Control and co-ordination of Japanese subsidiaries in China: problems of an expatriate-based management system

This paper analyses the international management control (IMC) system that Japanese multinational companies (MNCs) employ to co-ordinate the activities of their subsidiaries in China. It focuses on the role of Japanese expatriates in this IMC system and assesses their performance. In the process, it offers a comprehensive evaluation of the organizational fit of the Japanese IMC model within the current Chinese business environment. Taking Japanese firms as the subject, the analysis identifies areas of incongruity and explains the underlying reasons for problems with expatriate-focused IMC models. In doing so, this paper argues that the Japanese expatriate-based control system in China (as in many other parts of the world) continues to be characterized by an insider-outsider mentality that prevents a real internationalization of overseas operations in the 'transnational' sense.