HRM Practices between YAOHAN and JUSCO in Hong Kong

= = = = 2012.2.12

Sales and Profit performance comparison (from 93 to 97)

Yaohan: rev around 4,000 mill  but profit dropped from 54 mill to loss of 103 mill

Jusco: rev grew from 1,400 mill to 2,000 mill ; profit also grew from 56 to 95

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HR practices:

Yaohan – typical ethnocentric mgmt, i.e. most of the senior mgrs were from PCN (parent-country nationals)

Jusco – more HCN (host country nationals) even at senior mgmt level; only 3 were Jap

Background

Yaohan: 2700 staff in HK (1997), moved HQ from Japan to HK in 1989, moved to SH in 1996

Jusco: 1500 staff in HK (1998), parent company always in Tokyo, Japan

= = = Compensation

Yaohan : large number of expat PCN, high cost. 80% of monthly salary based on seniority! Remaining 20% are allowance

Jusco: ‘service contract’ – base on individual / company performance. Next contract depends on the fulfillment of the performance target in the previous contract.

= = training

Jusco provided more comprehensive training and development to their HCN. Introduced generalist training – ‘Jusco University’ in 1992. All supervisors or above got 3 level training courses. Some HCN got specialist training in Japan.

= = =background for HR policy

Yaohan was started by Kazuo Wada in Atami in 1962. It is a small town in Shizuoka in Japan. Started to expand to overseas. First attempt in Brazil (1970, bankrupt in 1977). The failure made Wada rely more on Japanese PCN to run and control overseas operation. Operation in HK was the largest in 1994. Wada tightened up his personal control of the HK operation by handpicking and train PCN himself.

Jusco was strong in Japan. Top ten position in Japan. Proceeded at a more moderate pace in overseas investment compared with Yaohan.

Home market in Japan:

Japan had been going through the longest recession since WW2. Many PCN had to face a touch external environment in Japan – their long term career development.  ‘ Rather than becoming a MADOGAWAZOKU (position with a seat by the window but with no real responsibility), we may be given KATA TATAKI (a tap on the shoulder signaling being asked to resign on their own initiative.) Hence, many PCN at YAOHAN had to stick to the Japanese work practices in handling HR. So YAOHAN used a more ethnocentric IHRM policy.

Jusco was ranked 2^nd in Japan in 1997.  Gave PCN and HCN more autonomy to decide their own business strategy in Hong Kong.

Interest rate went up sharply in 1994 to 1995. Yaohan’s over-borrowing policy – diminishing profit were further offset by the higher cost of paying bank loan interests.

Rapid expansion of YAOHAN

It caused more than30 percent of the PCN had less than 5 years of working experience. So YAOHAN committed many mistakes in strategic and financial decisions , which directly led to its decline.

In Jusco, many PCN were repatriated to Japan, their work had been gradually taken over by competent HCN.

Use of Retail Technology is much better in JUSCO: company wide EPOS system from 1990.  Jusco can keep these professional HCN to maintain its edge in this area.

Reference: May M L WONG and Chris HENDRY    ‘Managed in Hong Kong’