Chinese Capitalism in a Global Era: Towards Hybrid Capitalism

Citation

Li, J. (2006), "Chinese Capitalism in a Global Era: Towards Hybrid Capitalism", Journal of Small Business and Enterprise Development, Vol. 13 No. 2, pp. 284-286. https://doi.org/10.1108/14626000610665971

Yeung's latest book, entitled Chinese Capitalism in a Global Era: Towards Hybrid Capitalism, is a fascinating and ambitious work that explores the distinct features of Chinese capitalism. In the book “Chinese capitalism” is defined as the social organisation and political economy of the so‐called overseas Chinese living outside mainland China. Setting in the context of globalisation, Yeung gives his work a unique focus on multinational Chinese family businesses outside mainland China and pursues two specific research questions:

1. 1.

   What made Chinese capitalism and its business systems distinctive.

2. 2.

   How has globalisation transformed the dynamics of Chinese capitalism and its organisation?

The book consists of seven chapters. It starts with an overview of the economic significance of ethnic Chinese in east and southeast Asia and a literature review of three competing strands that are intended to explain Chinese capitalism. In this context, the first chapter outlines the core issues relating to globalisation and the dynamics of Chinese capitalism. Chapter two conceptualises Chinese capitalism as a hybrid mode of economic organisation and develops a framework for subsequent empirical analysis. The following four chapters (3‐6) analyse the four dimensions of the hybrid Chinese capitalism, e.g. the participation of key Chinese actors in globalisation processes, changes of traditional practices and norms through transnational entrepreneurship, transformation of the social organisation, and changes in corporate governance and strategic management. The final chapter examines how the Asian crisis in 1997‐1998 influenced and speeded up the ongoing development and future trajectory of Chinese capitalism.

Despite the sheer diversity of Chinese capitalism in various contexts, researches have so far recognised a number of consistent traits of Chinese capitalism, underpinned by unique social and cultural factors, that is, the extensive penetration of business networks (guanxi) and cooperative personal relationships embedded in business networks. At the core of these networks are closely‐knit family and kinship ties, which extend to outsiders who are socialised into the family to create wider business networks, and stretch to political‐economic alliances (patron‐client relationships). Through these networks, Chinese businesses internalise external markets to maintain self‐ownership and autonomy in decision‐making. Built upon the debates on Chinese capitalism, the central theme of the book is “a gradual process of transition and transformation leads to a form of hybrid capitalism that is open and fluid in nature” (p. 42). In other words, Chinese capitalism converges towards certain norms and rules in Anglo‐American capitalism and yet diverges from its key institutions and structures, by reflecting context‐specific dynamics and the uneven impact of global flows of capital, information, discourse and technologies.

Using the concept of hybrid capitalism, Yeung argues that globalisation has transformed Chinese capitalism in a number of ways, e.g. the internationalisation of leading Chinese firms, interactions with non‐Chinese actor‐networks, and the growing professionalism of corporate governance. As a result, there is a profound change in the governance and authority systems. This is shown by the shift from the paternalistic governance based on personal relationships and owner management to network governance based on decentralisation, financial performance management and corporate board decisions. In examining the changing face of Chinese capitalism in the era of globalisation, Yeung has done an excellent and convincing job of presenting the evidence of the convergence tendency of Chinese capitalism with Anglo‐American capitalism, but not quite so in describing what remains to be unique in Chinese capitalism.

The author adopts the concept of “ethnic Chinese economy” from a home country (mainland China) perspective and implicitly assumes that Chinese individuals living outside mainland China are either immigrants in their origins or ethnic minorities in their adopted countries. Therefore, he loosely refers to them as “overseas Chinese”. This assumption and subsequently the application of the “ethnics” concept to the three Chinese‐dominated economies of Hong Kong, Singapore and Taiwan are questionable. Light (2004), defines an “ethnic economy” to include two sectors: the ethnic controlled economy – characterised by ethnic control and not ownership; and the ethnic ownership economy – typified by business ownership. It might make sense to use the generic term “ethnic Chinese economy” to cover those Chinese businesses that operate in countries such as Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam because their origins can be traced directly to the immigrant entrepreneurship. It also makes some sense to cover Hong Kong in this broad concept, on the grounds that the characteristics of both the colonial economy and the immigration economy gave Chinese businesses in the pre‐1997 Hong Kong many identifiable features of “ethnic Chinese economy”. Changes in the post‐1997 Hong Kong, however, have given rise to doubts as to whether the emphasis on the ethnic features continues to make sense.

The biggest problem, however, is to include Taiwan under the concept of “ethnic Chinese economy”. Yeung gives no hint of how this inclusion can be justified, given that the Chinese account for 99 per cent of Taiwan's population (p. 13). As the significance of the private economy in mainland China continues to increase, there is scope to broaden the research on “Chinese capitalism” to include mainland China for testing these theories (p. 255). Nevertheless, the concept of “ethnic Chinese economy” would prove problematic. Clearly, “Chinese capitalism” would consist of two types of economies: “ethnic Chinese economies” (or “overseas Chinese capitalism” in Yeung's word (p. 17)) contributed by immigrants and ethnic minorities, and “mainstream Chinese economies” in mainland China, Taiwan and Hong Kong (and possibly Singapore). Despite some inevitable overlap, as a result of cultural factors, the contextual aspects between these two types of Chinese economies are significantly different and therefore research should differentiate accordingly.

Another potential aspect of Chinese capitalism would broaden its scope to cover ethnic Chinese entrepreneurship in other parts of the world. Outside Asia, there are now over five million Chinese living in America, and two million in Europe (p. 12). In their newly found world, many Chinese exhibit their entrepreneurial nature and set up business ventures. The contribution of Chinese entrepreneurship is widely acknowledged by their respective adopted countries, but the success of Chinese entrepreneurs in America and Europe has rarely matched the achievement of their counterparts in east and southeast Asia. Interesting questions could be asked about similarities and differences in Chinese capitalism within different contexts. Future research in this area could contribute significantly to our understanding of whether there is a unique brand of Chinese capitalism. This book would be of interest to those who want to understand what Chinese capitalism is and how it works, evolves and develops under different socio‐economic and political circumstance.