Japan and South Korea present an excellent example of Asian countries that reached fascinating achievements in business and economics in a short period. Their uniqueness is emphasized by the balance in modern technologies and traditional practices used to regulate and control giant corporations. Historically, both countries experienced economic hardships during the first half of the 20th century. South Korea and Japan were capable to build robust economies in Asia and the world. Comparing two business systems, many differences, as well as similarities, could be noticed. Talking about South Korea, the chaebol’s dominating business system contains the conglomerates that originated in the 1960s (Kenton, 2021). In the Korean context, chaebol refers to “plutocracy, wealthy business family, or monopoly “covering the large scale of the business in the country (Kenton, 2021). The most significant and most prominent chaebol examples are Samsung, Hyundai, SK Group, and LG Group, controlled and regulated by the family dynasties. According to Kentan (2021), the South Korean government supports the chaebol structure, especially in the oil, steel, and chemical industries providing particular loans, subsidies, and tax incentives.
This rapid communication and growth allowed South Korea to be a part of the Four Asian Tigers, four countries with rapidly growing economies. Generally, the chaebol has an enormous influence on Korean society in all spheres. Japanese business management system also has a structure unique to this country called keiretsu. As Kenton (2021) mentioned, Japan’s keiretsu and Korean chaebols are often compared with each other. The main similarity between them is that both chaebol and keiretsu are formed by individual organizations unified in the same structure. In keiretsu, companies are run by top managers but not family members (Japanese Management, n.d.). They share a significant part of the stock that creates a “corporate family” (Japanese Management, n.d.). In most cases, none of them is related to the family relationships with each other. The classical keiretsu and the vertically integrated keiretsu are the two types of structures present in Japan.
In the classical keiretsu, legally independent members share their responsibilities with other members without defining the central figure. The widely known examples of the classical keiretsu are Big Six Japanese business groups: Fuyo/Fuji Group, Sumitomo, Sanwa, Mitsui, Mitsubishi, and Daiichi-Kangyo Ginko (Japanese Management, n.d.). The feature of the classical keiretsu is that they usually cover different industries without focusing the total output on them. As mentioned in Japanese Management (n.d.), classical keiretsu could apply and use companies not included in their firms to obtain the final product. In contrast, vertically integrated keiretsu focuses only on one industry. Common examples of vertically integrated keiretsu are Hitachi, Toyota, Nissan, Toshiba, and Matsushita companies (Japanese Management, n.d). This type of keiretsu follows the same management type as in the classical one.
To conclude, it could be said that both South Korean and Japanese business systems present unique arrangement that includes traditions and modern organizational structures. The business systems of both countries rely on the idea of a corporate family. Although the differences between these two models are significant, they present excellent examples of prospering economics and business management. Both countries experienced enormous economic growth during the second half of the 20th century recovering from the wars. Societal coordination and industrial policies in Japan and South Korea transformed these countries’ image from starving unperceptive provinces to flourishing business empires.
References
Japanese management. Reference for Business. (n.d.).
Kenton, W. (2021). Chaebol structure definition. Investopedia.