Chandos Asian Studies Series. Oxford: Chandos Publishing, 2014. xliv, 323 pp. (Tables, figures.) US$141.00, cloth. ISBN 978-1-84334-768-2.
As the second-largest economy in the world, China is playing an increasingly important role in the world economy. China’s latest initiative, namely, the “one belt, one road” (or the Silk Road) initiative points to China’s enhanced economic role and increasing national self-confidence. The editor is right in arguing that “[n]o region of the world is unaffected by the nature and volume of China’s trade and investment” (preface). An understanding of the globalization of Chinese business is thus a must for all who are interested in this rapidly developing and changing country. The editor of this volume made great efforts in bringing together a dozen or so scholars and examining key aspects of globalizing Chinese business.
It is worth noting that the globalization of Chinese business has been an interactive process between Chinese and foreign firms. In the early stages of the opening up in the 1980s and 1990s, China opened its market to foreign investors since the country was then suffering from a serious shortage of capital. After more than three decades of opening up, China today has successfully transformed itself into a capital surplus economy. This is the rationale behind the globalization of Chinese business today. Furthermore, foreign investors have been an integral and important part of the globalization of Chinese business. The stage of the interaction between Chinese capital and foreign capital is now expanding to the international front.
How the interaction between the two plays out depends on many factors. Among others, the development of Chinese businesses matters a lot. China’s economic reform is still an ongoing process and there are many serious obstacles to sustaining the high growth rates of the past. After the current leadership of Xi Jinping came to power in 2012–2013, China has initiated a new set of economic policies. As President Xi emphasized, China has entered a stage of “new normal.” This concept refers to a situation where China’s high economic growth is over and the country has come to an age of middle growth. This new set of policies is apparently aimed at responding to the ongoing transformation of the Chinese economy. No doubt, such a transformation has presented both challenges and opportunities for foreign multinational investors.
The book focuses on the operation of multinational investors in their interaction with Chinese firms. It consists of 13 chapters, and is divided into two parts. Part 1 focuses on the internal operations of Chinese firms and examines key aspects of the Chinese firms, including the evolution of Chinese management, China’s R&D and innovation strategy, endogenous and exogenous dynamics in China’s cluster economy, state-owned versus private enterprises, the influence of family control on business performance and financial structure, and internationalization strategies of medium-sized multinational firms. It is clear that Chinese firms have learned and matured from their interactions with foreign firms. The transfer of human resources management practices in French multinational companies experiences in China is a good example.
Part 2 focuses on China’s economic changes by sectors, including the services sector, the financial services sector, the Shanghai stock market, and the health-care system. It also examines changing household saving patterns, the growing consumer culture, country-of-origin effects on Chinese consumption of branded foreign products, advertising in the luxury sector, and competition among Asian growing markets. As in part 1, the authors also explore the evolution of these key industrial sectors and their interaction with foreign firms.
All the authors made a great effort to combine economic and business analyses, and to integrate micro and macro perspectives. They together provide an overall picture of the development of China’s economic reform and opening up in different stages and its impact on Chinese business and interactions with foreign firms. The reader will find this book more interesting and helpful in understanding China than other books which focus either on micro-level factors or macro-level factors.
There are also many detailed case studies. The authors were able to dig up deep-rooted problems when they looked into the operation of Chinese firms. Many of the insights they provide are very useful in guiding foreign investors in different sectors and from different perspectives.
All the chapters were written by scholars from different fields and in a very academic way. Many readers will find the book a bit too academic. It could have been written using simpler language and would thus have been more accessible. Overall, the book is very helpful in understanding key aspects of the Chinese economy and the operation of its firms, particularly their interaction with foreign firms.
Yongnian Zheng
National University of Singapore, Singapore
pp. 622-623