Autumn Child
Junior Member
agreed. it also have to come with all the right incentive measures. I know a couple of bosses who allows their subordinate to receive kickback as incentive for them to stay longer at the company.
Chinese Economics Thread
- Thread starter Norfolk
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well a large part of China's economy is still state-owned, especially some its largest firms. so what you are gonna end up gettin is state-owned economy beating down privately-owned counterparts because these firms get backed by the government and they operate under market principles.
if you look at Guangdong, they wanna take this opportunity (as a lot of the low-end manufacturing firms are closing down) to accomodate for more advanced industries. that's a model that China seem to want to use, its similar to the Japanese model because the government is still doing the overall planning, but different in that the Chinese want more internal competition and innovation, which is actually borrowed from the US. but to synthesize these you need a Chinese way of doing things.
the Japanese model doesnt suck at all. afterall, toyota has been beating the big three's a** for quite a while now. some US firms tried to adopt the Japanese model but failed. the structure is a bit rigid that's their biggest problem,but its extremely effective.
the American is good but we have to remember that these guys are profit maximizers. but what is rational for individuals may not be rational for the whole, what you get is exactly what you see, firms (like enron and even the automakers) stopped making profits on producing actual goods and start gambling with derivatives. i wouldnt call that shady deal but i think its worse.
if you look at Guangdong, they wanna take this opportunity (as a lot of the low-end manufacturing firms are closing down) to accomodate for more advanced industries. that's a model that China seem to want to use, its similar to the Japanese model because the government is still doing the overall planning, but different in that the Chinese want more internal competition and innovation, which is actually borrowed from the US. but to synthesize these you need a Chinese way of doing things.
the Japanese model doesnt suck at all. afterall, toyota has been beating the big three's a** for quite a while now. some US firms tried to adopt the Japanese model but failed. the structure is a bit rigid that's their biggest problem,but its extremely effective.
the American is good but we have to remember that these guys are profit maximizers. but what is rational for individuals may not be rational for the whole, what you get is exactly what you see, firms (like enron and even the automakers) stopped making profits on producing actual goods and start gambling with derivatives. i wouldnt call that shady deal but i think its worse.
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Being state owned doesn't mean it has a security net. Back in the Eighties and Nineties, the Chinese government allowed many state owned enterprises to go under.
State owned companies themselves are in a disadvantage against private companies backed by rich people who has deep connections or GuanXi to the officials.
Asian business, whether its Chinese, Korean, Japanese, Malaysian, etc,. share a common pattern, and a very strong one indeed, is the emphasis in "connections". With American companies, its difficult to build connections like say, after you met a top level representative of this and that company, and after all the time developing the personal rapport, you find out a month later he gets laid off as part of organizational restructuring. Then all his personal contacts will find business with another company if they can't find rapport with his successor.
State owned companies themselves are in a disadvantage against private companies backed by rich people who has deep connections or GuanXi to the officials.
Asian business, whether its Chinese, Korean, Japanese, Malaysian, etc,. share a common pattern, and a very strong one indeed, is the emphasis in "connections". With American companies, its difficult to build connections like say, after you met a top level representative of this and that company, and after all the time developing the personal rapport, you find out a month later he gets laid off as part of organizational restructuring. Then all his personal contacts will find business with another company if they can't find rapport with his successor.
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vesicles
Colonel
Bingo! All those bad things happenning in China is a result of lack of checks and balances. It is only human nature to find loop holes and shortcuts whenever possible. That's why lawyers make so much money in Western nations. In China, laws are incomplete. People can find much more loop holes to achieve their goals. I think it is a matter of making laws and enforcing them. But who makes sure law enforcement agencies do their job properly? Well, that is where democracy comes in handy.
during the 90s many state owned enterprises were abandoned because they were incompetent, those that were kept were either good enough for a reform, or were too important to fail. like i said, state-owned businesses nowadays operate under market conditions, so yes the Chinese government will let it fail if it sucks.
i dont think private companies have that much of an advantage in that area. unless you are Ma Yun or someone really big, but there are only a few of those in China. some of the executives that were appointed to manage a major state-owned enterprise can go on to take certain positions in the central government, Wu Yi is an example. and in many cases these firms have a monopoly over the sector.
RedMercury
Junior Member
NED and color revolutions also show why democracies are so handy...for certain governments.
Its more than just that. What if the private company is owned by a relative/friend of a high level official? What if the high level official himself owns part of the company by proxy?
that might be the case at local level. on the national level, private firms wont be as influential as a state firms. most obvious case, Li Peng's daughter.
Autumn Child
Junior Member
China have enough check and balance, but very different than western countries. Some laws are intentionaly left porous because the govt either give the company transition time for change or its for the benefit of the "system". who make sure the law enforcement agency do their job? the citizens do. not through vote but through discontent and "Mass Incidents". If the chinese govt is a pure dictator, then they would not care about its citizen at all. Even within the communist party there are check and balance mechanism, so there is no real dictator in china. Its the system that runs China. The fact is that the govt fear the people. In the history of China, the citizen brings down the govt much more often than any outside forces.
My point is western democracy won't work with China and most asian countries...unless you want china to be like thailand and you want the whole world to experience another economic crisis. China has unique culture with strong/ancient traditions that cannot be changed easily. Any solutions must fit China not the other way around.
Autumn Child
Junior Member
I agree that private company do not have as much advantage over large SOE. SOE are larger, ussually have large market share and can receive financial and policy support much more easily than private company. Most large private company are also obidient of govt orders. for example rescently the munciple govt "ordered/urged" some large private comapany in shanghai to help out with growing employment problem. The private company obeyed and recruited fresh graduates even though they do not need the extra work force. The cost of maintaining extra work force is worth it considering the potential policy "pay off" from the govt such as land rights, etc.
However, the tough business landscape will benefit china as a whole since private company have more pressure to innovate, take risk and be cost efficient. Already we see emerging private company like huawei that can rival large SOE in term of their brand. In the next few years, there will be a huge wave on private enterprise that is on par with multinationals, but with unique chinese touch.