Beijing Jeep: Problem Solving: Unfamiliar Political-Economic Systems

The People's Republic of China (PRC)

Proclamation of PRC

Oct. 1, 1949

Mao Zedong

Soviet Union's economic model

*State-owned enterprises (SOE)

5-year plans

*Production quotas

Pay

*“Iron rice bowl”

Discussion: Beijing Jeep, pp. 126-38, 156-81

What kinds of country shock and cultural incidents occur as AMC employees work on starting up the Beijing Jeep joint venture?

Why were beds in BAW offices? How did Angus MacGregor, the first president of Beijing Jeep cause a serious Type II cultural incident (p. 128)?

Why were AMC representatives not having luck with the installation of the new Jeep Cherokee assembly line (pp. 163-64)? Why were they more successful than MacGregor in mobilizing Chinese employees?

Despite the signing of a contract to create a joint venture in 1984, how were China’s political and economic systems bankrupting the Beijing Jeep joint venture by 1986?

What types of financial, legal, bureaucratic problems existed that AMC officials had not anticipated?

Why were American and Chinese executives unable to resolve these problems?

Country and Culture Shock

Legally imposed isolation of foreigners

✓Food

Foreigner prices

✓Language differences

✓Siesta

Beds in offices

✓Contract disputes

Salaries

Housing

Value of equipment

State-owned enterprise (SOE) workplace expectations

"Iron rice bowl"

Official rhetoric vs. cultural norms

Siesta (xiuxi)

State-owned enterprises

Expectations of workers

*Iron rice bowl

Disincentive to take responsibility & risks

✓Propaganda campaigns

Anti-siesta (xiuxi)

Model workers “Serve the people”

AMC employees as “model workers”

Political and economic problems

“They didn’t yet understand the nature of Chinese socialism or the workings of China’s socialist economy” (p. 162).

Legal-Bureaucratic

✓Contract law

✓State-owned enterprises (SOE) under authority of various Ministries & Commissions

State Planning Commission (p. 163)

State Economic Commission (p. 163)

State Commission for Restructuring the Economy (p. 187)

Ministry of Foreign Economic Relations and Trade (p. 185)

Customs Bureau (p. 177)

Ministry of Finance

Ministry of Industry

Chinese National Automotive Industrial Corporation, Chen Zutao, Director (pp. 177, 185)

Beijing Municipal Government (p. 177)

Lack of funds

Foreign exchange currency (FEC) vs. “People’s Money” Reminbi (RMB)

BAW not turning over reminbi (RMB) to Beijing Jeep

State Materials Bureau not turning over FEC to Beijing Jeep

Lack of opportunity to export

✓High cost of foreign managers

Formal Political System

National People's Congress

Premier heads Cabinet

Cabinet members head ministries and commissions

State Economic Commission, State Planning Commission, Ministry of Foreign Economic Relations and Trade, Ministry of Finance, Ministry of Industry, etc.

Provincial governments

Informal Power System

*Chinese Communist Party (CCP)

Central committee (44 members, 1949)

Politburo (14 members)

*Politburo's standing committee (5-8 members)

“Supreme Leader” w/o formal title

Mao Zedong, d. 1976

Chairman of Chinese Communist Party (CCP)

Chairman of Central Military Commission

Communist Party Branches in bureaucracy, army, resident committees, work units (factories, schools, hospitals, etc.)

Party Secretary

Party Committee

Party members

State-owned work units

Organization

Employees with functional duties (formal)

Some employees are party members (informal)

Pay “Iron rice bowl”

New Informal Supreme Leader

Deng Xiaoping

“Practice” faction of CCP

Consolidates Power

Politburo Standing Committee

Chair of Central Military Commission, late 1978

Deng's New Policies: *“Four Modernizations”

Industry, Agriculture, Science, National defense

Opening to outside world

Chinese studying abroad

“Foreign experts” in China

Foreign investment

Renewed mandate for foreign investment, 1981 (Beijing Jeep, p. 76)