Lessons for Chinese Enterprises based from Japan and Korea experience Chang Liu Hanyu Liu Lei Luo.
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Transcript of Lessons for Chinese Enterprises based from Japan and Korea experience Chang Liu Hanyu Liu Lei Luo.
Chaebol
• Chaebol refers to some huge business conglomerate which controlled by family or state, with multiple management and interlocking shareholdings.
• Graet influence, even involved in politics.
• Asian chaebol is start from Janpan.
Japanese Zaibatsu
• In late of 19th century, Meiji government sold state-owned enterprises with a low price to few capitalist who has special political background.
• Meiji government use protectionism to help private develop.
• During WW I and WW II, Zaibatsu get significant development through the close relationship with war industry.
Japanese Zaibatsu
After WW II, some of Zaibatsu servive from the disband that the U.S did through Japanese government.
These Zaibatsu get stronger, they even involve in government
Negative Effect of Japanese Zaibatsu
• The strong of the zaibatsu reduces the dominance of government.
• Uneven distribution of national resource.
• Higher uncertainty of economic growth.
• Zaibatsu controlled the economic lifeline of the country. In other words, they controlled economic growth of country.
Weaken Zaibatsu Why Zaibatsu so strong• Indulgence of government. • Since Minji government help Zaibatsu
develop, neither of Taisho and Showa government use tough attitude to Zaibatsu.
Tanaka Kakuei
Chaebols in South Korea
South Korea made the “Miracle on the Han River” between 1961 and 1996.
Chaebols contributed the most.
Now many Chinese entrepreneurs have the “chaebol complex”.
Is it suitable?
Chaebols in South Korea
“Small country and big company” strategy.
Government pool the best resources to several selected enterprises.
Enough capital and profit for expansion.
Finally enter the high-tech area.
“Death, Tax and Samsung”
Chaebols in South Korea
Problems caused by Chaebols
The official-business collusion.
Triangle relationship between government, bank and chaebol.
“Secret Campaign finance”
Unlimited expansion.
High debt ratio.
Chaebols in South Korea
Shortcomings of Chaebol.
Unlike european and american consortium
Strongly depend on government help.
Family business mode.
Limit the growth of small and medium-sized. enterprises.
Enlarge the rich-poor gap.
Current Chinese chaebol rudiment
mainly divide into to two main stypes:
Private enterprises which leech on to government(overt)
SOE owned by descendant of Red generation(covert)
Current Chinese chaebol rudimentPrivate enterprises which leech on to government
Example: Alibaba Corporation
Including : Alibaba, Taobao, Alipay, chinese yahoo, HiChina and so on
Current Chinese chaebol rudiment
two improtant factors of becoming chaebol:enterprise has a power of controlling the society
2013 Taobao daily business transaction: 19.1 billion2013.11.11 Taobao business transaction : 30 billion
2013 Alibaba and Taobao sales volume : 1000 billion, directly or indirectly created 10million jobs
Current Chinese chaebol rudiment
another improtant factor of chaebol:
the tightness relationship with the government
China Investment Corp invest 6.4 billion to become its major shareholder
→6.4 billion
Current Chinese chaebol rudiment
SOE owned by descendant of Red generation. (covert)
Example :
Baoli Group Corp
Current Chinese chaebol rudiment
Baoli corp: including real estate,technology,energy sources,mining industry (more introducing)
honorary board director: son-in-law of Denxiaoping
board director:son-in-law of former chairman yangshanggun
former board director: son of former vice-chairman wangzhen
Current Chinese chaebol rudiment
Zhang Beili:Wife of Wen (former prime minister of China)
Diamond jewelry exclusively controls China's jewelry trade
Wen Yunsong-board director of china satcom group
their family actually controled lots of enterprise including: real estate ,energy sources,jewelry,cleanning . Total worth more than 17 billion yuan
(David Barboza, <<Billions in Hidden Riches for Family of Chinese Leader>> New York Times , October 26, 2012)
China could form chaebols through:
Government support enterprises that leech on to the government
SOE Privatization
problems that might happen
1.japanese experience
The stronge of the zaibatsu reduces the dominance of government.
Uneven distribution of national resource.
Higher uncertainty of economic growth.
2.korean experience
The official-business collusion
High debt ratio→investment drease
Limit the growth of small and medium-sized enterprises.
Enlarge the rich-poor gap
problems that might happen
3.China's actual conditions:first pot of gold control problem(SEO Privatization, government officials become the board of derector, government and companies collude with each other)(fundamental) problem → direction problem,in Japan and Korea, Chaebols develop with the growth of people's living standard, but in China, due to moral issues, those policies of improving people's living standard will hurt the profit of interest group.wealth gap become widerdomestic demand is very lage
The weakness of the state-owned enterprises
inefficiency
State-owned enterprises cost less than private enterprises
Conclusion
Privatization of the state-owned enterprise will lead to social problems
State-owned enterprises need to reform for for small and medium-sized enterprise development
free competition in market, give small and medium-sized enterprise space to develop
explanation
• In the part of Chinese chaebol, I introduced 2 rudiments, one is private enterprises which leech on to government, one is SOE, and then i introduced some typical enterprises of them, but im saying that Soe is not chaebols, they can become chaebols by privatization,but according to my analysis, soe privatization will cause lots of problems and still won't work effiencily, so private enterprises is the only way if China want to develop chaebol economic, in order to develop private enterprises, Soe must reform to make a space for private enterprises. And private enterprises so chose leader who's Neo-confucianism, or it will cause moral issues.