~ Pergamon European Management Journal VoI. I4, No. 6, pp. 648--65I, 1996 Published by Elsevier Science Ltd. Printed in Great Britain

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Books for Managers Management in China During the Age of Reform, by JOHN CHILD, Cambridge: Cambridge University Press, 1994, pp. 333. ISBN 0 521 42005 9.

Management Issues in China: Domestic Enterprises, by DAVID BROWN and ROBIN PORTER London: Routledge, I996, pp. 268. ISBN 0 415 13002 6.

China is likely to be the main driver of the world economy in the 21st century. With a population in I992 of 1.175 billion and a labour-force of over 500 million, 60 per cent still employed in low productivity agriculture, China is already the world's third largest economy on a purchasing power parity basis. It is the world's largest agricultural producer and amongst the eight biggest industrial producers. Understanding Chinese management is therefore fundamental to understanding international management development in the next century. Both books under review make a significant contribution to this objective. John Child's book is an excellent detailed review of developments in Chinese management since the reform process began in 1978. It is thoroughly researched, clearly written and uses detailed enterprise level research, including research carried out during the author's period of residence in Beijing at the China European Community Management Centre in the late 1980s. The volume edited by David Brown and Robin Porter is a collection of recent conference papers, also focusing on enterprise level management issues; it is uneven, but contains several valuable papers.

In China, as in Central and Eastern

Europe, the objective of recent economic reforms has been to transform the enterprise from a purely production unit into a business enterprise. More specifically, the reform has involved 'decollectivisation of agriculture, the deregulation of the economy (including easing of the right to establish private and collective firms) and decentralization of much remaining regulation ... strengthening the management system within producing units through an enhancement of managerial competence and discretion: improving incentives by linking remuneration through incentive payment schemes and responsibility systems' (Child, p. 39).

The two volumes shed light on the progress achieved since 1978. There have been massive changes in the Chinese economy, in the direction pointed; Tiananman Square represented only a brief interruption of the trend. However, management in China remains substantially different from management in the West (or East). There remains a fundamental dualism: decentralisation and pragmatism is balanced by centralism and the continued importance of political ideology. There has been no diminution in the leading role of the Communist Party. Marketisation has been dissociated from private ownership. For the foreseeable future the systems of industrial governance and management in China will remain distinctive.

This distinctiveness is shown both in the web of relationships within which the Chinese enterprise operates and in the style of its internal management.

In market economies enterprise managers need to satisfy the needs of customers, be sensitive to the wishes of suppliers and respond to the actions of competitors. Chinese enterprise managers need to comply

with the wishes of three further sets of actors: the Ministry, sometimes acting through the industrial association, local municipal authorities and the Communist Party. Each set of relationships is important for a different aspect of enterprise performance.

The Ministry and the industrial association are concerned to ensure that the enterprise conforms with national economics interests, which may be defined in terms of maximising output, enhancing China's technological standing or maximising return on assets or other economic or non-economic criteria. This set of relationships is especially important for strategic decisions, including new investments. Decisions on new investment are not made at the enterprise level; instead, 'the system of initiating investments remained primarily funding-led rather than market-led' (Child, p.I09). Although large enterprises have planning staffs responsible for planning innovations, such plans are only brought forward after 'mutual communication' with higher authority.

Local authorities are concerned to improve their tax base and to maintain employment levels. They therefore take active steps to ensure that enterprises in their region buy their supplies from other enterprises in the same administrative area, and give locals priority in distributing their goods and services. The local authority allocates manual workers to the enterprise.

The Communist Party retains its central role, although its influence within the enterprise has been modified by the emphasis of the economic reform on productive efficiency. The Party plays a central role in recruitment to the managerial cadre. The criteria for managerial selection include 'good moral practice' as well as a positive working attitude and technical competence; the ability to work

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harmoniously within the enterprise and political loyalty remain critical factors.

Within the enterprise, management structures and, especially style, differ from the West. Most importantly, the enterprise remains a socio- political, not simply an economic organisation. The principle of 'eating from the same big iron rice bowl' remains a fundamental feature of payment systems, with incentive payments failing to achieve the importance sought by reformers. The management style remains personal and with a heavy reliance on unstructured means of communication.

The fundamental difference between Chinese and Western enterprises relates to the dissociation between marketisation and private ownership. Chinese enterprises may be owned by the State, by municipalities, by private individuals or by a combination of all three; output may be distributed through administrative order, or the market or a combination of methods. Attitudes towards property ownership are less absolutist than in the West; ownership rights are recognised to be conditional on the consent of the ruling structure. 'In the West ownership normally confers property rights which are embodied in the law. In China, by contrast, the right to acquire, benefit from and dispose of property was always liable to require the approval of the ruler's officials, and the confiscation of property was quite common. Home for the Chinese could never be said to be their castle' (Child, pp. 303-4) In this respect there was strong continuity between Chinese tradition and State socialism. The lines of division between State and private property are likely to remain blurred, with obvious implications for the autonomy of enterprise management.

The parallel between Chinese economic reforms and developments in Eastern Europe since 1989 is explicitly discussed by Chang and Nolan in Brown and Porter's collection of papers. Chang and Nolan argue that the Chinese route from the command economy has been substantially more successful than the shock therapy route followed in Central and Eastern

Europe. China's economy since 1978 has become one of the most dynamic in the world, and the productivity decline of the 1960s reversed. They attribute this success substantially to the Chinese government's incrementalist policy; 'the enthusiasm of post-Communist "capitalist triumphalism" among advisers to Eastern Europe and the former USSR may have caused a major mistake in assessing not only the required speed of the transition but also the desirable economic functions of the State over an extended transition period' (p. 32). 'the strong State, with a self reforming Communist party, may be the "least bad vehicle" with which to achieve a successful transition away from a Communist economy' (p. 13). The analysis is misleading in underestimating the strength of political support within the region for rapid transition, and the autonomous dynamic of political change; and the weakening of Communist Party control preceded shock therapy (although was rapidly accelerated by it). Moreover, speed was perceived as essential to ensure the permanence of reform. However, the debate about the relevance of the Chinese route to the post- Socialist economy is of fundamental importance to developments in Europe, especially as Socialist parties regain their influence in Central and Eastern Europe.

Both books provide important insights into Chinese management and a well informed basis for assessing future trends. Management in China in the Age of Reform is an especially important book, which is an excellent addition to the literature on strategic management and organizational behaviour as well as on its specific subject, management in China.

Roderick Martin

Competing to Win, by W. CARLING and R. HELLER, Little Brown and Company. ISBN 0316 914 479

This book appears to offer a winning formula, and the British take their sport seriously. Despite the UK Conservative Government's support of market principles, recent legislation has ensured that big sporting events are made widely available through terrestrial television and not just sold off to the highest bidder.

In the I980s, business issues moved from specialised business pages to the front pages of newspapers. By the same token, the growth of management journalism and 'competitive edge' rhetoric since that decade has made it more likely that a book jointly written by a top sportsman and a leading financial writer would be a winning authorship formula. Competing to Win is written by a headline- capturing captain of the England Rugby Union football team with the editor of Management Today. They set out to see how comparable the ingredients are for success in sport and in business by setting sporting alongside corporate turn-round stories.

The book appears to have been written by Heller, although Carling is likely to be responsible for selling more copies. Carling also comes out as a sympathetic figure by the end of the book, and one has to admire his capacity for accepting advice about others in his team.

The authors claim that the conditions for winning in business and in sport overlap, but are not identical. The condition necessary for publicly-acknowledged success in business is spectacular contribution to company turn-round. Household business names appear to be like sprinters, providing quick bursts of energy at the right moment over a short distance. But their fame does not endure; business leaders of the rest are less familiar and less loved than sportsmen and women of the past. The route to business fame is the company turn-round - the sprint, not the marathon - and doctoring companies back to health

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