Ethical Dilemmas and Institutional Purification in East Asia’s Relationship-Based Capitalism: China vs. Japan

Zhe Li; Wenze Xiong

doi:10.62177/apemr.v2i6.930

Authors

Zhe Li City University of Macau
Wenze Xiong University of Auckland

DOI:

https://doi.org/10.62177/apemr.v2i6.930

Keywords:

Relationship-Based Capitalism, Guanxi, Institutional Reforms

Abstract

East Asian economies often operate on relationship-based capitalism, where personal ties and networks shape business and governance. This paper examines the ethical dilemmas arising from such systems in China and Japan, and how each country pursues institutional purification to address misconduct. In China, the tradition of guanxi, the personal connections in China, fosters trust and reciprocity but blurs the line between gift-giving and corruption. Japan’s corporate networks emphasize loyalty and harmony, yet can lead to insider favoritism and cover-ups. We compare how these relational systems create ethical challenges and examine reforms: China’s sweeping anti-corruption campaigns and Japan’s corporate governance and compliance initiatives. Through a comparative analysis, we highlight the cultural underpinnings of ethical conduct in each country and the institutional reforms implemented to restore integrity. The study finds that while relationship-based practices are deeply rooted in social values, both nations recognize the need for rule-based frameworks to curb abuses. Strengthening ethics in East Asian capitalism requires balancing cultural relationship norms with transparent, fair institutions.

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