1. Chinese Management (1, 2)
Corporate Strategy

2. CHINA
The Chinese business system has been evolving since the initiation of the economic reforms by Deng Xiaoping in 1978
The urban industrial sector, under the command economy, was dominated by state enterprises, and funded by the central government
Greater autonomy has been granted to state enterprise managers as an incentive for improving performance. Still, it is private enterprise that has shown the most improvement, and now accounts for the majority of industrial output in China
The government policy since the 1990s has been to create conglomerates or multinationals from major state enterprises
The changing nature of the business systems is evident in the evolving nature of corporate governance, which is a hybrid of Western and Chinese values and norms

4. State-Owned Enterprises (SOEs)
Article 7: State Economy
The State-owned economy, that is, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy.

5. State-Owned Enterprises (SOEs)
Lack of FREEDOM/Access to
Retain Profits
Diversified Market Outlets
Corporate governance (State is the only shareholder and management)
Market Mechanism
Selections of Customers and Suppliers
Recruitment

6. Reform of SOEs Industrial reform: Accountability:
Organizational efficiency and effectiveness  competitiveness
Accountability:
Make state enterprises directors and managers more accountable, and more domestically and globally competitive
Encouragement of Foreign Trade and Investment

7. Source: Fortune, July 22, 2015.

8. Private Economy Article 11: Private Economy
Individual, private and other non-public economies that exist within the limits prescribed by law are major components of the socialist market economy.

9. Overview of China’s Market Economy (since 1978)
Deng Xiaoping
In 2011 China’s economy grew by 9.2% compared with 10.4% in 2010.
2nd largest economy in the world
Foreign trade grew by 22.5% in 2011, including a rise in exports of 20.3%
Industrial management reform is taking place (state industrial sector, private enterprise and FDI ventures lead to the reform of corporate governance)
Rapid economic growth has incurred costs: environmental degradation and social inequality

10. Property Rights, Corporate Governance
The enactment of company law in 1997 to create a modern enterprise system
Automobiles, electronics, pharmaceuticals and steel are allowed to privatize, but the state remains a major institutional shareholder
Towards true privatization (joint stock companies)
Budgetary allocation, bank lending, and shareholder equity
The creation of property rights, incentives for investment, monitoring of management, attention paid to ensure optimal use of resources
New system of corporate governance by Jiang Zemin in 1997
Managerial cadre responsible for a board of directors and shareholders
Legal infrastructure for the clear delineation of property rights
The inauguration of market socialism by Deng Xiaoping in 1992
The maintenance of political monopoly by the CCP
A move towards privatization

12. China’s Socialist Market Economy (Caveats)
Social Inequality
Labor registration
Wage increase
Labor Shortage
Technical manpower
Skilled management
High tech, Scientific Management
State initiative in corporate governance
Technological infusion through FDI
Environmental Degradation

13. A Case in Point in History: China and Overseas Chinese

17. Invisible or Under-Visible Corporate Names owned by Overseas Chinese

18. Building Blocks of Chinese Firms’ Competitive Advantage
1. Building Competitive Advantage
at Home (“Tough Institutional Environment”)
2. Niche Marketing
in Developed Markets
2. Cash-Rich Position
3. Acquisition or Partnership Strategy in DC Markets
Technology
Distribution
Channel
Source: Kotabe, Masaaki and Tanvi Kothari, “Emerging Market Multinational Companies’ Evolutionary Paths to Building a Competitive Advantage from Emerging Markets to Developed Countries," Journal of World Business, 51 (September), 2016,

19. Three “Generic” Strategies for EMCs
Cost Leadership for Industrialized Country Markets (e.g., the U.S.)
Differentiation for Emerging Markets
Become Long-Term Suppliers for Established Multinationals as 2/3 of International Trade is Already Either Intra-Firm or on a Long-Term Contract
Sources: Aulakh, Preet S., Masaaki Kotabe, and Hildy Teegen, “Export Strategies and Performance of Firms from Emerging Economies: Evidence from Latin America,” Academy of Management Journal, 43 (3), 2000, ; and Kotabe, Masaaki and Carlos Arruda de Oliveira, “Supplying Multinational Organizations: Opportunities and Recommendations for Developing Country Enterprises,” Executive Forum on National Export Strategies, UNCTAD, International Trade Center, 1999.

20. Lessons Learned from EMCs
“Innovations” (a.k.a., “good ideas”) from tough emerging market environments have a “niche” market in developed countries.
Money can buy me love (The Beatles was wrong on that).
Consciously trading up on the value chain
Important role of invisible / under-visible overseas Chinese tycoons for business across Southeast Asia

21. Let’s Take A Break!