Zhibin Gu: China's future: deadly corruption vs global financial crisis

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Get onground knowledge and analysis from business and investment guide book: China’s Global Reach

Borderless Business, National Competition, Politics, and Globalization (book excerpts)

by George Zhibin Gu

Afterword
China, United States and Global Development
by Andre Gunder Frank

Part IV
China’s Reform at Home: The Unfinished Task

SUMMARY

(1). Today, China’s fundamental problem remains with an unlimited bureaucratic power still in place. Despite all the changes, this basic issue has yet to resolved. The key difficulty behind it is that China has not had any real opportunities to change the old political structure from the very basics.

For ages, China’s government bodies are all self-appointed. In truth, this self-appointed government has been a self-sever who has had unlimited ways to squeeze on the society and people. The squeezing role was pushed to the very extreme in the Mao era. Even today, it remains very much unchanged.

Under the bureaucratic design, the entire society, economy, and people were made to serve the government. This was done partly through state monopoly of all economic sectors. In the Mao era, the government controlled and ran all banks, factories, mines, farms, and shops. Furthermore, this system was designed against free flows of humans, ideas, and goods. For example, people were banned to travel. However, this bureaucratic system immediately led to poverty and chaos.

The current reform aims to get out the old mess. Allowing private sector to exist is one most significant change. But political and institutional reforms have been extremely slow, which continue to create vast problems.

(2). Moreover, this bureaucratic framework has eliminated a well-defined ownership and modern legal system. As a result, banks and state companies are without true owners and true protectors. In addition, there is vast confusion as to the rights and wrongs in the marketplace. In particular, building professional standards and modern organizations is next to impossible.

(3). The very basic motive of Beijing to initiate the current reform is to gain more power, not less. Consequently, the government only does what benefits itself other than the nation. For example, true state sector reform demands a complete separation of bureaucracy from the business sphere, but this has not happened so far. Consequently, countless state companies are in distress now.

(4). In this era, China has gained a much more liberal environment. People’s power is on the rise. Still, it has happened more by accident than design. Most old restrictions remain in place. Worse still, corrupt officials constantly employ the unlimited state power for personal gain. They prey on people, especially the poor, all the time; and

(5). Despite all the changes, the supreme state power has yet to be truly challenged. Without dumping the unlimited bureaucratic power, there is no way to establish a modern society based on law. But under an increasingly open environment, all the key issues gain new light.

[...]

CONTENTS
Introduction
Three New Lessons
Growing Up in China
Going International
Returning Home
This Small Book
The Big Picture

Acknowledgments

Part I China as a New Global Theater

1. Ambitions of Foreign Multinationals in China
Today’s Versions of Columbus and Magellan
International Rush
Why Are They Here?
Why China?
One Big Factory-Market
More Sectors, More Players

2. The Business of China Is Business!
“Empty Talk Destroys Prosperity!”
Foreign Bankers
Spouses and Children
Welcome!

3. Creation of a Global Manufacturing Center
Unexpected Contributors
Arrival of Indian Companies
A Crowded Market
Galanz: the Manufacturer of the World
Convenient Settings
Future Trends

4. The Ultimate Driving Force: Explosive Consumption
Unexpected Development
Impressive Outcome
Continued Consumption Surge

5. Sharp Rise of Private Sector
One U.S. Banker’s Discovery
40 Million New Businesspeople
Rural and Urban Entrepreneurs
Buttons Create a New Industrial Town
Jinjiang, Fujian: Biggest Exporting Center for Sport Shoes
Low-End Players

6. All Players Are Important
Competing International Players
Auto Market
International Banks
International Listings
Consumer Views

Part II Global Interactions, Business Dealings, and Job Transfers

7. Learning - A Big Industry
Demand for Education
A Top School
International Involvement

8. The Officials’ Global Reach
Officials Lead the Way
Guangdong versus Inland
Abolishing Bureaucratic Tricks
International First
New York versus Beijing

9. “Capital Is Not Enough”
No Shortcuts
Two Lessons to Remember
Volkswagen versus Beijing Jeep
“Capital Is Not Enough”
Ericsson’s Seven Mistakes
Bashing Carrefour

10. Global Job Transfers
One International Question
Hiring by Foreign Multinationals
New Era of Global Job Transfers
Job Worries around the World
Hiring by Chinese Players
Global Job Transfers: China versus India

Part III China’s New International Experiences

11. Price, Price, Price
A Chinese Edge
GE in China
Japan’s Global Efforts
Cisco versus Huawei
Microsoft in China
Global Price Reductions

12. When Can Chinese Companies Become Global?
Weakness at Home
Foreign Observations
Low Benefits for China
State Banks: “The Troublemakers”
A Long Way to Go

13. Chinese Multinationals
Some Sizable Chinese Companies
Buying Into International Markets
Overseas Operations
Creating More Partnerships

14. Bringing Foreigners In
Trade Fairs
Industrial Parks
Foreign Acquisitions

Part IV China’s Reform at Home: The Unfinished Task

15. Problems Outpacing Solutions
The Ownership Issue
State Assets and Death on the Nile
“Two Pockets of the Same Jacket”
Lack of Weapons and True Owners

16. How Can a Man Still Wear Baby Clothes?
Credit Crisis and Banking Problems
The Richest Man in Shanghai
Corruptive Partnerships

17. Crises of State Sector
Rapid Changes in the Managerial Class
Hiring Foreign Managers
Long Live Competition!
Reform Difficulties
Painful Layoffs
Government Trimming

18. When Can China Achieve Meaningful Restructuring?
A Saturated Market
Difficulties for a Rational Order
The CEO in China and Elsewhere
Who Is Responsible for Wealth Creation?
Buying Parties Ready?
Need for Greater Determination

19. Employment Traps
Resident Permits
Lives of the Migrants
Employment Difficulties for Other Groups
Death of a College Graduate

20. Bureaucratic Tails
Tails Everywhere
Lucky International Players
“The Red Building”

Part V Globalization in Light of History

21. An Unbroken Circle?
The British Isles as a Global Center
China’s Missed Opportunities
The U.S. Way: Dumping Losers
Expansion and Wealth Creation, Past and Present

22. Universal Companies and Global Expansion
Bigger and Bigger Multinationals
First Strategy: A Strong Home Base
Second Strategy: Creating a New Form of Dominance
Third Strategy: A True Global Reach
China’s Participation in the World Economy

23. More on the Circle
Who Has Affected Globalization the Most?
First Factor: Japan’s Global Reach and Retreat
What Is Going On in Tokyo?
South Korea: Glories and Bubbles
Second Factor: Asia’s Financial Crisis
Third Factor: The World Trade Organization
Unexpected Developments
Global Development Orbit

24. How Does China Achieve Sustained Growth?
A Great Paradox
Effective Government, Different Role
The Big Picture
A New Model
Getting Out of the Box
A New World Order

Afterword: China, United States and Global Development
by Andre Gunder Frank

Notes

ABOUT THE AUTHOR

George Zhibin Gu is a journalist/consultant based in Guangdong, China. A native of Xian, he obtained education at Nanjing University in China and Vanderbilt University and the University of Michigan in the United States. He holds two MS degrees and a Ph.D. from the University of Michigan.

For the past two decades, he has been an investment banker and business consultant with a focus on China. His work focuses on helping international businesses to invest in China and the Chinese companies to expand overseas. He has worked for Prudential Securities, Lazard, and State Street Bank, among others. He generally covers mergers and acquisitions, joint ventures, venture capital, business expansion, and restructuring.

Also, he is a journalist focusing on China in relation to global development. His articles or columns have appeared in Asia Times, Beijing Review, The Seoul Times, Financial Sense, Gurus Online, Money Week, Online Opinion, Asia Venture Capital Journal, and Sinomania, among others.

He is the author of three additional books, China Beyond Deng: Reforms in the PRC (McFarland, 1991),

China and New World Order: How Entrepreneurship, Globalization, and Borderless Business Reshape China and World (Fultus, 2006), and Made in China: Players and Challengers in the 21st Century (English edition forthcoming; Portuguese edition, Centro Atlantico, 2005). He is a member of World Association of International Studies hosted by Stanford University.