Get onground knowledge and analysis from business and investment guide book: China’s Global Reach

Borderless Business, National Competition, Politics, and Globalization (book excerpts)

by George Zhibin Gu

Afterword

China, United States and Global Development

by Andre Gunder Frank

Part IV

China’s Reform at Home: The Unfinished Task



SUMMARY

(1). Today, China’s fundamental problem remains with an unlimited bureaucratic power still in place. Despite all the changes, this basic issue has yet to resolved. The key difficulty behind it is that China has not had any real opportunities to change the old political structure from the very basics.

For ages, China’s government bodies are all self-appointed. In truth, this self-appointed government has been a self-sever who has had unlimited ways to squeeze on the society and people. The squeezing role was pushed to the very extreme in the Mao era. Even today, it remains very much unchanged.

Under the bureaucratic design, the entire society, economy, and people were made to serve the government. This was done partly through state monopoly of all economic sectors. In the Mao era, the government controlled and ran all banks, factories, mines, farms, and shops. Furthermore, this system was designed against free flows of humans, ideas, and goods. For example, people were banned to travel. However, this bureaucratic system immediately led to poverty and chaos.

The current reform aims to get out the old mess. Allowing private sector to exist is one most significant change. But political and institutional reforms have been extremely slow, which continue to create vast problems.

(2). Moreover, this bureaucratic framework has eliminated a well-defined ownership and modern legal system. As a result, banks and state companies are without true owners and true protectors. In addition, there is vast confusion as to the rights and wrongs in the marketplace. In particular, building professional standards and modern organizations is next to impossible.

(3). The very basic motive of Beijing to initiate the current reform is to gain more power, not less. Consequently, the government only does what benefits itself other than the nation. For example, true state sector reform demands a complete separation of bureaucracy from the business sphere, but this has not happened so far. Consequently, countless state companies are in distress now.

(4). In this era, China has gained a much more liberal environment. People’s power is on the rise. Still, it has happened more by accident than design. Most old restrictions remain in place. Worse still, corrupt officials constantly employ the unlimited state power for personal gain. They prey on people, especially the poor, all the time; and

(5). Despite all the changes, the supreme state power has yet to be truly challenged. Without dumping the unlimited bureaucratic power, there is no way to establish a modern society based on law. But under an increasingly open environment, all the key issues gain new light.

[...]

CONTENTS

Introduction

Three New Lessons

Growing Up in China

Going International

Returning Home

This Small Book

The Big Picture

Acknowledgments

Part I China as a New Global Theater

1. Ambitions of Foreign Multinationals in China

Today’s Versions of Columbus and Magellan

International Rush

Why Are They Here?

Why China?

One Big Factory-Market

More Sectors, More Players

2. The Business of China Is Business!

“Empty Talk Destroys Prosperity!”

Foreign Bankers

Spouses and Children

Welcome!

3. Creation of a Global Manufacturing Center

Unexpected Contributors

Arrival of Indian Companies

A Crowded Market

Galanz: the Manufacturer of the World

Convenient Settings

Future Trends

4. The Ultimate Driving Force: Explosive Consumption

Unexpected Development

Impressive Outcome

Continued Consumption Surge

5. Sharp Rise of Private Sector

One U.S. Banker’s Discovery

40 Million New Businesspeople

Rural and Urban Entrepreneurs

Buttons Create a New Industrial Town

Jinjiang, Fujian: Biggest Exporting Center for Sport Shoes

Low-End Players

6. All Players Are Important

Competing International Players

Auto Market

International Banks

International Listings

Consumer Views

Part II Global Interactions, Business Dealings, and Job Transfers

7. Learning - A Big Industry

Demand for Education

A Top School

International Involvement

8. The Officials’ Global Reach

Officials Lead the Way

Guangdong versus Inland

Abolishing Bureaucratic Tricks

International First

New York versus Beijing

9. “Capital Is Not Enough”

No Shortcuts

Two Lessons to Remember

Volkswagen versus Beijing Jeep

“Capital Is Not Enough”

Ericsson’s Seven Mistakes

Bashing Carrefour

10. Global Job Transfers

One International Question

Hiring by Foreign Multinationals

New Era of Global Job Transfers

Job Worries around the World

Hiring by Chinese Players

Global Job Transfers: China versus India

Part III China’s New International Experiences

11. Price, Price, Price

A Chinese Edge

GE in China

Japan’s Global Efforts

Cisco versus Huawei

Microsoft in China

Global Price Reductions

12. When Can Chinese Companies Become Global?

Weakness at Home

Foreign Observations

Low Benefits for China

State Banks: “The Troublemakers”

A Long Way to Go

13. Chinese Multinationals

Some Sizable Chinese Companies

Buying Into International Markets

Overseas Operations

Creating More Partnerships

14. Bringing Foreigners In

Trade Fairs

Industrial Parks

Foreign Acquisitions

Part IV China’s Reform at Home: The Unfinished Task

15. Problems Outpacing Solutions

The Ownership Issue

State Assets and Death on the Nile

“Two Pockets of the Same Jacket”

Lack of Weapons and True Owners

16. How Can a Man Still Wear Baby Clothes?

Credit Crisis and Banking Problems

The Richest Man in Shanghai

Corruptive Partnerships

17. Crises of State Sector

Rapid Changes in the Managerial Class

Hiring Foreign Managers

Long Live Competition!

Reform Difficulties

Painful Layoffs

Government Trimming

18. When Can China Achieve Meaningful Restructuring?

A Saturated Market

Difficulties for a Rational Order

The CEO in China and Elsewhere

Who Is Responsible for Wealth Creation?

Buying Parties Ready?

Need for Greater Determination

19. Employment Traps

Resident Permits

Lives of the Migrants

Employment Difficulties for Other Groups

Death of a College Graduate

20. Bureaucratic Tails

Tails Everywhere

Lucky International Players

“The Red Building”

Part V Globalization in Light of History

21. An Unbroken Circle?

The British Isles as a Global Center

China’s Missed Opportunities

The U.S. Way: Dumping Losers

Expansion and Wealth Creation, Past and Present

22. Universal Companies and Global Expansion

Bigger and Bigger Multinationals

First Strategy: A Strong Home Base

Second Strategy: Creating a New Form of Dominance

Third Strategy: A True Global Reach

China’s Participation in the World Economy

23. More on the Circle

Who Has Affected Globalization the Most?

First Factor: Japan’s Global Reach and Retreat

What Is Going On in Tokyo?

South Korea: Glories and Bubbles

Second Factor: Asia’s Financial Crisis

Third Factor: The World Trade Organization

Unexpected Developments

Global Development Orbit

24. How Does China Achieve Sustained Growth?

A Great Paradox

Effective Government, Different Role

The Big Picture

A New Model

Getting Out of the Box

A New World Order

Afterword: China, United States and Global Development

by Andre Gunder Frank

Notes

ABOUT THE AUTHOR

George Zhibin Gu is a journalist/consultant based in Guangdong, China. A native of Xian, he obtained education at Nanjing University in China and Vanderbilt University and the University of Michigan in the United States. He holds two MS degrees and a Ph.D. from the University of Michigan.

For the past two decades, he has been an investment banker and business consultant with a focus on China. His work focuses on helping international businesses to invest in China and the Chinese companies to expand overseas. He has worked for Prudential Securities, Lazard, and State Street Bank, among others. He generally covers mergers and acquisitions, joint ventures, venture capital, business expansion, and restructuring.

Also, he is a journalist focusing on China in relation to global development. His articles or columns have appeared in Asia Times, Beijing Review, The Seoul Times, Financial Sense, Gurus Online, Money Week, Online Opinion, Asia Venture Capital Journal, and Sinomania, among others.

He is the author of three additional books, China Beyond Deng: Reforms in the PRC (McFarland, 1991),

China and New World Order: How Entrepreneurship, Globalization, and Borderless Business Reshape China and World (Fultus, 2006), and Made in China: Players and Challengers in the 21st Century (English edition forthcoming; Portuguese edition, Centro Atlantico, 2005). He is a member of World Association of International Studies hosted by Stanford University.