DOCSLIB.ORG

The Rise of the Chinese Multinationals Dan Steinbock

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Rise of the Chinese Multinationals Dan Steinbock Asia Supplement The Rise of the Chinese Multinationals Dan Steinbock N EARLY June, hoping to ease These overseas Chinese have developed Igrowing trade tensions with the an informal “bamboo network” that tran- European Union, China agreed to place scends national boundaries and extends voluntary limits on the growth of its tex- throughout the region, where entrepre- tile and apparel exports to Europe. The neurs, business executives, traders and decision came hours before the EU was financiers of Chinese descent are major set to impose its own trade restrictions players in local economies.1 Today, the on China. A few days later, deep misgiv- array of complementary business rela- ings about China’s rising economic and tionships comprises more than fifty mil- political clout fueled a fierce debate over lion ethnic Chinese, who control many of a major Chinese oil company’s bid to buy Asia’s largest public companies and who U.S. producer Unocal. Topping Chev- have contributed to the rise of China’s ron’s original offer of $16.8 billion, the new multinationals. $18.5 billion bid from the government- When, a century ago, the first wave of controlled China National Offshore Oil globalization swept across the developed Corporation (CNOOC) came under fire economies of western Europe and North from U.S. lawmakers. These two inci- America, East Asia enjoyed a boom of dents highlight the new economic reality: its own. Chinese capitalists launched op- China is no longer just a destination for erations outside China while investing in foreign direct investment (FDI)—it is the their home country. home for Asia’s new multinationals. After 1949 the People’s Republic of China opted for a command economy in- Bamboo Networks to SEZs 1Murray Weidenbaum and Samuel Hughes, The INCE THE 1500s, southern Bamboo Network: How Expatriate Chinese En- SChina has been a springboard for trepreneurs are Creating a New Economic Super- emigrants to Vietnam, Thailand, Indo- power in Asia (New York: Simon & Schuster, nesia and elsewhere in Southeast Asia. 1996). 2 The National Interest––Fall 2005 spired by the Soviet model. Despite rapid was a Beijing restaurant in Tokyo, a joint growth, productivity was dismal. The civil venture of a Chinese and a Japanese com- war and the communist rule that followed pany. Despite significant expansion in led to massive capital outflows to neigh- overseas investment, by 1985 only 143 boring Hong Kong, Taiwan and Southeast Chinese enterprises had made the jump, Asia. Chinese “emigrant entrepreneurs” investing $170 million in 45 countries played a critical role in the industrializa- (less than 3 percent of China’s total inflow tion of Hong Kong, contributing to the of FDI). These businesses were mostly in significance of the city as a global textiles low-tech services, such as Chinese res- and garment hub.2 With the Cold War, taurants, located in the major cities or capital outflows from China were replaced Chinatowns of countries like the United by two-way flows between Hong Kong States, Japan and Thailand. Investment in and Southeast Asia. Postwar globalization other service sectors, such as construction arrived in mainland China only after the and shipping, was located primarily in failures of the initial national moderniza- Hong Kong and Macao. tion efforts (the Great Leap Forward in the 1950s and the Cultural Revolution in High-Tech Zones and Natural Resources the late 1960s), which contributed to fam- ine, devastation and dissension. itH THE initiation of in- In January 1975 Deng Xiaoping and Wdustrial modernization in the Zhou Enlai drafted the “Four Modern- coastal provinces, Chinese reformers also izations”, calling for modernization in began to pay increasing attention to the agriculture, industry, science and technol- modernization of science and technology, ogy, and national defense. The transition the third priority of the modernization from import substitution to export orien- program. The development of high-tech tation led to China’s “reform and open- industries was seen as vital for boosting ing.” Following the successful reforms of FDI inflows and attracting foreign mul- the agricultural sector, Deng moved on tinationals. If the idea for the SEZs came to the next stage of China’s moderniza- mainly from other East Asian export pro- tion, industrial reform, in 1984. The gov- cessing zones and free trade zones, the ernment established Special Economic model for the high-tech zones originated Zones (SEZs) close to Hong Kong and in Silicon Valley. then opened the coastal provinces and China’s high-tech development pro- major cities to overseas capital. The re- gram was initiated in 1986, when the formers saw the bamboo network of the State Council called together more than overseas Chinese in the south as an asset 120 senior Chinese scientists to draft through which the SEZs could be inte- China’s strategic high-technology plan. grated with Hong Kong, Macao and Tai- To implement the plan, the State Science wan, as well as the rest of the world. Still, and Technology (S & T) Commission de- overall annual FDI averaged only around signed the Torch Program, which aimed $1 billion. at the commercialization, industrialization Chinese FDI abroad started even more and internationalization of “high and new modestly. In 1979 a chosen few compa- technology.” One of the program’s key nies began to invest overseas, typically components was to establish Science and on the basis of existing overseas trade Technology Industrial Parks and innova- linkages. A third of overseas operations were located in Hong Kong and Macao, 2Siu-Lin Wong, Emigrant Entrepreneurs: Shanghai another third in the United States, Japan Industrialists in Hong Kong (Hong Kong: Ox- and Thailand. The first multinational ford University, 1988). Asia Supplement 3 tion centers. Meanwhile, the program investors, capital inflows accelerated also became responsible for the “high and dramatically. Initially, this FDI phase led new technology industrial development to the geographical expansion of Chi- zones” (HNTIDZs) focusing on a dozen nese firms from Hong Kong, Taiwan and strategic industries, including microelec- Southeast Asia. Now China also showed tronics, aerospace, biotechnology and, up on the radar screens of U.S. corpora- more recently, information technology. tions. After Deng’s southern tour, U.S. Concurrently, the government took steps investment flows to China grew more to improve the investment environment, than fivefold to $556 million in 1993. which triggered another phase of FDI, Over the latter half of the decade, U.S. with annual inflows exceeding $3 billion. capital flows to China averaged $1.1 bil- These measures were mirrored by lion annually. the Chinese government’s bolder steps Through foreign multinationals—the toward outward investment. In the latter so-called foreign-invested enterprises half of the 1980s, 620 new Chinese busi- (FIEs)—FDI played a critical role not just nesses invested more than $860 million in China’s economic reforms and opening, in over ninety countries. Instead of res- but in the rise of Chinese multination- taurants, natural resource development als. Until the late 1980s only 2 percent of projects, along with assembly and trans- the foreign multinationals in China were port, dominated Chinese overseas invest- regarded as technologically advanced, ments. Large, state-owned enterprises, and enterprises using advanced technol- including trust, steel and chemical giants, ogy made up just 5 percent of total FDI joined in. Of the newly established over- in China. After the mid-1990s the FIEs seas firms, 50 percent were in Asia and 18 replaced the small- and medium-sized en- percent were in Africa. However, it was terprises of the overseas Chinese as major the developed countries that attracted investors. Capital inflows soared from $11 the attention of Chinese investors, with billion in 1992 to $50 billion in 1999. Australia targeted as the single most im- Located in the United States, western portant host country for natural resource Europe and Japan, the FIEs are global development projects. But though the giants, owned by institutional investors, growth rate of Chinese FDI was almost engaged in worldwide operations and ex- 50 percent greater than the growth rate celling in high-tech industries. Account- of multinationals worldwide, Chinese FDI ing for only 10 percent of total national accounted for only 0.1 percent of the industrial assets in 2000, they provided global total. more than 27 percent of the gross in- The tumultuous early years of reform dustrial output value, 24 percent of the contributed to inflationary pressures, total value added and 29 percent of the unrest and, ultimately, the Tiananmen total industrial profits. At the end of the events. The momentum was recaptured growth years in 2001, more than 400 of only in 1992. Following his tour of the the world’s top 500 manufacturing com- southern coastal provinces, Deng was panies had invested in China. The FIEs now calling for “faster, better, deeper” accounted for an estimated one fifth of economic growth. the GDP growth. In particular, the rapid export growth of China resulted from Enter the Global Giants the dramatic expansion of FIE exports as a percentage of national total exports— S THE Chinese government from less than 16 percent in the early Aintroduced market-oriented re- 1990s to more than 50 percent in the forms to again attract U.S. and other early 2000s. 4 The National Interest––Fall 2005 For more than two decades, China and communication technology (ICT). In- has been the most attractive FDI host deed, China’s trade in ICT goods (imports among all developing countries. China’s and exports) more than doubled from just accession to the World Trade Organiza- over 12 percent of total trade in 1996 to tion and selection to host the 2008 Olym- more than 27 percent in 2003. More than pics has accelerated investment initiatives.
Load more

Recommended publications
  • Trends in Southeast Asia
    ISSN 0219-3213 2017 no. 16 Trends in Southeast Asia THE POLITICAL ECONOMY OF CHINESE INVESTMENT IN CAMBODIA VANNARITH CHHEANG TRS16/17s ISBN 978-981-4786-79-9 30 Heng Mui Keng Terrace Singapore 119614 http://bookshop.iseas.edu.sg 9 7 8 9 8 1 4 7 8 6 7 9 9 Trends in Southeast Asia 17-J02872 01 Trends_2017-16.indd 1 24/10/17 11:54 AM The ISEAS – Yusof Ishak Institute (formerly Institute of Southeast Asian Studies) is an autonomous organization established in 1968. It is a regional centre dedicated to the study of socio-political, security, and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are grouped under Regional Economic Studies (RES), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). The Institute is also home to the ASEAN Studies Centre (ASC), the Nalanda-Sriwijaya Centre (NSC) and the Singapore APEC Study Centre. ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world. 17-J02872 01 Trends_2017-16.indd 2 24/10/17 11:54 AM 2017 no. 16 Trends in Southeast Asia THE POLITICAL ECONOMY OF CHINESE INVESTMENT IN CAMBODIA VANNARITH CHHEANG 17-J02872 01 Trends_2017-16.indd 3 24/10/17 11:54 AM Published by: ISEAS Publishing 30 Heng Mui Keng Terrace Singapore 119614 [email protected] http://bookshop.iseas.edu.sg © 2017 ISEAS – Yusof Ishak Institute, Singapore All rights reserved.
    [Show full text]
  • Globalising Chinese Business Firms: Where Are They Coming From, Where Are They Headed?
    Globalising Chinese Business Firms: Where are They Coming from, Where are They Headed? Yeung, Henry Wai-chung and Olds, Kris National University of Singapore Full reference below Yeung, Henry Wai-chung and Olds, Kris (2000), 'Globalizing Chinese business firms: where are they coming from, where are they heading?', in Henry Wai-chung Yeung and Kris Olds (eds.), The Globalisation of Chinese Business Firms, London: Macmillan, pp.1-28. Chinese-owned businesses in East Asia, the United States, Canada, and even farther afield are increasingly becoming part of what I call the Chinese commonwealth (Kao, 1993: 24; original italics). In his widely-read Harvard Business Review article, Professor John Kao (1993) concluded that Chinese business and its "worldwide web" will become a major force in the global economy in the next millennium. Similarly, Joel Kotkin argued in Tribes: How Race, Religion and Identity Determine Success in the New Global Economy that by the early twenty-first century, "the Chinese global tribe likely will rank with the British-Americans and the Japanese as a driving force in transnational commerce" (Kotkin, 1992: 9). Despite the 1997/1998 Asian economic crisis, it appears that current thinking in global business reveals a serious reappraisal of the economic potential of Chinese business and its associated organisations and institutions. The Weberian thesis on the inherent limits to the growth of Chinese business and societies has been subject to fundamental challenges by recent studies (e.g. Hamilton, 1996a; Whyte, 1996; Olds and Yeung, 1999). Scholars of Chinese business begin to recognise the economic success of the "overseas Chinese"1 and their business firms in 1 The term "overseas Chinese" may be contentious to some scholars of ethnic Chinese who are living outside mainland China.
    [Show full text]
  • A New Force in the Global Marketplace
    Washington University in St. Louis Washington University Open Scholarship Weidenbaum Center on the Economy, Murray Weidenbaum Publications Government, and Public Policy Policy Brief 185 9-1-1997 China: A New Force in the Global Marketplace Murray L. Weidenbaum Washington University in St Louis Follow this and additional works at: https://openscholarship.wustl.edu/mlw_papers Part of the Economics Commons, and the Public Policy Commons Recommended Citation Weidenbaum, Murray L., "China: A New Force in the Global Marketplace", Policy Brief 185, 1997, doi:10.7936/K7HH6H7P. Murray Weidenbaum Publications, https://openscholarship.wustl.edu/mlw_papers/148. Weidenbaum Center on the Economy, Government, and Public Policy — Washington University in St. Louis Campus Box 1027, St. Louis, MO 63130. China: A New Force in the Global Marketplace Murray Weidenbaum Policy Brief 185 September 1997 Contact: Robert Batterson Communications Director (314) 935-5676 Washington Universi1y Campus Box 1208 One Brookings Drive St. Louis, Missouri 63130-4899 China: A New Force in the Global Marketplace by Murray Weidenbaum This is a time of fundamental change in the global marketplace. It's like the middle of the 19th century when European nations dominated the world economy - and then the United States elbowed its way into the club of industrialized nations. Again, in the middle of the 20th century, when Western nations dominated the world economy, Japan elbowed its way into the club. In both cases, the world economy continued to grow, if not to accelerate, although the monopoly of the "club" was broken. In absolute terms, each nation experienced growth in its production and exports, although their relative shares of the world market declined.
    [Show full text]
  • Beyond the Bamboo Network
    Beyond the Bamboo Network Beyond the Bamboo Network The Internationalization Process of Thai Family Business Groups Maetinee Hemrit Dissertation for the Degree of Doctor of Philosophy, Ph.D. Stockholm School of Economics 2011 Keywords: Internationalization, Emerging Multinationals Business Groups, Family Business Groups, Weak Institutions, Developing Countries, Emerging Economies Thailand, Ethnic Chinese, Overseas Chinese, East Asian Capitalism Beyond the Bamboo Network: The Internationalization Process of Thai Family Business Groups © SSE and the author, 2010 ISBN 978-91-7258-843-1 Cover by: © Suchart Wongthong, 2010 Printed in Sweden by: Intellecta Infolog, Göteborg 2010 Distributed by: The Research Secretariat Stockholm School of Economics Box 6501, SE-113 83 Stockholm, Sweden www.hhs.se iv To my parents Preface This volume is submitted as a doctor’s thesis at the Stockholm School of Economics. The author has been entirely free to conduct and present her research in her own ways as an expression of her own ideas. The research presented in the thesis was initiated at the late Institute of International Business (IIB) and concluded within the Department of Marketing and Strategy at the Stockholm School of Economics. The research has been generously funded by IIB and the European Institute of Japanese Studies. Several firms cooperated through their managers in the preparation of the thesis as detailed in the same. All this generous support and assistance is gratefully acknowledged by the Stockholm School of Economics. Stockholm, March 6, 2011 Richard Wahlund Professor Head of the Department of Marketing and Strategy Stockholm School of Economics Acknowledgements Life is a journey. Sometimes you can plan; often, you can’t – it is a matter of destiny.
    [Show full text]
  • Corporate Governance of Family Businesses in Asia I
    Corporate Governance of Family Businesses in Asia What’s Right and What’s Wrong? Haider A. Khan* I. Introduction The Asian financial crisis, which can be characterized as a capital account crisis with the twin features of a financial crisis, i.e., currency crisis (international) and banking crisis (domestic) (see Yoshitomi and Ohno, 1999), has highlighted the weaknesses of the domestic banking system and hence underlying corporate governance. In Asia, banks are the dominant source of external finance so that they are naturally expected to have effectively monitored firms as borrowers during the “Asian Miracle” period. However, in retrospect, banks appear to have failed to do so. There are several reasons for the weakness of the banking system in Asia. As a recent World Bank (1998) document puts it: The East Asian crisis has underlined the importance of the rules, norms, and organizations that govern corporate behavior and define accountability to investors. East Asian corporate finance markets typically are dominated by banks. Because securities markets require a more sophisticated institutional and regulatory framework, bank dominance of corporate finance is probably the best way for developing countries to grow, provided they are not subject to undue state influence, are exposed to competition, and are prudently regulated. [italics added] (World Bank, 1998, p. 56) However, a more crucial question is what exactly determines whether banks are in a position to monitor borrowers in Asia. In the first place, this depends very much on the “location” of banks in the overall industrial and financial organizational structure in an economy. If banks are under the strong influence of large family businesses, they may not be in a good position to monitor such influential large family business conglomerates.
    [Show full text]
  • Printmgr File
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 20-F REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number: 1-14696 China Mobile Limited (Exact Name of Registrant as Specified in Its Charter) N/A (Translation of Registrant’s Name into English) Hong Kong, China (Jurisdiction of Incorporation or Organization) 60th Floor, The Center 99 Queen’s Road Central Hong Kong, China (Address of Principal Executive Offices) Grace Wong Company Secretary China Mobile Limited 60th Floor, The Center 99 Queen’s Road Central Hong Kong, China WorldReginfo - 6b632014-4fc2-4a43-a7bd-383ded3973c1 Telephone: (852) 3121-8888 Fax: (852) 2511-9092 (Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Ordinary shares, par value HK$0.10 per share New York Stock Exchange* * Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares representing the ordinary shares. Securities registered or to be registered pursuant to Section 12(g) of the Act: None (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None (Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
    [Show full text]
  • Here 183 4 - Iron to Rust 219
    Contents Editorial 5 At the Edge of the Empire Red Dust 21 The Capitalist Transition in China Introduction - Hermitage 22 1 - Pacific Rim 41 2 - Borders 89 3 - Sinosphere 183 4 - Iron to Rust 219 A State Adequate to the Task 283 Conversations with Lao Xie Picking Quarrels 361 Lu Yuyu, Li Tingyu and the Changing Cadence of Class Conflict in China The Awakening of Lin Xiaocao 425 A Personal Account of the 2010 Strike at Nanhai Honda Spirit Breaking 485 Capitalism and Terror in Northwest China by Adam Hunerven Eternal Enemies 525 The 20th Century Origins of Vietnamese Sinophobia by J. Frank Parnell At the Edge of the Empire Editorial At the Edge of the Empire The Palace that Splits the Sky Thick, slate-colored smog presses through a towering maze of identical apartment blocks, a half-living ocean ebbing below: people hunched over carts and scooters, faces covered by dingy surgical masks, often little more than silhouettes backlit by the haze-dulled throb of glowing ads broadcast on wall-size screens. The smog is like a skin of concrete melded through the image, broken here and there by masked faces or the fleeting 5 Frontiers blue glitter of cellphones held aloft like fragile torches. This picture—or something equally gargantuan and brutal—is the spectral shape that China today takes in the public imagination. It’s familiar because it emerges almost automatically upon mention, in the same way that the mist-wrapped karstic cliffs and tranquil waterways of shanshui painting might have arisen in the minds of previous generations.
    [Show full text]
  • Printmgr File
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 20-F REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number: 1-14696 China Mobile Limited (Exact Name of Registrant as Specified in Its Charter) N/A (Translation of Registrant’s Name into English) Hong Kong, China (Jurisdiction of Incorporation or Organization) 60th Floor, The Center 99 Queen’s Road Central Hong Kong, China (Address of Principal Executive Offices) Grace Wong Company Secretary China Mobile Limited 60th Floor, The Center 99 Queen’s Road Central Hong Kong, China Telephone: (852) 3121-8888 Fax: (852) 2511-9092 (Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Ordinary shares, par value HK$0.10 per share New York Stock Exchange* * Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares representing the ordinary shares. Securities registered or to be registered pursuant to Section 12(g) of the Act: None (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None (Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
    [Show full text]
  • Coming of Age Multinational Companies in China
    Monitor Group and In co-operation with Alcatel, Bates Asia, Bayer, Citigroup, DHL, KPMG An Economist Intelligence Unit white paper With additional support from Fuji Xerox, Hitachi Data Systems, Norton Rose, Primasia, Russell Reynolds Associates, Sheraton Hong Kong, Timken Coming of age Multinational companies in China June 2004 Coming o Multinational companies in China f age LONDON 15 Regent Street London SW1Y 4LR United Kingdom Tel: (44.20) 7830 1000 Fax: (44.20) 7499 9767 E-mail: [email protected] NEW YORK 111 West 57th Street New York NY 10019 United States Tel: (1.212) 554 0600 Fax: (1.212) 586 1181/2 E-mail: [email protected] HONG KONG 6001 Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: [email protected] Coming of age Multinational companies in China Contents 2 Acknowledgements 3 Preface 4 Executive summary 6 Introduction PART 1 10 A new environment 26 Addressing the market 42 Persistent headaches PART 2 54 Automobiles 66 Financial and professional services 80 Logistics 88 Pharmaceuticals 98 Retailing and consumer goods 110 Telecommunications 122 Appendix: Survey results © The Economist Intelligence Unit 1 Coming of age Multinational companies in China Acknowledgements Many hands and minds came together to create this © 2004 Economist Intelligence Unit. report. The Economist Intelligence Unit would like to All rights reserved. make special mention of the lead sponsors—Citigroup, All information in this report is verified to the best of the authors' and the publisher's DHL, KPMG and Monitor Group—and in particular those ability. However, the Economist who took time to give us valuable input: Tony May, Wu Xin Intelligence Unit does not accept and John Diener at Monitor Group; Paul Kennedy, Anson responsibility for any loss arising from Bailey and Andrew Weir at KPMG; Gary Clinton at Citi- reliance on it.
    [Show full text]
  • The Prevalence of Networking Or Guanxi in Asian [Family] Business1
    The prevalence of networking or guanxi in Asian [family] business1 Peter Verhezen2 Vlerick Leuven Gent Management School, Leuven & Gent Campus, Belgium Harvard Kennedy School, Ash Institute for Governance & Innovation, Cambridge MA, USA Department of Management & Marketing, University of Melbourne Parkville Campus, Victoria, Australia Verhezen & Associates Ltd Sampoerna Square, Jakarta, Indonesia/Singapore Abstract This conceptual paper examines the ethical dimension of using gifts to establish social networks, applying the concept of ‘guanxi’ or social capital in Indonesia - a practice which may lead to personal and/or corporate gain. Guanxi refers to a network of personal and social relations. Guanxi is characterized by specific ethical and instrumental dimensions that embedded in social and moral norms and originally founded on a traditional Confucian philosophy. Social contextuality seems to be more relevant for its ethical acceptability than a precise moral individual threshold. To what extent can possible gain or profit from guanxi be considered as 'ethical'? The answer lies in understanding the fine line between socially appropriate and a-social networks. Social networks such as guanxi could transgress as they take the form of nepotism wherein emotional and moral obligations in interpersonal relations are ignored in favor of pure instrumental [calculating] exploitation of networks for personal gain. When the cultural ritual of guanxi degenerates into a rent-seeking guanxi, an appropriate network loses its ethical edge as it turns
    [Show full text]
  • Business Group Affiliation, Performance, Context, and Strategy: a Meta-Analysis
    BUSINESS GROUP AFFILIATION, PERFORMANCE, CONTEXT, AND STRATEGY: A META-ANALYSIS* Final version: http://amj.aom.org/content/54/3/437.short Michael Carney John Molson School of Business Concordia University [email protected] Eric R. Gedajlovic Faculty of Business Administration Simon Fraser University [email protected] Pursey P. M. A. R. Heugens Rotterdam School of Management Erasmus University [email protected] Marc van Essen Utrecht School of Economics Utrecht University [email protected] J. (Hans) van Oosterhout Rotterdam School of Management Erasmus University [email protected] * We thank AMJ Associate Editor Gerry Sanders and three anonymous reviewers for their guidance and support. Tammo Bijmolt, Chris Doucouliagos, and Inge Geyskens provided useful suggestions for dealing with publication outlet quality variability and sample overlap issues. Nico Dewaelheyns, Sandra Dow, Niels Hermes, Woochan Kim, Robert Lensink, Ronny Manos, Claudio Piga, and Michael Sullivan sent us additional primary studies. Any remaining mistakes are our own. BUSINESS GROUP AFFILIATION, PERFORMANCE, CONTEXT, AND STRATEGY: A META-ANALYSIS Abstract Research on business groups – legally independent firms tied together in a variety of formal and informal ways – is accelerating. Through meta-analytical techniques employed on a database of 141 studies covering 28 different countries, we synthesize this research and extend it by testing several new hypotheses. We find that affiliation diminishes firm performance in general, but also that affiliates are comparatively better off in contexts with underdeveloped financial and labor market institutions. We also trace the affiliation discount to specific strategic actions taken at the firm and group levels. Overall, our results indicate that affiliate performance reflects complex processes and motivations.
    [Show full text]
  • Cesifo Working Paper No. 2537 Category 5: Fiscal Policy, Macroeconomics and Growth February 2009
    Chinese Experience with Global 3G Standard-Setting JOHN WHALLEY WEIMIN ZHOU XIAOPENG AN CESIFO WORKING PAPER NO. 2537 CATEGORY 5: FISCAL POLICY, MACROECONOMICS AND GROWTH FEBRUARY 2009 An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: www.CESifo-group.org/wpT T CESifo Working Paper No. 2537 Chinese Experience with Global 3G Standard-Setting Abstract China’s growth strategy as set out in the 11th 5-year plan in 2005 called for upgrading of product quality, the development of an innovation society, and reduced reliance on foreign intellectual property with high license fees. Consistent with this policy, China has been involved in recent years with the development of a Chinese standard in third generation (3G) mobile phone technology, both in negotiating the standard and seeing it through to commercialization. This is the first case of a developing country both originating and successfully negotiating a telecommunications standard and this experience raises issues for China’s future development strategy based on product and process upgrading in manufacturing. We argue that while precedent setting from an international negotiating point of view, the experience has thus far is unproven commercially. But the lessons learned will benefit future related efforts in follow-on technologies if similar Chinese efforts are made. This paper documents Chinese standard-setting efforts from proposal submission to ITU to the current large-scale trial network deployment in China and overseas trial networks deployment. We discuss the underlying objectives for this initiative, evaluate its effectiveness, and assess its broader implications for Chinese development policy.
    [Show full text]