Japanese Trade Law: A Strategic Location in the World in Which to Invest the Business

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Introduction

You have heard that the people of Japan are incredibly friendly but this friendliness does not reflect in doing business in Japan, actually doing business in Japan is very difficult as you compare it with other countries from developed countries. For a long time in Japan, foreign investment has been minimal as you compare it to other advanced industrial countries in Europe where foreign investments overlaps the local investment.

There are small people in Japanese total population which speak other languages like English and this has led to isolation of intellectual from other countries. Traditionally in Japan financial industry was dominated by zaibatsu and this barrier has made it difficult to do business across Japanese boundaries and these barriers have been mostly affected by this barrier. Bureaucracy is rampant in Japan and there is a dense network of business regulations and procedures in Japan, many of these business regulations and procedures that are found in Japan, in other places procedures and regulations do not need approval e.g. in United State and other Europeans countries, but some of these regulations are designed to act as barriers against foreign companies to the already existing companies that are found in that nation.

Some respected brands which have dominated Europe and US markets but unsuccessfully been able to break into the local market found in Japan e.g. Ford cars in the US and Mercedes-Benz in Europe. These companies have been unable to break the bond of loyalty that binds Japanese consumers to their locally produced goods and services. In Japan loyalty is a respected value of Japanese traditions and most people in that nation tend to be loyal to their local industries, for example many customers in Japan will drop a supplier if the salesman of that company retires or have been moved to other areas. For every foreign company wanting to start business in Japan, they must create relationships with local companies in order to succeed because it is these local companies which will help these foreign companies to break into Japanese market.

Human Resource

Management of Human resource have become a challenge around the world and Japan has not been excluded , many companies have tried to adopt the International model of Human resource management bur they are facing difficulties because of changes in the environment and structures that is experienced around the world in business. Different workers in many different countries have different culture and they behave differently, this diversity of people sometimes may bring conflicts tor international companies at a time when they want to implement this model of International Human Resource Management. Many multi international companies will try to reduce these difficulties and the cost by employing the local people in the host countries.

Talent Shortage

The shortage of talent in Japan can be defined as graduates who are professional efficient, in Japan thousands of University graduate enter into the market but unfortunately this market that is found in Japan does not return the talent that are available in the country market.. The ratio of graduate with science base courses is unbalanced when we compare it to those who are graduating with arts related courses. Many art base courses in Japan consists of single subject and these courses are not related to other courses which are necessary in doing business like finance or Information Technology, student graduating from these Art related courses will not get the goal of the course that is required. Language is also another factor because student in Japan don’t posses strong language skills that is required in International companies.

Failure of Expatriate

There is shortage of qualified experience workers in Japan and ii is usually difficult to employ the local people at the inception of the companies operations, most of international companies have used expatriate from other countries in their top management positions. Since the introduction of economic globalization most multi international companies in Japan have employed this expatriates who are familiar with the organization techniques of these international companies that the local managers. Most of these multi international companies have a high rate of expatriates’ failures; some of them will return early their countries or as a result of doing poor job in relations to the company performance. There are many reasons which led to expatriate failures such as culture shock because of different in cultural norms and values that are found in Japan, others are separation from family an expert will feel homesick and depressed.

Foreign investment

In the 1980s it was quite difficult to invest and do business in Japan mainly due to high labour costs and already existing tough Legal Laws that made it difficult for foreign investment. At the beginning of the new millennium the situation in foreign investment have tremendously improved, real estate and labour costs are moderate in the current situation in the economy and the Government has change the legal situations in the country which have made easier for foreign investors to invest in the country, for example in the 1980’s foreign companies were not permitted to invest in the Telecommunication market which was exclusive to the local investors, but in the current situation there have been an influx of foreign controlled Telecommunication companies such as NTT and KDD. The Japanese Government realized the need to cooperate with the foreign companies on all the sector of the economy such as in business and in the technology.

There are some factors which makes Japan attractive to t foreign investors, first the country populations is large, which is estimated to consist of over 127 million people and this has translated to the read available market, secondly the are higher standards set by the Government both in technology industries and economy which has been expressed in the country’s high GDP and lastly the Asia market is largely controlled by the Japanese industries, it is estimated that the 75 per cent of the Asian markets consists of goods and services which have been produced in Japan.

Foreign Zones Import

In the year 1992 the Government passed a Labour Law, the aim of this Law was to increase the Import business and to encourage foreign companies to invest in the country. This Law gave the Government mandate to construct some zones (FAZ) near the Seaport and Airport to be used for Import business only. The main aim of the Government in setting up these zones was to attract foreign capital into the Japanese economy. The companies both local and foreign companies in these zones are qualified in tax and financial remuneration. In addition from these financial benefits that are provided in FAZ, also the companies operating from this zones are entitled to various packages, for example; reduced interests on loans which these companies take, they are also excused from local taxes were companies outside these zones are entitled to pay e.g. taxes on buying of property to set a business. Lastly the rate of depreciations in these zones are has been increased so as to promote importation of already produced goods, also these companies in FAZ are guaranteed the Government support.

Labour Law

Japan remarkable economic growth has been attributed to the Labour Laws, in the early 1990s the Japan economy experience stagnation in economic growth which led to many companies cutting costs or laying out some of it employees for their survival. Most of the Japan’s Labour Laws have undergone tremendous Amendments since the end of the World War two, before that the countries unions were greatly subdued by the Government which they feared the occurrence of communist ideology to happen in those Laws. Labour Unions in Japan are based on the company and not on the industry as it has been seen in the western countries.

Compulsory and Cooperation Law

There are two kinds of Laws in Japan, those that are compulsory and those laws which require cooperation from the private sectors in the country. The rights of workers in Japan is protected, their way of living should be protected. Management in any company that is registered in the country must follow these regulations that have been set down by the Government. When the parties that are involved in this compulsory violate any of these laws can face the Law of the country, not only the persons who perpetrator this abuse of this standards law that have been set by the Government even the companies if they violate they are criminally liable and will depend on the nature of the violation.

There are Laws which have been passed in Japan any they relate to individual or work. These types of laws don’t have criminal sanctions by nature if any parties violate them, either the person or the company that have violated them. These cooperative laws have only commitment in cooperation because the standard set by the Government for the violations are often unclear.

Generally the words which have been used in these Laws will provide explanation whether this Laws are either compulsory or merely cooperative, for example words like “must” or “must not” this will automatically fall under compulsory law while if the wording is “must endeavor to…..” then automatically this type of Law will fall under obligation laws.

Rules of Employment Law

These Laws set by the Government require any company which have employ more that 10 workers, must listen to the employee union.

The agreement in the contract between the two parties is included in the Labour Standard Law, and a copy must be taken to the office of the Inspector of Labor. When the their have been any changes in the contract between the employer and the employee and both parties have hear the views of the Labour Union, those changes in the agreement must also be taken to that office.

Issues which are supposed to be included in this agreement are mostly labour agreement between the company and the employee of that company and this are issues like working hours of the person and the type of salary which the company will pay the employer and these Laws but be structured in such a way that they don’t violate any laws of the country or the Labour Laws and if the agreement between the person and the company violate any such law set by the Government, then the agreement will become invalid. This type of Labour Standards Law gives additional pay to workers who have been asked by their companies to work extra hours under the agreed Labour management contract but it exclude persons who are in managerial positions. The Governments want to provide Amendment in this Law so that it enables the employees in companies to work under minimal supervision.

Disciplinary Law

This Law gives the employer power to discipline a worker who has cause disruptions at the company or intentionally hurt the earning of the company, there are way in which the company can do that such us, by the use of warning letter given to the employee or the company can cut the salary of the employee or if the disruption has greatly affected the company then summary dismissal of the worker can be instituted.

It is believe in this Disciplinary Law warning are the lightest sanctions because it gives the employee to monitor the worker who have been given the warning letter and also it will give time to the worker to reflect on his actions, while in the salary reduction the worker salary is cut down by the stated amount over a fixed period of time. The Labour Laws limit the worker salary cut to ½ of the day salary. The worker will suspended over a period of time and this period the worker does not deserve any pay from his employer. A worker being dismissed from work is the most harsh way employer can discipline the worker, the worker will immediately lose his job and the pension which have accrued over the years which the worker has work in that company but they are cases where a employee can apply for his pension if the violation is not serious.

The company will have the right to institute discipline to an employee when certain conditions have been met by that employee; the reason of such discipline should be laid down clearly in the contract between the company and the affected worker, when the company wants to institute discipline he must inform the affected employee in advance, the discipline must be fair according to the set down rules in the Disciplinary Law of the country and lastly when the employee discipline the worker he must do that no condition that he does not retaliate or out of prejudice.

Laws on Minors

The persons who are 18 years and below are regarded as minor under the Japanese Labour Laws and are protected to work on various jobs that are available in Japan and at the same time they are protected from unwanted conditions that can compromise the health of these minor, also the minors under the Labour Laws are not permitted to work during the night or work for extra hours than the usual normal time eight hours and they should be provided with flexible working hours. These minors under the Japan Labour Laws are also not permitted to work under stressful environment like in mines and driving of company’s vehicles.

Equalization Law

Law of Equalization forbids discrimination based on gender in a company, such as during promotions and on the increment of employee salary. This Labour Law applies when there is difference in treatment in gender based on same work. There was a company in Japan which promoted it only male employees who had worked for over ten years, as it was agreed in the contract, but it female employees of the same company received no similar treatment. The female workers in that company sued the company and won, the company was compelled by the Court to grant the same treatment to it female employees.

Social Economic

The Labour force in Japan has been predicted to decrease in years to come due to aging that is affecting the country’s economy because the number of births is decreasing but the number of people who are growing old is on the increase. This why the Government has come up with a plan to utilize the experience of the elderly who are still willing to work and to make it possible for them to continue working in order to maintain the countries economy. The Amendment to the Elderly Employment Law has made it possible to this group of people in the society to continue with work beyond the age of 70 years. Under this law the companies in Japan have been required to prolong the retirement age of the workers who wish to work beyond the age of 70 years.

According to the Section 1, Article 9 of the above mentioned Law, the Government will provide incentive to companies who have a workforce of 300 workers and few of these workers who are above 65 years of age, secondly the Government will provide grants to companies which have improved the working environment for these elderly workers in the country. This improvement of working environment can be either, the company will allow it workers to work beyond the age of 70 years or they have to raise the retirement age to be above 65 years. This Law also gives grant to groups of threes elderly persons who are beyond the age of 65 years, who have unite to start a business.

Cultural Difference

Various cultural beliefs in Japan have influence operations of international companies that have set up shops in Japan. Workers from different countries have different traditions and also their altitude towards business will varies from that of host country. Multinational companies need to understand the fundamentals of Japanese thought of business culture that is found among the people living in Japan. Japanese cultures has 3 philosophy traditions on doing business and these are Confucianism which means having human relationship and respecting the way the local people behave and their way of thinking, you must at all times avoid conflict and always strive in keeping harmony with the local people and lastly most of religion which is found in Japan culture is Buddhism people from other places they must respect the way the Japanese people pray.

Corporate Governance in Japan

Corporate reforms have been experienced around the world and have a common focus in the country’s markets. In Japan for example corporate governance has been limited and conservative.Mashiko who is an economist, said it corporate governance is limited in Japan because it reflect the characteristic of Japan’s culture and it is conservative because it protects the company from external pressure due to the countries market or from the shareholders of the same company.

Companies in Japan have a choice to choose the style of governance that is in tandem with the industrial organization of that particular company. Most of the Japanese corporate governance has a relation to the countries productions. Most of the companies which are characterized by the human working capital, they are mostly having a tradition way of corporate governance

but those companies that have the ability to respond to the ever changing environment of business will adapt a western style type of corporate governance.

Finally Newton’s (first) law motion state that objects will remain at rest until force is applied, the object will start moving. If we relate this simple law to business environment, conservative type of corporate governance will tend to be stagnant till force of change is instituted it will bring reforms, but sometimes this reforms usually come with resistance.

In the year 2002 the was some Amendment in the country Commercial Code, these Amendment allowed companies to have it own choice of people in the company board. But the Japan statutory auditor is weaker as you compares it to other nations in the Western countries, It lacks the mandate to remove a director from a company board and it does not represent the wishes of shareholders since the policy of that country the auditors in a particular company are appointed by the directors in that company. The aims of statutory auditor in Japan is to make sure companies comply with the laws that have been set in the country and to evaluate the financial statement of the company.

Conclusion

For a company wanting to invest in around the world, Japan should be on top of the list to be considered when making such a decision. The reasons for this is because Japan has got the second largest economy in the world after the United State of America and it economy is well established one that is being envied by countries in Europe and other Asian countries. The countries is serving as a model to be copied in the Asian countries, it is believed most of countries in Asian continent have prosper as a result of imitating Japan economy. Many businesses in Japan report high returns within a shorter period of time, so if you are looking for a strategic location in the world in which to invest your business choose Japan.

Talent war can only be won when multinational companies should first pay more attention to the whole process of recruitment to ensure those people who are employed in those companies have quality another way is companies can establish internal training courses that is geared towards improving their workers abilities and skills which are necessary in the company. Lastly foreign companies should learn the fundamental of doing business in Japan.

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