Entering the Asian developmental state in high-tech and service industries: the case of Italian SMEs in China and Japan

From an industrial policy point of view, Japan and China show similar attitudes towards a progressive opening of their market economies even though they pursuit it in different periods. The two countries share also a good economic planning run by an effective bureaucracy. Japanese industrial system has always been regarded as a state controlled relationship network amongst firms (Gerlach, 1992; Lincoln et al, 1992). During the '80s and '90s, these particular features and business practices have been described as one of the main sources of competitive advantage for the Japanese manufacturing system (Imai, 1986; Lincoln et al, 1996, Lincoln et al , 1998).On the other side foreign manufacturing firms have looked at the Chinese industrial system as a low cost one and they therefore delocalize there consistent parts of their activities. Nowadays mostly foreign service and high-tech firms look at China as a competitive and important market both for selling and for product development (Child, Tse, 2001). In both cases foreign firms face difficulties both in entry processes and in establishing regular and profitable activities because of cultural distance, different institutions, scarce resources, and so on. From a micro perspective the two investigated countries show similarities in typical business practices (Hofstede, 1980). In particular they seem to share a strong attitude towards long-term business relationships (Dyer et al, 2001; Leung et al, 2005). These relations shape the markets in interconnected business networks and allow to overcome traditional and pure market mechanisms. Moreover long-term relationships help innovation processes in terms of flexibility and knowledge sharing as well as time-to-market and cost reduction (Herbig et al, 1996).
We use case study research to collect data on Italian service and high-tech small and medium enterprises (SMEs) that operate in China and Japan and we try to understand if a competitive advantage can be earned from local business practices and if it can be replicated in the country of origin. This study represents a first effort aimed at refining the research questions above and it will be used to focus our ongoing research in a more focused direction. Our current data suggest that, despite major changes in the investigated systems have occurred during the last years, SMEs can still earn a competitive advantage on the Chinese and Japanese markets from such local business practices. However our focal firms seem to face difficulties replying these advantages in their country of origin because of cultural distance and differences in industrial systems organization.