Marketing and the Modernization of China

Yaobang Hu , “Create a New Situation in All Fields of Socialist Modernization—Report to the Twelfth National Congress of the Communist Party of China,” Beijing Review, September 13, 1982, pp. 18–19.

Since 1980, I have spent about 15 months in China on four teaching tours, mostly at the National Center for Science and Technology Management Development at Dalian (hereafter referred to as the National Center for Management), where I have been serving as Dean of the American faculty. Participants in the Dalian program were managers from Chinese enterprises and bureaus, typically 40 to 50 years of age; these as well as some managers and government officials in Beijing and other cities were interviewed.

Muqiao Xue , China's Socialist Economy (Beijing: Foreign Language Press, 1981), pp. 45–6; Liang Xiao , “The Rehabilitation of Collective Enterprises in Urban Areas,” in Wei Lin Chao Arnold , China's Economic Reforms (Philadelphia, PA: University of Pennsylvania Press, 1982), p. 159.

The limited decision-making role of the managing director of the enterprises would at times be brought to our attention in classes at the National Center for Management at Dalian. If the American instructor asked “How do you decide on ‘x’?” “x” being, say, the price of the product of the enterprise, the participants from the enterprise would point out that they never make the pricing decision.

See, for example, Muqiao Xue , op. cit., p. 192.

Byrd William and others, Recent Chinese Economic Reforms—Studies of Two Industrial Enterprises (Washington, D.C.: World Bank Staff Working Papers Numbers 652), p. 81.

The retail store customer in China is typically shown several units of the item being considered, since the customer will want to look for defects and buy one which is defect-free. Thus both clerk and customer recognize that quality control is in the hands of the final buyer.

Non-food products and food products not moving directly to retail outlets were handled by a three-tier wholesaling system. Third-level wholesalers were essentially local operations which supplied the local retail outlets. They would buy from local producing units, from other third-level wholesale units, or from second-level wholesalers. The latter were essentially provincially led, and would buy directly from producers, from other second-level wholesalers, or from first-level wholesale units. The latter were national in scope and would handle the distribution of products of the very largest plants.

During the war with the Japanese in the 1930s, regional self-sufficiency became a major virtue as a means of maintaining economic viability even after any particular city might be lost to the Japanese. Self-sufficiency is still considered desirable, in part because of poor internal transportation and communication.

Byrd and others, op. cit.

Xue , op. cit., p. 205.

For a detailed discussion of the new, individually owned enterprises in China, see Reeder John A. , “Entrepreneurship in the People's Republic of China,” Columbia Journal of World Business (Fall 1984), p. 43 ff. Some larger privately owned firms are also apparently being permitted. See “China Allows the Rebirth of Some Private Capitalism,” August 10, 1984, p. 26; and “Entrepreneurs in China are Quick to Seize Opportunity, Despite Official Delays, Hostility,” Wall Street Journal, March 11, 1985, p. 26.

See “U.S. Firms Rush Through China's Open Door,” Wall Street Journal, April 8, 1985, p. 22.

See, for example, “Much Work Remains in the Drive for Economic Efficiency,” China Daily, January 12, 1984, p. 4; and “Peking Turns Sharply Down Capitalist Road in New Economic Plan,” Wall Street Journal, October 25, 1985, p. 1.

Foreign Broadcast Information Service, February 8, 1985, p. K-10.

Reynolds Bruce L. , “Reform in Chinese Industrial Management: An Empirical Report,” China Under the Four Modernizations, Part 1, Selected Papers submitted to the Joint Economic Committee, Congress of the United States, 1982, p. 119.

Yaobang Hu , “Create a New Situation in All Fields of Socialist Modernization—Report to the 12th National Congress of the Communist Party of China, September 1, 1982,” Beijing Review, September 13, 1982, pp. 19–20.

Wong Christine , “Ownership and Control in Chinese Industry: The Maoist Legacy and Prospects for the 1980s,” paper submitted to the Joint Economic Committee, U.S. Congress, for publication in The Chinese Economy in the 1980s, p. 2; and Xue , op. cit., p. 209.

China Daily, March 25, 1985, p. 1.

The local advertising agencies are organized into two national networks, the China National United Advertising Corporation and the China National Foreign Trade Advertising Association, but it is apparent that they are co-ordinating organizations only. Fund Lawrence , ed., China Trade Handbook (Hong Kong: The Adsale People, 1984).

Shulian Zhou , “The Market Mechanism in a Planned Economy,” in Wei Chao , op. cit., p. 110.

“China's Economy Must Break the Shackles of its Maoist Past,” Wall Street Journal, May 7, 1984, p. 27.

Improving product quality continues to be a major concern of the planners in China. “Ministry to Probe Product Quality,” China Daily, March 30, 1985, p. 3; “The Price of Progress,” Far Eastern Economic Review, April 11, 1985, p. 74.

Reynolds , op. cit., p. 121.

Zhenzhi Wang Yongzhi Wang , “Epilogue: Prices in China,” in Wei Chao , op. cit., p. 229.

“China Embraces Free-market Principles in an Attempt to Modernize its Economy,” Wall Street Journal, October 22, 1984, p. 24.

One study reports that the enterprise being researched was not permitted to raise the price of any modified products regardless of improvements in design, performance, quality or cost effectiveness. See Byrd , op. cit., p. 85.

“Peking Turns Sharply Down Capitalist Road in New Economic Plan,” Wall Street Journal, October 25, 1984, p. 1.