China is the largest economy in the world by purchasing power parity and is growing at an astounding 9 per cent per annum. The enormous potential of the Chinese markets have motivated many researchers to understand Chinese business practices in terms of their historical, social and cultural development (Battat, 1986; Laaksonen, 1988). This book focuses on the changes in management practices in China in the 1980s, the era of reform, with a slant towards informing the international business person planning to do business in China.
The book is divided into four parts. Part I deals with the macro-level setting of Chinese system and economy. The Chinese economy and society is not as homogeneous as commonly assumed in Western societies. Even with 98 per cent of the population belonging to the Han race, significant differences exist in language, dialects and cultural practices in various parts of China. Nor is the Chinese economy static. A chronological exposition of the waves of reform under the Emperor, Mao Tse-Tung, and Deng Xiaoping shows the dynamically shifting balance between capitalism and socialistic forces in China. However, Chinese culture is significantly different from Western cultures. For example, Chinese communicative practices are highly context and face-work driven. The Chinese language makes no distinction between singular and plural nouns and the listener is expected to interpret the message in context. Conflict is highly avoided: subordinates shy away from committing themselves to a position without first feeling out the boss. Face is highly valued in nurturing and developing multi-generational social relationships. The Chinese have two concepts of face: lien and mianzi. Lien stands for others' confidence in one's moral character, while mianzi stands for personal prestige and personal success. Losing lien can incapacitate a Chinese person as a member of his or her community. Guangzi, or a system of deep, multi-layered, personal contacts, is a significant factor in accomplishing results in the Chinese society. These social and cultural issues have implications for the management of enterprises, which are discussed in part II of the book.
As property rights are weak in China, and virtually everything, including all business enterprises, belongs to the people, as represented by the party and the national and regional congresses, the managers and directors of the business enterprises have to negotiate carefully their autonomy from party leaders. The level of managerial autonomy depends on many factors. Under the "director of responsibility system", the organizational head takes full responsibility for accomplishing agreed targets, much like a profit centre, and thus earns operational autonomy. However, to obtain new capital investments for their enterprises, the business managers need to obtain a series of approvals from many inter-dependent authorities, which in turn requires considerable face-work and guanxi.
Distance from central power structures in Beijing is another important factor in determining managerial autonomy. Thus, a province that is far from Beijing is able to afford greater autonomy for the enterprises. In addition, business managers in China sometimes engage in joint ventures with international firms solely to improve their managerial autonomy from party leaders. One of the main outcomes of the reform over the last decades has, however, been the progressive development of party rights and consequently an exponential rate of increase in privately-owned enterprises, with its attendant increase in managerial decentralization. As most of the important work is accomplished through guanzi, most Chinese people need to work longer hours than their Western counterparts in developing guanzi, and in constantly negotiating their power and autonomy from party leaders. Functionally, the organizational heads pay utmost attention to the personnel function. They are patriarchs: they recruit their key employees through guanzi and then they provide lifetime employment and social status to their subordinates. Finally, the quality of information available for making business decisions is quite poor in China, and the party offices are often the only, albeit unreliable, source for economic information.
Part III or the book offers the international business person some guidelines setting up joint ventures with enterprises in China. Chinese authorities distinguish between joint ventures about and wholly-owned foreign businesses and provide greater incentives for joint ventures. The Chinese seek international partners to obtain greater managerial autonomy, to absorb foreign capital and technology, and to obtain access to export markets. According to the author, international investors should be certain of their own objectives, and whether potential partners will be likely to achieve their objectives, before getting involved in joint ventures.
In the final section (Part IV) of the book, the author offers his prespective on the future of the Chinese economy and management system. The economic reform is resulting in a western-style-based business system in China. Enterprises are moving fast towards private ownership and decentralized management, even though the country overall remains wary of capitalistic excesses and foreign economic colonialism.
This is a very timely and well-written book that offers a wealth of insights on the Chinese management system. However, a few concerns arise here. Broadly framed, they are concerns about the "etic" (outsider looking in) reading of the Chinese culture by a non-Chinese person and the Western epistemic lens employed to guide such inquiry (Garfinkel, 1988), and concerns about the unquestioned acceptance of the western development project (Alvares, 1992; Nandy, 1980) without critical examination of what is being reformed and for whom (Schrijvers, 1993).
Knowledge is a social and contextual phenomenon (Lyotard, 1984). It is bounded in interpretive convention unique to a community of knowing or culture. These conventions are self-supporting and autonomous, subject to their own respective logics and armed with their own facilities of truth validation (Wittgenstein, 1974). Thus culture is prior to research (Bourdieu, 1992). In an etic reading of a different culture the very questions we ask are already shaped by our cultural assumptions and cast in our personal cultural categories (Hampton-Turner, 1991). A frequent criticism is that in etic readings, as researchers, we pull our respondents' answers into our own mindsets and in the process often lose the distinctive ways they think and construct their phenomenological world. Therefore, reading a culture is best achieved through an "emic" reading perspective that is the heterogeneous subject positions of individuals and social groups that constitute culture (Garfinkel, 1988).
The author of this book claims to be sensitive to local ways of knowing, and by including a few informants of Chinese origin attempts to give an emic bent to his interpretation of Chinese management practices. The etic slant is, however, evident in the way the book uses western, techno-rational, industrial logic categories as templates for making sense of Chinese management culture. A set of western management labels such as leadership style, autonomy, decision making, information, and control structures appear to have been superimposed on to a complex and traditional scheme of things. While the author does make a case for the applicability of these concepts to the Chinese context, no strong or elaborate arguments are presented.
In using a set of alien categories to describe a culture, not only is distinctive cultural knowledge lost, but it also acts to "privilege" one culture's narrative or model over that of the other. Holding a central narrative with reference to this ideal is problematic since it introduces "power equations" and implicitly sets up a hierarchy of superior and inferior narratives (Foucault, 1980).
An additional concern is that the author interprets from his experiences with a small and skewed sample of organizations (six medium-sized state-owned enterprises located around Beijing) during his two visits to China and yet produces grand summaries of the complex and diverse domain of Chinese organizing practices. Another limitation of this non-representative sample is that it ignores the exponentially increasing population of privately-owned enterprises.
From a rational prespective, economic development, as coined in western terms, is viewed synonymous with the notion of growth and progress and is seen as a universal state to be desired. However, the notion of economic reform and development implies a value stance, and its desirability depends on what and who is being reformed and whose interest are being represented through the reform process (Alvares, 1992: Schrijvers, 1993). As many contemporary critics have observed, the western notion of development and accompanying market reforms have had repercussions in Russia (Walek, 1994), India (Nandy, 1980), and also China (Chen, 1995) in terms of violating indigenous tradition and culture and polarizing the local population into a self-enriching top layer and growing underclass of poor. The author appears to assume the validity of the western development project and is conspicuously silent about whose voice is heard or silenced, and who is benefited or impoverished.
In balance, the book accomplishes its purpose very well. It does make reasonably fathomable for the western audience, especially the business person planning to do business in China, in terms familiar to them, the multi-layered and complex landscape of Chinese social and business practices.
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