China replaced Japan as the second largest economy in the world in 2010. At the end of 2010, Japan’s economy was worth $5.474 trillion while China’s economy was worth about $5.8 trillion at that time (Stephanie Flanders, 2010). The reason behind this could be referred to the differences between the evolutions of their business systems throughout their economic history. Despite the fact that both China and Japan share similar cultures, values and geographic location, both economies went through much different paths.
Before the Second World War, they invented the “Zaibatsu model”. After the Second World War, the Japanese redesigned and developed their Zaibatsu model hence the “Keiretsu”. They started to bring western technologies and knowledge to their country in the late 19th century after the Meiji Restoration period (Suren Padmalingam 2002). They then experienced rapid economic growth and became the second biggest economy in the world. The government at that time believed they should concentrate on important industries such as the electronics and engineering industries instead of weaker industries.
One of the earliest Zaibatsu model was founded by the family Mitsui in the 16th century. (Wade 2004). During the Zaibatsu period, Mitsui developed division of labour, marketing and advertising, which was discovered by the western countries 200 years later. At that time, there was three other big and powerful Zaibatsu families apart from the Mitsui family; Mitsubishi, Sumitomo and Yasuda. (Chen 1995: 167) All the Zaibatsu share similar structure with a holding company owned by the Zaibatsu family, the holding company owned multiple smaller subsidiary companies. When the Mitsui Zaibatsu became more powerful, they realised the money distribution in Japan was inefficient, therefore they proposed to the government and introduced the first cashless money transfer. With the help of the government, they were given a concession to open their own private bank, the...