Business Countermeasures by Japanese Companies after the Signing of Square Agreement

The recent appreciation of RMB imposes huge impact on Chinese companies and dealing with this situation will greatly affect their survival and operation. The miracles in the economic areas made by Japanese companies after the second World War are largely due to Japanese people’s innovation and entrepreneurship. Innovation can be found not only in technology but also in company’s internal management and business strategies. In 1980s, Japan had large trade surplus and this phenomenon has caused great dissatisfaction and criticism from major developed countries in the world. The focus of the criticism was on the low valuation of Japanese Yen. In September 1985, Finance Ministers and Central Bank Governors of U.S, Japan, Western Germany, UK and France signed the “Square Agreement” in New York and that is the starting point of the sharp appreciation of Japanese Yen. Faced with new economic environment, Japanese companies began to proactively change the fixed direction and try to minimize the negative impact caused by Yen’s appreciation with the help of government’s policy of enhancing domestic demand and global business strategy and at the same time try to take the potential advantages led by the currency appreciation. Business strategies adopted by Japanese companies during this period of time can also bring a lot of references for Chinese companies.