Chinese-Japanese Relations in the Twenty-First Century: Complementarity and Conflict

By Marie Söderberg | Go to book overview

10

Managing the global-local dilemma

Problems in controlling Japanese subsidiaries in China

Jochen Legewie

One of the most striking characteristics of Japanese firms is their high reliance on expatriates in running their overseas subsidiaries - a management practice for which they have been both praised and criticised worldwide. In China, this approach only fits well for some firms. According to a recent survey by the Japan-China Investment Promotion Organisation, Japanese export-oriented affiliates in China are quite profitable, with only 15 per cent turning in losses. 1 Among local market-oriented affiliates, by contrast, more than 40 per cent are operating in the red. Unlike Western firms, the majority of Japanese companies in China are still export-oriented. However, the trend is clearly turning towards a stronger local market orientation forcing more and more Japanese firms to address the issue of low profitability. Can this issue of profitability be related to expatriate management or, in more general terms, what role do control and coordination mechanisms that are specific to Japanese firms play?

All multinational companies (MNCs), regardless whether they are from Japan, Europe, the US, or elsewhere, face the task of an effective and efficient control and coordination of their overseas subsidiaries. Defined as a means to achieve common organisational goals, such international management control (IMC) directly relates to the general global-local dilemma of internationally active companies. MNCs must find the optimal mix between centralised and decentralised decision-making and employ an optimal mix of the various control and coordination mechanisms.

To solve this dilemma, recent international management theory suggests that MNCs should move toward a kind of loosely coupled network organisation. 2 The final outcome is often described as a 'transnational' company. 3 Within such an organisation, the management of human resources is obviously very important. Coordination shifts from formal to more informal and subtle mechanisms. 4

The employment of expatriates plays a crucial role within such indirect control and coordination systems. 5 Authors like Child, Edström and Lorange, Kobrin, Daniels and Radebaugh, and Roth and Nigh refer to the observations of Edström and Galbraith who were among the first to find different patterns of expatriate employment in the overseas subsidiaries of otherwise similar MNCs. 6 Echoing Wiechmann, 7 they see expatriates as an alternative to formal control

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Chinese-Japanese Relations in the Twenty-First Century: Complementarity and Conflict
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Tables and Figures vii
  • Preface xi
  • Abbreviations xiii
  • Note on Names xv
  • Introduction 1
  • Notes 9
  • 1 - Mirror for the Future or the History Card? 10
  • 2 - Sino-Japanese Relations in the Context of the Beijing-Tokyo- Washington Triangle 32
  • 3 - Engagement Japanese Style 52
  • 4 - Sino-Japanese Relations and Ballistic Missile Defence (Bmd) 69
  • 5 - The Taiwan Question 88
  • 6 - The Background and Trend of the Partnership 103
  • 7 - The Role of Oda in the Relationship 114
  • 8 - Economic Relations 130
  • 9 - Japanese Firms in China 154
  • 10 - Managing the Global-Local Dilemma 177
  • Index 195
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