China's Large Enterprises and the Challenge of Late Industrialisation (Routledgecurzonstudies on the Chinese Economy)

198 Pages·2003·0.75 MB·English

by  Dyla Sutherland

China’s Large Enterprises and the
Challenge of Late Industrialization
This book considers the ‘late industrialization’ of China, showing how government
policies have encouraged the development of 120 ‘national champions’ (akin to
Japanese keiretsu and South Korean chaebol), how these ‘national champions’
compete with multinational enterprises, and how China’s rapid and successful ‘late
industrialization’ does not fit orthodox economic theories. The book provides a
detailed illustration of these wider issues with a case study of the auto industry.
Dylan Sutherlandis currently a member of the Faculty of Economics and Politics
at Cambridge University. He is an assistant director of Development Studies at the
university and a fellow of Wolfson College.
RoutledgeCurzon studies on the Chinese economy
Series editors
Peter Nolan,University of Cambridge
Dong Fureng, Beijing University
The aim of this series is to publish original, high-quality, research-level work by
both new and established scholars in the West and the East, on all aspects of the
Chinese economy, including studies of business and economic history.
1. The Growth of Market Relations in Post-reform Rural China
A micro-analysis of peasants, migrants and peasant entrepreneurs
Hiroshi Sato
2. The Chinese Coal Industry
An economic history
Elspeth Thomson
3. Sustaining China’s Economic Growth in the Twenty-First Century
Edited by Shujie Yao and Xianning Liu
4. China’s Poor Regions
Rural–urban migration, poverty, economic reform and urbanisation
Mei Zhang
5. China’s Large Enterprises and the Challenge of Late
Industrialization
Dylan Sutherland
China’s Large Enterprises
and the Challenge of Late
Industrialization
Dylan Sutherland
First published 2003
by RoutledgeCurzon
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by RoutledgeCurzon
29 West 35th Street, New York, NY 10001
This edition published in the Taylor & Francis e-Library, 2003.
RoutledgeCurzon is an imprint of the Taylor & Francis Group
© 2003 Dylan Sutherland
All rights reserved. No part of this book may be reprinted or reproduced or
utilized 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 in 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 0-203-51174-3 Master e-book ISBN
ISBN 0-203-34187-2 (Adobe eReader Format)
ISBN 0–415–30581–0 (Print edition)
Contents
List of figures vii
List of tables viii
Preface ix
List of abbreviations xiii
1 Introduction 1
Competing development paradigms 3
Large enterprises and development 5
Large enterprises, development paradigms and China 10
2 China’s large industrial enterprises 20
Economic growth and the large-scale sector 21
Competing development paradigms and China 32
Conclusions 36
3 The national team of enterprise groups 39
Origins of the national team 40
Pillar industries and an evolving industrial policy 48
Policies to ‘grasp the large’ 51
Conclusions 63
List and description of trial groups: Table 3.4 66
4 The national team and the business revolution 92
A business revolution? 94
Global consolidation and the national team 98
Conclusions 107
5 The national team in international comparative
perspective: the auto industry 110
The global auto industry 111
The national team and China’s auto industry 122
vi Contents
Conclusions 133
6 Conclusions 136
China, large enterprises and the global business revolution 137
Theory and policy lessons 142
Appendices 148
Chronology of business group-related policies 148
Extending the ‘grasp the large policy’ 151
Spread of policy to lower levels 153
Appended key policy documents 155
Global market shares of various business activities 164
Notes 170
Bibliography 177
Index 181
Figures
2.1 China’s large enterprises by province for various years 25
2.2 LME and SOE output share by various industrial sectors 26
2.3 Share of gross value of industrial output contributed by LMEs for
forty Chinese industry sectors, 1987 and 1995 28
5.1 Province shares of national output by enterprise size for the auto
industry, 1997 126
Tables
2.1 Share of large, medium and small enterprises in the gross value of
industrial output 22
3.1 Average group assets, net assets, sales, taxes and exports by industrial
sector, 1995 46
3.2 Industrial sectors of the first and second trial group batches 50
3.3 Evolution of policies and their implementation within the centrally
approved enterprise groups, 1987–99 56
3.4 Description of China’s national team players 67–91
4.1 Cross-border M&As with value over $1 billion, ‘mega-deals’,
1987–2000 95
5.1 Global assembly champions and strategic alliances
(their acquisitions, equity partners) 117
5.2 Projections in first-tier supplier numbers, medium and long term 118
5.3 Global oligopoly in the auto component industry 120
5.4 Auto components enterprises, share (per cent) of various indicators
in total components production 127
A.1 Provincial locations of China’s preferred large-scale enterprises
and groups in the late 1990s 154
A.2 Reported market shares for various products, business activities 164
Preface
This book is based around my PhD thesis. The research I undertook for the thesis
was associated with the China Big Business Programme in the Judge Institute
of Management Studies at Cambridge University, England. This programme
brought together industry leaders from both China and the West and used a selection
of case studies on some of China’s leading firms to expose the major issues in the
emergence of big business in China today.
At the very start of my research, the objective was to contribute to these case
studies. My plan was to carry out a detailed investigation on the auto industry in
China. Shortly after starting though, I became interested in another area of China’s
reforms. In the mid-1990s, short press reports in the Chinese media were beginning
to mention China’s plans to develop a batch of large enterprise groups, dubbed the
‘national team’. The trickles soon grew to a steady flow. These snippets of infor-
mation drew my attention away from the more specialized area of the auto industry
and a curiosity in the broader topic of the national team developed.
Initially, I searched through the Western media and academic press but could
find little of substance on China’s plans to build the national team groups. What
seemed like a central component of their industrial policy remained a frustrating
mystery. Given the earlier successes of enterprise groups in Japan and South
Korea it seemed particularly strange that China’s efforts had attracted so little
attention. The increasingly obvious intentions of the Chinese government to
attempt to emulate their East Asian neighbours (through what became known as the
‘grasping the large, letting go of the small’ policy) made this omission all the more
curious.
For the first year of my research, based in the United Kingdom, most of my
insights into the large groups of the national team remained limited. By the late
1990s, however, a few academic articles began to hint at the increasingly important
role of the large-scale sector in China’s late industrialization. These findings
contrasted sharply with mainstream opinion which had argued, even until the late
1990s, that there was little future for China’s incumbent large enterprises. I became
even more convinced that the national team really was important – that an under-
standing of this select group of companies might also contribute towards the debate
on the large-scale sector, as well as to far broader questions related to economics
and development.