China and the Global Business Revolution (review)

After a dozen volumes on business and the economy in China, Peter Nolan, Sinyi Professor of Chinese Management at the Judge Institute of Management Studies, Cambridge University, has produced another weighty study on China. The very existence of the chair in Chinese Management reflects the vision of this institution and the expertise of the chair's occupant. The present study evidently benefited from the author's cumulative knowledge and well-placed Chinese collaborators. Although the title of the study is China and the Global Business Revolution, the focus is actually on a number of case studies of large enterprises in China and the policies of the Chinese government concerning these enterprises in the context of changing world business paradigms and practices. Thus, the title is probably more a reflection of the marketing concerns of the publisher than an accurate description of the book's contents.

The bulk of the study is devoted to example cases of enterprises in the areas of aerospace, pharmaceuticals, power equipment, oil and petrochemicals, autos and auto components, steel, and coal. The degree of detail found in these example cases is uneven, apparently reflecting the difficulty in obtaining pertinent and accurate information from the target organizations. Although the author has used very good Chinese researchers and has excellent Chinese connections with senior government officials, there is little disclosure of the precise methodology used in the fieldwork. For instance, it is revealed that the author and his collaborators "lived in Shougang's 'hotel' for seven days" (p. xxi) while conducting interviews. However, no information is given about the kind of businesses in which the people interviewed were involved, whether the questions asked were predetermined or open, and, in particular, what kind of internal documents were made available to the researchers. Judging from my own research experience, it is likely that the interviews were mostly with senior-level employees and that contact with lower-level workers was, at best, occasional, probably occurring when the interviewers were taken on guided plant tours. Sometimes, certain internal documents are passed on informally to "friends," but the question of access to company books is rarely brought up since this could have raised legal questions about the passing of "state secrets" to foreigners.

There have, indeed, been a number of embarrassing situations involving foreign researchers whose zeal for exploring gold mines of information has put them in compromising positions concerning Chinese law, which may or may not be strictly enforced. The fact that "state secrets" are actually voluntarily offered does not absolve either the foreigner or the Chinese collaborator from possible legal entanglements. The author's silence on such an issue may, therefore, be prudent, but it nevertheless raises the question of adequacy of information. The limitations of the case studies are somewhat compensated for by a general survey of industry in China and the rest of the world, about which information is more readily available.

The seven case studies are accompanied by a survey of China's financial-services industry by Wu Qing, of the Judge Institute. This chapter does not rely on specific case or field studies.

The enterprise and industry case studies are preceded by three introductory chapters on, respectively, large firms and economic development, the challenges of the global business revolution, and policies to build national champions—China's "national team" of enterprise groups. The third chapter is contributed by Dylan Sutherland, also of the Judge Institute. The study concludes with two chapters, one on the response to the challenges of the global business revolution and the other on the long-term outlook, especially in view of China's entry into the World Trade Organization (WTO).

The main theme of the volume is clearly stated in the first chapter: making the choice between the neoclassic view of atomistic firms in pure competition and the predominance of large and even larger firms. This "ideal type" dichotomy is based on theoretical constructs useful for classroom expositions, but it is also a heroic...