Compare and contrast business systems in Japan and China. Answer with Essay

Compare and contrast business systems in Japan and China. Answer with reference to relevant theories and use comparative country - Essay Example The similarity between the political systems in the countries is that both are state capitalist countries; a system which incorporates both free enterprise and government control to generate rapid or unmatched development and growth of their economies as well as the industrial sector. This system was used in Japan to instigate rapid economic growth and development but later resulted in huge economic dangers for the country. The system that brought Japan to proximity to the world’s largest economy also almost led its economy into turmoil. Hence, many may ask themselves, is China on the right path with the use of a business or market system that once proved a failure and a danger in its rival country Japan? Can the same fate that took Japan come China’s way? Japan instigated the capitalist form of governance in Asia during the 1950s and 1970s when it produced similar trends in economic growth and development as that produced by China in the current economic market (Yiping and Kunyu, 2011). ... Huge savings domestically were forcefully invested in these industries. The system enabled Japan to generate large cash surpluses due to export promotion instead of domestic consumption leading to Japan being accused of intentionally lowering the value of the yen so that its exports could be competitive in the global market. This period did not only see Japan’s capitalism produce enormous development and economic growth in the country but it also promoted the emergence of new industries that are globally competitive such as semiconductor and steel industries. This success led to some advocates from the US and other nations relishing the business system of Japan to an extent of some suggesting the system be implemented in nations such as the US so as to emulate Japan’s economic growth and development. Apparently, China has taken the same path as that which Japan took during its brighter economic days. Japan’s crisis began with the increase in oil prices that had a considerable effect on the Japan’s critical manufacturing industries. This had adverse financial impacts on Japan’s economic system. Japan was quick to notice this trend and instead, changed its development and growth strategies from manufacturing based industries to production based on knowledge i.e. the service industry. The service industry accounts for about 65% of employees in Japan whereas the same is only but 26% in China, indicating that China is more dependent on manufacturing industry than the service industry. The government of China controls the lending practices via a banking system that is state-owned and directs the funds to pillar industries, mostly steel and automobile manufacturing industries. Through provision