of Representatives
• - House of Councillors
• one of the weakest parliaments in advanced
  democracies
• Bureaucracy makes policy Diet rubber-stamps
• Liberal Democratic Party in power from 1948-93
• represents interests of big business

8
Government and Business (cont.)

• Ministry of International Trade and Industry
  (MITI) coordinates and directs economic
  development
• exerts very strong influence ? Japan a planned
  economy (Berke)
• Network between politicians and business leaders
  very tight
• zaikai (business world - grouping of wealthy
  financiers and big business leaders) exercise
  business influence on government

9
Social aspects

• Japan the first example of capitalism built on a
  non-Western/Asian value system.
• ethnic state- cultural unity
• Japanese language unique to Japan
• religion Shinto also unique to Japan
• Confucian work ethic collective values and
  consensus are most important, long-termism
• NOT individualism and self-interest

10
The Business Environment

• Remember Hofstede?
• Japan
• Index Rank
• Power Distance 33/53
• Individualism 22/53
• Masculinity 1/53
• Uncertainty avoidance 7/53

11
Masculinity

• Characteristics of a high masculinity culture
  include
• achievement important
• money and things orientation
• work takes central role (live to work)
• larger corporations more attractive
• greater differentiation in gender roles
• fewer women in better paid jobs requiring better
  qualifications

12
Other cultural features

• Japanese have learnt to live with scarcity
• age-old passion for smallness and craftsmanship
• Japan essentially a feudal society
• hierarchy and age are respected
• one of the most high-context cultures in the
  world
• unpleasantness or confrontation to be avoided
• managers process-oriented rather than
  result-oriented
• concentration on quality and production
• group is the basic unit at work

13
Management in Japan

• Japanese-style managementoften equated with
  three key features (in large firms)
• 1. Lifetime/long-term employment
• 2. Wage/promotion system which rewards loyalty.
• 3. Union organisation based on employing
  organisation (enterprise union).
• BUT Established structures and practices are
  changing!

14
Management in Japan (cont.)

• kaizen management philosophy of continuous
  improvement, involving the entire workforce.
• ? enterprise unions!
• - one in six of the directors of listed
  companies has served as an executive of an
  enterprise union.

15
Management in Japan (cont.)

• just-in-time management (JIT) production system
  depending on delivery of materials just before
  they are needed in the production process.
• developed as a result of extensive use of
  sub-contracting.
• homogeneous workforce (enterprise unions)
• ? corporate activities strongly focused either
  by sector or by stage of production
• ? increasing interdependence of firms
• ? management of interfirm relations important

16
Corporate governance

• keiretsu business grouping, (financial,
  manufacturing or trading co.) consisting of one
  main bank and a number of companies held together
  by intricate web of cross-holdings of each
  others shares.
• ? prevents hostile takeovers
• ? long-term investment rather than short-term
  profit
• Cross-holdings as of total share holdings on
  decline
• (1994 gt 50 now lt 40).
• many industries dominated by big five/six

17
SMEs

• Japan usually associated with large conglomerates
• BUT highest proportion of small firms (and
  employees in them) of all OECD countries,
  together with Italy
• small firms often involved as subcontractors to
  larger companies.
• employment practices and wage levels tend to be
  significantly different from large companies

18
Japanese trade

• Exports to Imports from
• ( of total) ( of total)
• 1987 1996 1987 1996
• United States 36.8 27.5 21.2 22.7
• EU 16.8 15.4 11.8 14.2
• Other Asia 27.0 44.2 31.3 37.7
• All others 17.2 11.7 31.7 22.6
• concentration on trade with other triad nations
  and Asian neighbours
• Value of exports to US increased by 33, to EU by
  65 and to other Asia by 190

19
The 5 Is

• Japanese product development strategy in the
  process
• of entering world markets (based on Wee)
• Imitators products copied, cheap, poor quality.
• Improvers improved products beginning to be
  accepted.
• Improvisers products with distinctive features
  and quality
• Innovators 70s ? Japanese products often
  superior to others produced by the West.
• Inventors current phase, inventing new products
  in e. g. biotechnology, artificial intelligence

20
Summary

• Geography
• History
• Government and Business
• Social aspects
• Japan in Hofstedes cultural framework
• Japanese management
• Corporate governance
• SMEs
• Japanese trade
• The 5Is

21
useful website

• http//www.jetro.go.jp