Lessons for Chinese Enterprises based from Japan and Korea experience Chang Liu Hanyu Liu Lei Luo.

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

structure

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?


“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”


Problems caused by Chaebols

The official-business collusion.

Triangle relationship between government, bank and chaebol.

“Secret Campaign finance”

Unlimited expansion.

High debt ratio.

Corruption perceptions index 2013

(from: transparency international)


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


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


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


SOE owned by descendant of Red generation. (covert)

Example :

Baoli Group Corp


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


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

monopoly（ no innovation , no creativety)

←

←

←

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.

Lessons for Chinese Enterprises based from Japan and Korea experience Chang Liu Hanyu Liu Lei Luo.

Documents

Transcript of Lessons for Chinese Enterprises based from Japan and Korea experience Chang Liu Hanyu Liu Lei Luo.