Based on Institutional, Industry, and Firm-Specific Similarities, is China Facing a Real Estate Bubble Burst Similar to that of Japan in 1990/91? A Holistic Comparative Analysis of the Japanese and Chinese Real Estate Sector

Abstract

This Master’s thesis explores and elaborates on similarities in the macro and microenvironments of Japan’s real estate sector in the period from 1985 to 1991 and China’s real estate sector today, as well as the determinants that affect the building and burst of East Asian real estate bubbles and its strategic implications for local developers. A theoretical framework based on Witt & Redding’s (2013) extended Varieties of Capitalism model and Porter’s (1990) Diamond framework has been utilized to establish that the two countries are comparable despite their inherent political and economic differences, to give an in depth analysis of the developments within the two countries’ respective real estate sectors and its strategic implications for two case firms, Mitsubishi Estate in Japan, and Evergrande in China and thus contributes to existing literature which has not yet incorporated a comparative analysis on a holistic level of the real estate sectors of our two countries of interest. The conclusion offers decisive factors that contribute to real estate bubbles and their host countries’ economies overall, as well as specific insights into how they affect our case companies’ strategies.