Business Organizations in China

Abstract

For two-and-a-half decades, China’s transition to a market economy has produced remarkable growth rates and fundamental changes in the organization of economic action.1 Though lacking the fundamental institutional shifts that have defined many transforming socialist economies around the world, China’s gradualist reforms have nevertheless been radical and deep (Naughton, 1995; Guthrie, 1999, 2003, 2005; Nolan, 2004). The emergence of business organizations in China has played a key role in the transformation of the Chinese economy. In order to understand the emergence of the capitalist business organizations in China today, we must first examine the varieties and types of organizations that have come to function like business organizations. Once we have identified the organizational forms that fall under the rubric of business organizations in China, it is also crucial to examine the forces that have brought about this process of change. This chapter will take up both agendas. In the Chinese context, it is far too simplistic to think of business organizations as only covering private enterprises in the economy; this sector, while important, comprises only one of the organizational types that are behaving like business organizations in China today. In this chapter, we focus our attention on four types of organizations that comprise the category mainland Chinese business organizations. State-owned enterprises (SOEs), township and village enterprises (TVEs), private enterprises and foreign-funded enterprises are all part of the group of Chinese organizations that behave, to varying degrees, like business organizations China. We also focus our attention on the institutional changes that have shaped business organizations in China today. Specifically, we look at (1) the evolution of government–enterprise relationships, (2) the impact of foreign direct investment (FDI), (3) the transformation of social relationships in China’s market economy, and (4) the emergence of business associations. Through each of these areas of change, we address the question of the forces that have shaped the emergence of Chinese business organizations.