ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Japanese and Indian Subcontracting Practices in Small and Medium Industries, SME

Updated on February 5, 2014

The subcontracting system in Japan

The subcontracting system in Japan was a spontaneous outcome of its economic structure. Late start of industrialization with imported technology enabled the growth subcontracting system in its own way. Big industries and monopoly capital exploited the situation and as an outcome, the merchant capital took advantage of the household and the domestic industries and then the putting-out system. These facilitated the entry of industrial capital as parent company and its relations with the small and medium industries, who took the role of subcontractors.

Less competition between the large scale modern sector and the small and medium sized indigenous industries and practically no change in the mode of life of the people enabled the small and medium sized industries to survive and prosper. Availability of used or secondhand machinery and gradual automation and motorization through the local production of these machines for these smaller industries made it possible to have constant updating of the technology in these industries. Infrastructural facilities were created by the government through the development of transport and communication, development of power, financial institutions, and creation of specialized financial institutions for the small and medium sized industries. Many training, counseling, and consultation organizations for these industries were also promoted by the government. At the same time they were encouraged and initiated through other means to form cooperatives and associations. Above all, the near hundred per cent literacy of the people, the favorable law and order situation and appropriate policy measures of the government for the industrialization , together resulted in the present stage of the subcontracting system in Japan.

Although the large parent companies tended to exploit the subcontractors, they never failed to guide and assist them. These parent companies continuously helped the subcontractors in finance, management, technology, personnel and marketing and even encouraged them to form their cooperatives. The close and cordial relationship between employers and employees and between the parent companies and subcontractors have all contributed to the success. The Japanese case is one of subcontractors' subordinate position with their parent companies. Advantage has been taken of the wide wage gap between the workers of large and small industries, and the efficient work force in the small firms. Since the Japanese small and medium industries or subcontractors are week- financially and technologically- they were dependent on their parent companies for survival and later the parent companies provided these subcontractors with necessary assistance to make them capable and reliable. Except for minor instances, the subcontracting practice in Japan has been a spontaneous one.

Subcontracting System in India

In case of India, we find some form of imposed subcontracting. The government restricted the production capacity of large industries, reserved the area of operation of small scale and village industries and through state policies made subcontracting a compulsory provision in some cases. This has forced the parent co\companies to use inefficient subcontractors and a cost-plus pricing system, which will hamper progressive industrial efficiency . India lacks proper industrial skills, trained personnel, adequate infrastructural facilities and institutional supports for promotion of small scale industries, SME.

However, the Indian subcontracting forms do not have a subordinate position in relation to the parent enterprises. Because of the government patronage of the subcontracting system, the parent firms find it costly to develop subcontractors, who may no longer serve the parent firms once they become capable.

The Japanese experience shows that there has been a continuous growth of industrial combines which increased the capacity and power of the parent firms, enabling them to expand and assist the subcontractors. Whereas in India, the restriction by government on the expansion of the large firms, making it difficult for them to accommodate a large number of subcontractors with enough volume of orders. This , in turn, restricts the expansion of the subcontracting system. One interesting point of the Indian subcontracting system is that the small scale industries have increased their technological level through international subcontracting. The MNCs and foreign companies have been able to raise the level of the technological base of their subcontractors through offering training facilities and arranging visits to their factories. Since India is poor in industrial experience, specially in technological fields and marketing, the well experienced MNCs and foreign companies enabled the Indian subcontractors to develop their industrial efficiency. This is a positive contribution of industrial subcontracting which should be considered in case of such development in other countries like Bangladesh.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)