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0000299 - China-MC2 3:53 pm Page 28 THEWORLDTODAY.ORG...

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i N THE 1970 S AND 1980 S THERE WAS a widespread fear in the west of Japanese economic superiority. Unprecedented growth in its gross domestic product (GDP), exports and outward foreign direct investment suggested an alternative model of market capitalism that was out-performing the United States and European economies. High- profile articles and books fed this fear and research efforts tried to identify what was different about Japan and how such differences might convey sustained competitive advantages. As China’s growth rate exceeds that of Japan in its heyday, we are witnessing the same reaction. However, there are important differences between the two countries, their growth paths, and the PAGE 28 THEWORLDTODAY.ORG FEBRUARY 2008 CHINESE COMPETITION:LEARNING FROM JAPAN SIMON COLLINSON PROFESSOR OF INTERNATIONAL BUSINESS AND INNOVATION, WARWICK BUSINESS SCHOOL BRIDGETTE China Challenge Cheap goods from a foreign competitor threaten our industries; have we been here before? What can the west learn from the way it handled phenomenal Japanese growth, and does it apply to China? | INDEPENDENT THINKING ON INTERNATIONAL AFFAIRS implications. Some key differences stem from the combination of China’s size, its current rate of growth and its openness relative to Japan. It is far more integrated into, as well as integral to, the global economy than Japan was during its rise. The scale, scope and speed of China’s economic growth all exceed that in the industrial development phases of Europe, the US or Japan. Chinese firms are on the same learning trajectory as Japanese firms before them. However, in today’s globally integrated economy, they are able to take advantage of more opportunities to learn faster. Ironically, multinational companies in their own domestic market are the source of some of these opportunities, bringing technologies and management practices to firms that may well evolve into their future competitors. As a consequence the Chinese economy overall appears to be developing competitive advantages faster and over a broader range of industries – cars, consumer electronics, telecoms and software – than any country before. Despite the rise of Japan, the US and European economies remained intact and continued to grow – but they had to adapt. The global car and consumer electronics industries changed significantly, with new winners and losers at the corporate and national levels. A key question is whether there is enough time to adapt to the rise of China.
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SULLIVAN-TAYLOR LEVERHULME RESEARCH FELLOW, MARKETING AND STRATEGIC MANAGEMENT GROUP AT THE SCHOOL SCALE, SCOPE AND SPEED The scale, scope and speed of China’s economic growth all set it apart from the Japanese model. Each of these represents a different set of challenges for western firms and governments.
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