China's Industrial Policies and the Global Business Revolution The Case of the Domestic Appliance Industry (Routledgecurzon Studies on the Chinese Economy)

209 Pages·2005·1.45 MB·English

by  Ling Liu

China’s Industrial Policies and
the Global Business Revolution
As China has blended market reforms with comprehensive industrial
policies which have their origin in the command economy, most research
has focused on the national government’s strategies for economic growth.
However, one of the unique characteristics of industrial policy in China is
that it involves government intervention on all levels, from the centralgovern-
ment all the way down to village leaders.
China’s Industrial Policies and the Global Business Revolution looks in
particular at the domestic appliance industry, and China’s three major
business groups in this area – Haier, Hisense and Aucma. The Haier Group
in particular is one of the most successful and competitive enterprises inChina
and is very well placed to compete globally as the Chinese economybecomes
more integrated with the world trading system. This volume shows how
industrial policy is formulated at the national level and implemented at the
local level, and examines how local government frequently intervenes in
local enterprises’ business strategy and management.
Of urgent practical importance, this book provides academics,
businesspeople and policymakers with valuable insights into the develop-
ment process and a concrete understanding of the challenges faced in the
global business revolution by one of the world’s most dynamic economies.
Ling Liu received her PhD at the Judge Institute of Management at Cam-
bridge University, and her Master’s in International Management at the
University of Reading. Her research interests include globalisation, big busi-
ness, public policy and development strategy in China, regional economic
integration, strategic international business and emerging markets.
Routledge Studies on the Chinese Economy
Series Editor
Peter Nolan, University of Cambridge
Founding Series Editors
Peter Nolan, University of Cambridge
Dong Fureng, Beijing University
The aim of this series is to publish original, high-quality, research-levelwork
by both new and established scholars in the West and the East, on allaspects
of the Chinese economy, including studies of business and economic history.
1 The Growth of Market Relations in 9 Corporate Governance in China
Post-reform Rural China Jian Chen
A micro-analysis of peasants,
migrants and peasant entrepreneurs 10 The Theory of the Firm and
Hiroshi Sato Chinese Enterprise Reform
The case of China International
2 The Chinese Coal Industry
Trust and Investment Corporation
An economic history
Qin Xiao
Elspeth Thomson
11 Globalisation, Transition and
3 Sustaining China’s Economic Growth
Development in China
in the Twenty-First Century
The case of the coal industry
Edited by Shujie Yao and
Huaichuan Rui
Xiaming Liu
4 China’s Poor Regions 12 China Along the Yellow River
Rural–urban migration, poverty, Reflections on rural society
economic reform and urbanisation Cao Jingqing, translated by Nicky
Mei Zhang Harman and Huang Ruhua
5 China’s Large Enterprises and the 13 Economic Growth, Income
Challenge of Late Industrialization Distribution and Poverty Reduction
Dylan Sutherland in Contemporary China
Shujie Yao
6 China’s Economic Growth
Yanrui Wu
14 China’s Economic Relations with
7 The Employment Impact of China’s the West and Japan, 1949–79
World Trade Organisation Accession Grain, trade and diplomacy
A. S. Bhalla and S. Qiu Chad J. Mitcham
8 Catch-Up and Competitiveness in 15 China’s Industrial Policies and
China the Global Business Revolution
The case of large firms in the oil The case of the domestic appliance
industry industry
Jin Zhang Ling Liu
China’s Industrial Policies
and the Global Business
Revolution
The case of the domestic
appliance industry
Ling Liu
First published 2005
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY10016
Routledge is an imprint of the Taylor & Francis Group
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
© 2005 Ling Liu
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic, mechanical,
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
British Library Cataloguing the Publication Data
A catalogue record for this book is available
from the British Library
Library of Congress Cataloging in Publication Data
A catalog record for this book has been requested
ISBN 0-203-00199-0 Master e-book ISBN
ISBN 0–415–35560–5 (hbk)
For my parents, Guihua Chen and Jiansheng Liu

Contents
List of figures ix
List of tables x
Preface xii
Acknowledgements xvi
Abbreviations xvii
1 Industrial policies and globalisation in theoretical and
historical perspective 1
Introduction 1
Debates on government intervention 1
Debates on globalisation 16
Conclusion 20
2 Industrial policies in China 22
Introduction 22
Review of strategic changes in China’s industrial policies 22
Industrial policies in the domestic appliance industry 33
Local industrial policies: the case of Shandong Province
and Qingdao City 47
Conclusion 56
3 The domestic appliance industry 58
Introduction 58
Overview of the global domestic appliance industry 58
Overview of China’s domestic appliance industry 77
Conclusion 88
viii Contents
4 The Haier Group 90
Introduction 90
The background of the company 90
Expansion towards a diversified conglomerate structure 92
The Haier Group’s business structure 102
Discussion of the growth of the Haier Group 108
Discussion of the challenges facing Haier 115
Conclusion 125
5 The Hisense Group 127
Introduction 127
Background and history 127
Diversification: a journey of exploration to 3C 134
The model of a ‘neo-state-owned enterprise’ 138
New challenges after China’s entry to the WTO 142
The prospects 145
6 The Aucma Group 147
Background and history 147
Growth through diversification 150
Discussion of the challenges facing Aucma 153
The prospects 159
7 Conclusion 161
Introduction 161
Feasibility of industrial policies 162
The challenge of industrial policy in the epoch of
global business revolution 168
Notes 172
Bibliography 176
Index 184
Figures
2.1 The organisational hierarchy of the Chinese Light Industry
Association Union 40
4.1 The business structure of the Haier Group (prior to 1995) 104
4.2 The business structure of the Haier Group (1995–98) 105
4.3 The business structure of the Haier Group (1999 onwards) 107
4.4 The Haier Group’s organisational structure 124
5.1 The Hisense Group’s organisational structure (2002) 131
5.2 The business structure of the Hisense Group (2002) 132
6.1 The Aucma Group’s organisational structure (2002) 157
6.2 The business structure of the Aucma Group (2002) 158