Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
Overseas Transfer of Japanese Managerial Skills and Human
Resource Development: Small Business’s Expansion in China
Sun Yan*
By considering the adaptability and applicability of Japanese employment
system on a basis of previous comparative studies, this research attempts
to explore a proper direction for the transfer of Japanese employment
system overseas making discussions along with the development of
exampled small businesses.
1. Introduction
In recent, the overseas transfer of Japanese corporations has attracted a lot attention and it
is popular and necessary to do researches on seeking proper routes for Japanese
employment system by examining its compatibility.
Hot debate are done mainly on subjects over recruitment and development of IHRM
(International Human Resource Management), the problem of excellent human resources’
appointment to local executive positions, conflicts of sense of values and cultures between
Japanese employers and local employers, as well as the problems of local laws such as
industrial relations, labor laws and labor market.
Besides hot discussions there are three outstanding achievements in searching for the truth
of Japanese employment system made by David Marsden, James Abegglen, and Ronald
Dore on behalf of each period1. Of course theories of the three stand for different periods,
consider different fields or even view from different perspectives, but they also show factors
in common, and the meaning of comparative study done by the writer before lies in their
key concepts on Japanese employment system: common destiny and contractual custom.
Therefore, form the viewpoint of human resource management, and by taking conclusions
drawn from the comparative research based on the three researchers mentioned above, a
case of Japanese companies’ transfer to China has been chosen as a research example in
this paper: the expansion of Yanmar’s 2subcontractors in China.
Numerous discussions have been done on large corporations and conclusions are made in
difference fields, and whether it is applicable to small and medium enterprises comes to an
interesting problem. Thus, a group of six subcontractors of Yanmar is chosen here 3
* Sun Yan, Department of Economics, Shiga University, Japan. Email : smilesun527@yahoo.co.jp
1
A comparative study has been done and published by the writer based on the theories of these three
researchers.
David Marsden, A Theory of Employment System: Micro-Foundation of Social Diversity, Oxford University Press,
USA, 1999.
J. C. Abegglen, The Japanese Factory: Aspects of its Social Organization, Glencoe: Free Press, 1958.
R. P. Dore, British Factory-Japanese Factory: The Origins of National Diversity in Industrial Relations, University
of California Press, 1973.
2
About Yanmar: http://yanmar.com/
3
Six subcontractors chosen by Yanmar in China:
1) Enomoto Qingdao Machine Co., Ltd
2) Qingdao Precision Instrument Manufacturing Co., Ltd
3) Dongrong Metal Products (Qingdao) Co., Ltd
4) Qingdao Oida Works Co., Ltd
5) Kawamura Jinlong Machinery Co., Ltd
6) Takano Precision Products Manufacturing Co., Ltd
Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
because they are in line with the two above-mentioned characteristics of Japanese
employment system, and the transfer into Chinese market is coming into existence.
2. Research object’s selection and data collection
2.1 Selection of the research object
In the year 2013, a group of six corporations have expanded into Chinese market as
subcontractors of Yanmar Corporation 4 (the headquarters of 6 corporations are also
subcontractors of Yanmar Corporation in Japan). Due to the internationalization strategy of
Yanmar and the purpose of reducing costs, these six companies that make important parts
of engines have been chosen from Yanmar’s 4000 subcontractors in Japan to establish
factories in Qingdao, China, and Yanmar invests 19.9% to each of the six (each of them
owns 80.1% of total the investment). Though each of them is a subcontractor of Yanmar
(China) and provides main products to Yanmar, they can do business with other countries
across the world as well as other companies in Chinese market.
Factories of the six are established one by one in a large piece of land about 1400 meters
far from Yanmar’s. And in this way, these suppliers can be regarded as “a large company”
to certain content. At the same time, however, all of them can do their own business freely
as independent individuals, where the greatest advantage of this particular strategy of
expansion lies.
These supply companies not only transfer their products and technology but also the
Japanese employment system. And this research will take the biggest one of the 6 called
“Enomoto” as an example and do detailed empirical analysis.
2.2 Available data and research methodology
All of the data used in this research is primary source material from the person in charge,
especially that of internal, and the writer has been to Qingdao twice for field survey. The
first time was on November, 2013 and the second time was on February, 2014. Thus this
research will ensure its quantity and uniqueness of data, and what’s more, witness the
growing with the company.
These primary materials and interview made with those who are in charge of the six
corporations (China) will be examined, reorganized and analyzed in order to reach
definitive conclusions. In addition, instead of listing data directly, this research will focus on
the layout of the factory and its production line first, and then recruit staff according to the
needs of staff by the assembly line. In accordance with this kind of approach, the fact of
carrying out Japanese employment practices through its transfer process will be proved
again
3. Empirical Analysis
Enomoto (Qingdao) is the largest corporation of the six at the beginning as this research
started and in the business relation with Yanmar for long. Thus Enomoto is chosen here as
a preventative for detailed data analysis.
Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
3.1 Process of establishment
The process of Enomoto’s establishment can be summarized in Table 1as follows. The
company established on March, 2013. Then the factory was built on August and machines
were placed on October. After hiring workers for both sales and production department,
machines came into running for production in the following year.
TABLE 1 Process of establishmentof Enomoto in China
Year
Invent
2013.03
Company established
2013.08
Factory built
2013.10
Machine placed
2013.11
Employment of the sales department
2013.11Employment of the production division
2014.02
2014.03
Machines started running
Enomoto mainly products hydraulic cylinder for tractors, hydraulic cylinder for construction
machines, and hydraulic cylinder for combines in Japan and supplies nearly 99% to
Yanmar across the whole country. In China, its main products are tractor hydraulic cylinder
and lift cylinder. Though all of the six can do business with other countries across the world
or other companies in Chinese market, Enomoto along with others are only trading with
Yanmar at present.
3.2 Staffing
Japanese administration is well acknowledged for its long-term employment and
seniority-based pay system across the world. Therefore, how long will the contract be is a
significant problem in recruiting.
Table 2 and Table 3 show the situation of recruitment and staffing in sales and product
department and what should be paid enough attention is the employment relationship with
the company, which tells the difference between way of Japan and China.
(1) Staffing in sales department
There are 4 persons in sales department, two men of management and two women office
workers. The general manager is Japanese. He has been directly appointed by the head
office in Japan and is in charge of overall management of the company. Of course his
contract adopts the way of Japanese employment.
The plant manager is Chinese. But he was employed in Japan and then dispatched to
China after adopting and trained at the headquarters of Japan. Though he makes a short
contract with the company, he is “guaranteed as a long-term hired employer”.
Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
Position
General
Manager
Plant
manager
Cashier
Office
worker
TABLE 2 Staffing in sales department
Persons
Duties
Hiring process
directly
1
overall management appointed by the
(male)
of the company
head office in
Japan
dispatched to
pre-production:
China after
business
1
adopting and
when production
(male)
trained at the
starts: production
headquarters of
and sales
Japan
1
interpretation and
locally hired
(female)
cashier
1
procurement and
locally hired
(female)
general office work
Contract type
long-term
contract
2 years
contract
(long-term
relationship)
2 years
contract
2 years
contract
There are also two ladies in the office, a cashier and a normal office lady. They are both
hired in Qingdao with a contract for 2 years and be paid according to local wage standard.
Accounting and cashier cannot be in charge by one person according to the Chinese law,
so a one-year contract is made with the accounting firm at present.
(2) Staffing in production department
The product department is composed of 6 workers, 4 men for production and running
machines, and 2 women for assembly. Local hiring is done due to the layout of factory and
production line, and focused on technicians of expertise instead of any education
background. What’s more, the two female workers are only required to ensure their
attendance. (See details in Table 3)
Department
Production
department
Assembly
department
TABLE 3 Recruit plan due to the production line
Recruitment
Conditions of
Workers
Duties
employment
a. trained
technician with
a. person in
working
charge of
experience
production line
b. graduates of
6
b. machine
technical
(male)
operator
vocational
c. person in
schools
charge of
c. trainees
production
studied at the
head office
women who can
2
assembly of parts
ensure
(female)
attendance
Contract type
local hiring:
2-year contract
local hiring:
2-year contract
Trainees present a typical Japanese way of employment. Two or three trainees are
accepted by the head office every 3 years; and after the 3-year-training, one of the best will
be sent back to Qingdao Factory to work as a leader in production department.
Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
Here, what deserves discussion is the different understanding of the same word: “contract”.
In Japanese, it means the sense of responsibility besides simple employment relationship,
while in Mandarin; it is close to a kind of monetary relationship that workers only do what is
required in the contract.
3.3 Process of recruitment
Recruitment process seems simple. Its preconditions of recruitment include 1) the layout of
the factory and 2) the placement of machines. And employment practices come to be the
theory principle.
Based on the layout of the factory and placement of machines, employment plan is set and
wages are determined. Then, employment will be done in the labor market and through
internet or newspaper. And finally contracts are made with labors. The process of
recruitment is shown in the following figure (Figure 1).
Figure1 Process of recruitment
layout of the factory & placement of machines
setting employment plan & salaries
recruiting in the labor market
making contract with the labours
4. Summary and Conclusions
Taking account what has been discussed above into consideration, conclusions evident
itself that it is necessary to make effort for the relocation of production and quality control
techniques, and human resource development for fixing to the local management
technology is important. It is because that instead of the sense that there is low-cost labour
in China, factories are facing with a fact of labour lack.
In common, when the topic of labour lack comes into sight, is it natural to consider it as a
lack of skilled persons, on the contrary, positions whoever can adapt to, are hard to hire
right workers. In addition, the local condition shows that workers cannot cope with the
24-hour operation. Not only Enomoto but other 5 corporations take on a way of recruitment
according to the machine placement and layout of the factory. However, what is this kind of
employment system going to be remains a question. Is it a way of Japanese or Chinese?
Otherwise is it a combination of the two?
As future tasks, there are two points should be mentioned. Rather than recruit workers due
to factory site, it is necessary to build a human resource development system based on the
long-term vision of the company. On the other hand, enough attention should be paid to the
local middle management: their job satisfaction and degree of commitment to the company,
because they are actually in charge of the company “instead of” the head manager.
Proceedings of 3rd Global Business and Finance Research Conference
9 - 10 October 2014, Howard Civil Service International House, Taipei, Taiwan ISBN: 978-1-922069-61-0
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