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POSTSCRIPTS
From New York Newsday, August 9, 1992
China Laying Off in a Big Way
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Attention government employees: Think you got it bad here? You could be in China.
Since January, 1 million people have been laid off from state-run companies, China's labor minister said.
Veteran leader Deng Xiaoping has pushed ahead with reforms aimed at raising the efficiency of money-losing state enterprises. One key reform is dismissals -- a daring move in a land where lifetime employment was a tenet of the communist system.
Some laid-off workers have managed to find work in the private sector, which generally pays better but does not provide the perks or the security of the state sector.
Ruan Chongwu, the labor minister, said dismissals were causing some discontent among workers but ruled out the formation of independent trade unions to defend workers' interests.
-- Reuters
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In August the U.S. news media reported that a million people had converged on Shenzhen for a two-day sale of stock-application forms. The would-be investors came by train, bus, and plane from all over China, some with pockets crammed full of money collected from entire villages, hoping to win a chance to buy shares in a soft-drink manufacturer, a glass company, and an electronics producer.
The application sale was scheduled to start on Sunday, August 9. People began lining up on Friday. By Saturday the city was jammed, and fights were breaking out. Police used electric cattle prods, whips, and clubs to keep order. When that failed, they fired warning shots in the air. On Sunday the sale began -- and ended. Officials announced that all 5 million applications had been sold, but word on the street was that corrupt bureaucrats were keeping applications for themselves.
On Monday more than 50,000 disappointed investors gathered in a heavy rain outside the Shenzhen municipal offices, carrying signs demanding an end to corruption. The demonstration got out of hand. Stones were thrown. Government cars were overturned and set on fire. Plainclothes police officers were kicked and beaten. Finally, the riot police were called in to disperse the crowd with tear gas. The government denied reports that two people had been killed.
THE EMERGENCE OF A CHINESE ECONOMIC EMPIRE
Economic success is more than a matter of good government policy, brilliant management, or superior education. In virtually every corner of the world, there are some groups -- Indians in Britain, Armenians in France, Koreans in Los Angeles, Scots in Hong Kong -- who have a flair for entrepreneurship. Even when their numbers are small, their impact on local economies can be enormous.
Successful ethnic groups usually share certain characteristics -- a strong identity, communal self-help, a thirst for information and technology -- that are most effective when a group develops its networks across countries and continents, thus becoming a global tribe. The 1980s witnessed the Japanese's global reach. But the 1990s are destined to belong to another Asian group: the Chinese.
The emergence of the Chinese is already reshaping the world economy in everything from technology to manufacturing to finance. In America their impact will be felt as foreign competitors and partners and as one of our fastest-growing groups of immigrants. Like the Japanese, the Chinese have spread their operations around the world, but because of massive immigration, they have also become an intrinsic part of local economies from Indonesia to Manhattan.
Made up predominantly of small family-owned companies -- many of them with members on both sides of the Pacific -- Chinese-owned businesses can provide American businesses with critical access to markets, particularly in East Asia, which now boasts the world's fastest-growing economies. They can also help link Americans with some of the most effective manufacturing platforms in the world, from the ultra-low-cost regions of mainland China to the sophisticated producers of Taiwan and Hong Kong.
Perhaps the most important contributions of the Chinese can be found in the United States. Chinese-owned businesses such as Solectron, Everex Systems, and Kingston Technologies are among the most efficient U.S. manufacturers. And Chinese financial institutions, whose resources are rapidly outstripping those of the Japanese, increasingly seek out customers among non-Asian small businesses. Indeed, virtually everywhere they have settled in North America, from Silicon Valley to Flushing, N.Y., the Chinese have brought prosperity and a resurgence of entrepreneurial energy.
-- Joel Kotkin
A NETWORK OF SMALL FAMILY-OWNED COMPANIES
Emigrants, colonials, and residents of small, isolated states such as Taiwan and Singapore -- the overseas Chinese -- have eschewed Western-style capitalism and Japanese "companyism," developing a unique transnational economy relying largely on informal ties among its disparate members instead.
The Chinese businesspeople's progress stems largely from their ability to gain the confidence of others who can provide connections (or guanxi), as well as capital and other assistance needed to launch their entrepreneurial ventures. The most important network among the Chinese is the family, long the basis for Chinese society. Concern for the family and its long-term assets, not the company or the country, stands at the apex of priorities. The family also fulfills the practical need for reliable, motivated, and trustworthy workers.
Perhaps in no other segment has the effectiveness of family-based enterprise been more evident than in the garment industry. The Chinese role in garment production was greatly spurred by the influx into Hong Kong, Singapore, and other diaspora centers following the Communist takeover of the mainland, in 1947. Lacking the capital to revive their old businesses, the emigrants gravitated to garments, which required relatively small amounts of capital and a large supply of cheap, disciplined labor.
Today the Chinese model of family-based, widely dispersed enterprise has achieved global preeminence in the garment and textile industries. As early as the 1970s, Hong Kong had surpassed Italy as the world's largest exporter of clothing. Textile-production centers in China, Taiwan, and Hong Kong exported as much as those in Germany and Italy combined, and three times as much as those in Japan or the United States. And by the early 1990s many of the leading-edge producers from California, such as PCH and Bugle Boy, were owned by Chinese entrepreneurs who employed a network of production facilities, designers, shippers, and agents around the Pacific Basin and California.
