The Impact of Chinese Entrepreneur's Social Networks on the Development of Private Enterprises in China

Abstract

The Entrepreneur’s social network in China is the reflection of the deep-seated cultural and social background, which exerts both positive and negative effect on the development of the Chinese private enterprises. However, when the Chinese enterprises are further involved in the economic trend of the world, the negative effect will become the impediment of the development of the enterprises. As a result, establishing and improving a rational modern management regulation will play a critical role in promoting the growth of the enterprises. Keywords-Entrepreneur’s Social Network; Private Enterprise; Entrepreneur; Relationship; Management System I. RESEARCH BACKGROUND Since the 1990s, China has started its period of economic restructuring. The market environment became open and free. Numerous private enterprises sprung up in this period of time in China. At the same time, a number of outstanding private entrepreneurs appeared. However, due to political and other social issues, these new-started private enterprises had to compete with state-owned enterprises and foreign-funded enterprises for resources. This difficult situation blocked the development of private enterprises from the very beginning. Ultimately, the social network of entrepreneurs became an important way for them to access to resources. Private entrepreneurs gained development resources from their social network so as to create a better environment for their enterprises and to get a stronger position in the market. It was proved that the entrepreneur’s social network is an effective way to allocate resources in the specific social structure and traditional culture in China during that period of time. Like the cases of Mr. Zhang Ruimin of Haier and Mr. Li Dongsheng of TCL, for a successful private entrepreneur, in addition to the outstanding business talent, a strong social network, which can help them to get more resources, is greatly needed. However, while the market is growing mature today, the market system is improving as well in China. Due to the characteristics of Chinese entrepreneurs’ social network, it is becoming a negative impact on the development of enterprises now instead of a positive one in the past. The reliance on the entrepreneurs’ social network becomes the shackle of the further development of private enterprises. Moreover, it greatly reduces the competitive advantages of private enterprises in the international market, and hinders the process of internationalization of the private enterprises. Therefore, by analyzing the characteristics, background, and the role of both positive and negative aspects of Chinese entrepreneurs’ social network, this study will propose a developmental trend for Chinese entrepreneurs’ social network in the future. II. THE CHARACTERISTICS OF CHINESE ENTREPRENEUR’S