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China:CorporateStructureand
ManagementSystem
IBUS6019
S2,2015

Outline

STRUCTUREOFCORPORATESECTOR
Typesofcompanies
Evolutionandcharacteristicsofcorporate
Sector
StateOwnedCompanies
Collectivecompanies
Privateenterprises
ForeignInvestedEnterprises
CHINESEMANAGEMENTSYSTEM
Culturaltradition
Keyaspectofmanagement
Changingmanagementstyle

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StructureofCorporateSector
TYPEOFFIRMS
StateOwnedEnterprises(eg.Baoshan Iron&SteelCo.)
Ownedbystate(normallythecentralgovernment)andoften
controlledbyrelevantministry(e.g.,Ministryofcommunication)
Enjoypriorityaccesstocapital
SomeSOEsareprivatizedandlistedinstockexchangesinrecentyears
CollectiveEnterprises
Ownedbycommunitiesortheemployeesofanenterprisewhich
includes
Urbancollectives(eg Haier)
Townandvillageenterprises(TVEs)(eg.Kelon Electric)
Cooperatives

StructureofCorporateSector
PrivateEnterprises(eg.Lenovo)
Ownedprivatelybyindividualsandprivateentities
Includesindividualbusinesses,privatelyownedTVEsand
smallandmediumenterprises
ForeignInvestedEnterprises
Separatelegalentitieswithsoleormixedownershipstructure
whichincludes

EquityJointVentures(eg.ShanghaiVolkwagen,ShanghaiGM)
ContractualJointventures
CooperativeJointventures
WhollyOwnedEnterprises

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EvolutionandCharacteristics:SOEs

Pre1988Post1988(SOElaw)

EvolutionandCharacteristics:SOEs
Post1992/2006
StateownedAssetSupervisionand
AdministrationCommissionoftheState
Council

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EvolutionandCharacteristics:SOEs

BAOSTEEL

Relationship between the Company and its controller

EvolutionandCharacteristics:
Collectives
TownandVillageEnterprises(TVEs)

Originatedduring1950sascommuneandbrigadeenterprisesownedby
ruralcommunes
Producedmostlyiron,steel,cement,chemicalfertilizer,hydroelectricpower,
andfarmtools
Experiencedexponentialgrowthin1984tomid1990sduetosupportfrom
governmentsandalsotheentryofprivateTVEs
Declinedinproductivity&profitabilityinlate1990sledtoprivatization

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EvolutionandCharacteristics:
Collectives
TownandVillageEnterprise

EvolutionandCharacteristics:
Collectives
UrbanCollectives

http://www.youtube.com/watch?v=zYESDRaT8xo

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EvolutionandCharacteristics:Private
Enterprises
19781983:EstablishmentofIndividualbusinesses(getihu)inruralChina
19841992:Riseofprivatelyrunbusinesses(siying qiye)eitherfrom
individualbusinessesorleasingofcollectiveorstateownedenterprises
RedHatfirms
Firmswhichwereownedandoperatedbyprivateindividualsbutregisteredas
collectiveownedenterprises
Around50%oftheprivatelyownedbusinessesregisteredascollectives
Thisstrategywasadoptedbyprivatefirmstoavoiddiscriminationagainst
privatefirms.
Privatefirmswerelegallyrecognizedin1991throughaconstitutional
amendment

1993~
Exponentialgrowthofprivatefirms
PrivateownershipwereincorporatedintotheChineseConstitutionin
March1999

EvolutionandCharacteristics:Private
Enterprises

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EvolutionandCharacteristics:Private
Enterprises

EvolutionandCharacteristics:Foreign
InvestedEnterprises

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EvolutionandCharacteristics:FIEs

StructureofCorporateSector

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StructureofCorporateSector

Top500Companies

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StructureofCorporateSector

CHINESEMANAGEMENT
SYSTEM

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Culture
Cultural Orientation
& Value Patterns
Attitudes Toward
Work
Authority
Money
Change
Time
Risk
Family
Equality
Management functions
Organising & Controlling
Decision making
Negotiating
Communicating
Incentives & Motivation
Managing change
Source: Adapted from International Management, Ed Phatak, Bhagat & Kashlak

ChineseManagementSystem
CHINESECULTURALTRADITION

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HofstedesCulturalValuesModel
IndividualismversusCollectivism:
degreetowhichpeopleprefertoactasindividuals
ratherthaningroups
therelationsbetweentheindividualandhis/her
fellows

PowerDistance:
degreeofsocialinequalityconsiderednormal
distancebetweenindividualsatlevelsofahierarchy
equal(smallpowerdistance)
unequal(largepowerdistance)

KeyAspectsofChineseCultureand
Management
Face
Faceisessentiallytherecognitionothersasseenbyothersofones
socialstandingandposition(mianzi),andthusmustbeseenas
situationally definedratherthanpartofpersonality(lian).
Guanxi (RelationshiporConnection)
Friendshipwithimplicationsofacontinualexchangeoffavors
BasisofnetworkconstructioninChina
InChineseorganizationscontinuingrelationshipsareofgreat
importance,inpartbasedonfamilyandotherties,suchasclan,
sharedsurname,homevillage,region,educationorothershared
experience.
Inbusiness,relationshipsareimportantascontractsareoftennot
strictlyspecifiedinlegaltermsbutrelyontrustbetweentheparties

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KeyAspectsofChineseCultureand
Management
RespectforAgeandHierarchy
Thereissignificantevidenceforrespectforageandhierarchyasa
majorfeatureofChineseculture.
GroupOrientation
Oneoftheimplicationsofthisgrouporientationisthatthecultural
assumptionsofWesternmanagementtheoriesmaymaketheir
findingslessappropriatetoChineseorganizations.
WhilethisrelativelystronggrouporientationiscommontotheP.R.C.,
HongKong,TaiwanandoverseasChinese,itisprobablydeclining
gradually.However,grouporientationstillremainsakeyfeatureof
Chineseculture

ChangingFaceofChineseExecutives
EmpowermentVs.Autocracy
DespitetherecentsuccessChineseleadersarestillautocraticwithout
providingdecisionmakingpowertoemployees
DiversityVs.Insularity
Chineseemployeesarestillintoleranttodiversityandprefertoworkinin
groupmanagement
SelfSufficiencyVs.RelianceonGovernment
Withthedecliningsupportofgovernment,Chineseexecutivesare
adoptingpoliciesforefficiencybylayingoffemployees(contrarytothe
grouporientation)
GlobalPerspectiveVs.NationalPride
Chineseexecutivesholdtotheirtraditionalvalues(nationalpride)
ResultsoftheGLOBEstudy

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Appendix

Appendix

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THEEND

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