Redefining “Business-Society Relations” for Japanese Corporations in China

Abstract

The long and complex history between China and Japan, and in particular the “negative heritage” of the Second World War, has effectively alienated the two countries and led to a pervasive culture of anti-Japanese sentiment throughout China. Following the violent demonstrations of 2005, this anti-Japanese sentiment has also had an effect on the economic prospects of Japanese corporations, creating apprehension over the future of Japanese corporate and trade relations in China. All of this has forced Japanese companies seeking to expand their businesses abroad to grapple with the unique challenges of operating within the highly politicized environment of Chinese nationalism. This begs the question: how should Japanese corporations respond to Chinese nationalism in pursuing their business objectives? Based on field research conducted in 2007, this chapter begins with an analysis of the impact of Chinese nationalism on the commercial prospects of Japanese businesses with operations in China, goes on to discuss the importance of “business-society relations” for the localization of Japanese corporations in the Chinese market, and concludes by recommending strategies for social engagement that deal effectively with these issues. Still, the success of any such strategy ultimately depends on whether China's market economy continues to develop in the face of harsh political conditions and growing social unrest. To date, only a handful of studies have addressed the impact of business-society relations on the economic performance of Japanese corporations operating in China. This chapter is an attempt to fill that gap.