Chinas Business System Presentation 5

11/7/2011 8:03:00 AMw

Business System Distinctive configurations of firms and markets which have become established in particular institutional context as the dominant ways of structuring economic activities. Richard Whitley He is a major researcher of Chinese business systems/Asia. According to him a business system is: o are particular ways of organizing, controlling and directing enterprises Gordon Reddings model Professor at uni Hong Kong Researcher in the area o BUSINESS SYTEMS Ownership Networks Management o CULTURE Horizontal order (Identity) Vertical Order (Authority) Rationale o INSTITUTIONAL CONTEXT Financial capital Human Capital Social Capital Culture Defines as the social construction of reality Holds functioning societies together psychologically Helps make sense of reality Divided into 3 man components

o Rationale o Horizontal Order o Vertical Order Chinese Culture o Respect for age and hierarchy o Groups collective contribution instead of individual accountability o Importance of relationships guan xi Institutional Context

Financial capital

o Explores the rules by which capital becomes available and allocated) Human Capital o Captures the rules governing skill acquisition, organization of labor and labor availability. Social Capital o Enables voluntary cooperation among people Business System Coordination through ownership (Who owns firms, and to what extent does the owner have control) Coordination through social networks (repeated interaction among individuals that are independent from each other Management (how things are coordinated inside the firm)

Timeline of china Japanese Invasion (1937) o Ultimately increases the expansions of communist influence. Chinese Communist (1949) o Chinese communist party power under Mao Tse Tung. Collectivization of agriculture Great Leap Forward (1958-1966) o Revolutionary methods of trying to modernize economy Cultural revolution (1966-1976) o When the economic reform failed, Mao created a sociopolitical movement. Red guards was opposed to it. DengXiaoPing Opens China Reform and opening (1978) o China opened for foreign investment and to get strong economic growth Tiananmen Square Massacre (1989) o Political control of Chinese communist party to stop and suppress democracy movement. China enters the WTO (2001) o Willingness to enter the international trade and commercial rules. 1.34B Population

China

Currency RMB Renmini Yuan Religions Buddhism, Christianity, Islam, Taoism FDI Investment 90.03B$ (2009) Main exports Manufactured goods, textiles, garments.

Iron Rice Bowl Chinese idiom referring to the system of guaranteed lifetime employment in state enterprises It has been set up by Mao Zedong in 1949 This system, called the Iron rice bowl, recalls the past when it was said that terminate people was to break their bowls Ends with Deng Xiao Ping in the 80s Chinas Business System State owned enterprise (SOEs) o Chinas organization structures have a history of predominantly being state-owned enterprises. o Chinas corporate law of 1993 o SOEs became wholly state owned Closely Held Corporation/Private Chinese Company o Private enterprise shareholders

SOEs

Owned by state council Large, bureaucratic capital investment Closely held corporation Was illegal until 1980s Accounts for 2/3 of GDP Publically held corporation Challenges faced by chinas as chinas business systems evolves Lack of experience Chinas Acquisitions Lack of innovation Censorship in china Experience in competing overseas Lack of Agricultural land due to industrialization Challenges in HRM Corruption

Censorship

Google?

Facebook? Corruption Failure at oversees competition

11/7/2011 8:03:00 AM

11/7/2011 8:03:00 AM