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Information to Users INFORMATION TO USERS This manuscript has been reproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand corner and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the back of the book. Photographs included in the original manuscript have been reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. University Microfilms International A Bell & Howell Information Company 300 North Zeeb Road. Ann Arbor. Ml 48106-1346 USA 313/761-4700 800/521-0600 Order Number 9307840 Government policy and Sino-foreign joint venture operations: The role of local bargaining in policy implementation in contemporary China Roehrig, Michael Franz, Ph.D. The Ohio State University, 1992 Copyright ©1992 by Roehrig, Michael Franz. All rights reserved. UMI 300 N. ZeebRd. Ann Arbor, MI 48106 GOVERNMENT POLICY AND SINO-FOREIGN JOINT VENTURE OPERATIONS: THE ROLE OF LOCAL BARGAINING IN POLICY IMPLEMENTATION IN CONTEMPORARY CHINA DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in the Graduate School of The Ohio State University By Michael Franz Roehrig, B.A., M.A. * * * * * The Ohio State University 1992 Dissertation Committee: R. William Liddle Kevin J. O'Brien Department of Goldie Shabad Political Science Copyright, 1992 by Michael F. Roehrig To My Family ii ACKNOWLEDGEMENTS I thank the East Asian Studies Program (EASP) of the Center for International Studies and the Graduate School/ The Ohio State University, for recommending me to the U.S. Department of Education for a National Defense Foreign Language Fellowship (Title IV), which supported me while participating in Indiana University's East Asian Summer Language Institute. IU provided invaluable linguistic preparation for research conducted in China. I acknowledge EASP for its role in arranging my research trip to China on the OSU-Wuhan University Exchange Program, which allowed me to collect data that is central to this dissertation. I also thank Wuhan University's Foreign Affairs Office for arranging and assisting in interviews with Chinese respondents and for the hospitality it extended to me while I lived there. I also thank OSU's College of Education for assistantship support in 1989-90 and 1991-2. My assignments offered me valuable knowledge and experience. I acknowledge my dissertation reading committee. I thank Professor R. William Liddle for enthusiastic support during my graduate studies and assistance during the dissertation iii process. I also thank Professor Goldie Shabad for suggestions which were especially helpful at the early stages of this study. Professor Kevin J. O'Brien spent many hours instructing me in fundamental aspects of Chinese area studies research in the U.S. and in China and then spent even more time guiding me through the process of writing the dissertation. Intellectually, he challenged me at every step of the way and was always a source of moral support and encouragement. As teacher and adviser, he was a model of integrity and commitment and I gladly acknowledge my debt to him. I also thank friends and family. In particular, I thank Greg Levitt for encouragement and advice, James Lee for assistance with my research and for teaching me much in the process, and Karim Massimov for valuable insight and data. I extend special thanks to Professor Daniel P. Foley whom I consulted throughout my graduate studies. He was a constant source of wisdom and strength. Finally, I had the steadfast and patient support of a loving family. My mother, Mary E. Roehrig, and my father, Helmut J. Roehrig sacrificed greatly to extend the emotional and financial backing to see me through my studies. Their unyielding devotion was crucial to the completion of my doctorate. To my family I owe the greatest debt of all. iv VITA December 23, 1964..........Born - Cincinnati, Ohio 1985 ....................... B.A., Xavier University, Cincinnati, Ohio 1987 ....................... Graduate Fellow, National Defense Foreign Language Fellowship (Title IV) 1989 ....................... M.A., Political Science, The Ohio/ State University, Colvfnbus, Ohio 1989-9 0 ........................Research Assistant, College of Education, The Ohio State University, Columbus, Ohio 1990-1 ..................... Visiting Scholar, OSU-Wuhan University Exchange Program, Wuhan, Hubei Province, People's Republic of China 1991-2 ..................... Research Assistant, College of Education, The Ohio State University, Columbus, Ohio FIELDS OF STUDY Major Field: Political Science Comparative Politics. Professors Kevin J. O'Brien, R. William Liddle, Goldie Shabad International Relations. Professors Joseph Kruzel and Donald Sylvan v TABLE OF CONTENTS ACKNOWLEDGMENTS........................................... iii VITA..................................................... V CHAPTER PAGE I. INTRODUCTION................................ 1 A. Introduction.............................. 1 B. Theoretical Overview..................... 3 C. Consequent Project Contributions........ 7 D. Method.................................... 10 E. Other Issues.............................. 13 F. Principal Findings....................... 14 G. Chapter Description ..................... 19 II. JOINT VENTURES IN THE CONTEXT OF CHINA'S MODERNIZATION PROGRAM....................... 30 A. Introduction.............................. 30 B. Attracting Foreign Capital............... 31 C. Attracting High Technology............... 40 D. Attracting Management Know-How........... 50 E. Conclusion................................ 59 III. POLICY AND LAW ADJUSTMENTS................. 69 A. Introduction.............................. 69 B. Issues of Autonomy from the State: Management Power, Labor Relations, and Resource Procurement................... 71 C. Issues of Finance: Valuation and Pricing, Taxes, and Foreign Exchange ........... 84 D. Conclusion.................................. 102 IV. THE OBJECTS OF BARGAINING..................... 115 A. Introduction................................ 115 B. The Objects of Bargaining in Labor. 119 vi C. Other Objects of Bargaining: Taxes and Foreign Exchange .......................... 142 D. Bargaining Strategies....................... 152 E. Conclusion .................................. 166 V. THE PRIMACY OF GUANXI (PERSONAL RELATIONSHIPS) AND OTHER SOURCES OF VARIATION................. 186 A. Introduction................................ 186 B. Personal Relationships Over Time, Joint Venture Type, and Leadership "Mood". 188 C. Partner Characteristics: Level of Government of the Chinese Partner, Corporate Personality, and Nationality of the Foreign Partner....................... 197 D. Geographic Area: Special Zones and Southern China...................................... 201 E. Conclusion ................................. 205 VI. CONCLUSION....................................... 213 A. Introduction............................... 213 B. Who Bargains and When They Bargain ........ 215 C. Sources of Bargaining....................... 218 D. conclusion ................................. 230 E. Other Research Areas ....................... 233 LIST OF REFERENCES .....................................242 vii CHAPTER I INTRODUCTION Introduction In 1979* China began to introduce rules, regulations, and laws designed to regulate Sino-foreign joint ventures. This dissertation explores how resident, foreign business persons interact with Chinese associates and officials and how this interaction affects implementation of joint venture policies. In particular, it investigates bargaining between foreign joint venture managers and sub-national bureaucratic actors and focuses on the policy adjustments and legal innovations that grew from these interactions and the outcomes that have evolved despite conflicting objectives. Most notably, it examines policy implementors who strive to maximize and speed transfer of capital, technology and management know-how while maintaining control over joint venture operations, and joint venture managers who develop countermeasures to maximize profit, including improving product quality and increasing autonomy from the state. The objectives of the research are to identify bargaining occasions and strategies, to determine what laws were promulgated to address points of conflict, to identify factors 1 2 that affect implementation, and to explain the ways foreigners bring to bear their influence on implementation. The dissertation pays particular attention to strategies foreigners employ to circumvent local bureaucratic interference.
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