Japan

Japanese Business System

Developed in response to the external shock of realizing the outside world was stronger and more advanced, Japan created a system in which all of its constituent parts would work together for the benefit of the whole country, rather than the benefit of individuals. Japan is, by comparison with the region, an ethnically and culturally homogeneous country. For cultural reasons, Japanese hold themselves to be different from other people and are quite prepared to accept that state policies should benefit Japanese society rather than anyone else. The system of development fell into four stages: import substitution through technological absorption; domestic rivalry and export expansion; outbound foreign direct investment (FDI); and import expansion from Japanese overseas units. In each case, steps were taken to boost local Japanese capabilities and to exclude overseas firms from the domestic market. This is important because it helps to explain the level of self-reliance which overseas competitors consider unfair, and which contravenes many international trade agreements that require nationality to be of no concern in business decisions.

The Japanese system is manifested in the ways in which central and local government contracts are allocated to potential contractors. Much vital information is withheld from outside competitors who feel themselves unfairly treated. The line between maintaining close and cooperative contacts between businesses and illegal collusion is often difficult to distinguish. Further, much of Japanese law remains in a vague and undefined manner such that it requires interpretation by officials or bureaucrats; again, there is opportunity for outsiders to feel unfairly excluded. This exclusion, it is widely believed [Page 456]in the business community, may be overcome through paying bribes, which is a widespread part of a gift-giving culture. One particularly well-known example of bribery was that of the U.S. aviation manufacturer Lockheed Corporation which, in the 1970s, paid bribes to a number of officials to secure sales; one result of this case was the conviction of former prime minister of Japan, Kakeui Tanaka.

An example of business and government working together is in the program of overseas development assistance (ODA) in Asia. In this case, assistance, which tends to focus on resource-rich recipient countries, is designed to benefit Japanese corporations more than the recipients of assistance. There is also evidence that the Japanese government has linked ODA with obtaining support in international forums, for example in buying votes to support its position at the International Whaling Commission.

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