The Development of Private Enterprise in Contemporary China: Institutional Foundations and Limitations

This paper is an attempt to analyse the rapid development of private enterprises in the reforming era, with particular emphasis on the role of trust. We argue that trust in China, although family centred, has an extraordinary capacity to extend and be network-based. It is this capacity for trust and...

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Bibliographic Details
Published inChina review (Hong Kong, China : 1991) Vol. 2; no. 2; pp. 65 - 91
Main Authors Sun Wen-bin, Wong Siu-lun
Format Journal Article
LanguageEnglish
Published Hong Kong 中文大學出版社 01.10.2002
The Chinese University Press
Chinese University Press
Subjects
Bank capital
Bank loans
Business
Corporate management
Corporations
Economic conditions
Economic development
Economic growth
Economic indicators
Economic reform
Entrepreneurs
Family owned businesses
Human capital
Imperative sentences
Local government
Organizational structure
Politics
Private enterprise
Private sector
Privately held corporations
Public policy
Social norms
Sun Wen
Trust
China
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Summary:This paper is an attempt to analyse the rapid development of private enterprises in the reforming era, with particular emphasis on the role of trust. We argue that trust in China, although family centred, has an extraordinary capacity to extend and be network-based. It is this capacity for trust and the shared family ethics and social norms that underlie it which provide new institutions for the growth of the private sector. The concept of trust therefore is further divided into three types, namely, trust in one’s own person, trust in interpersonal relations, and trust in systems, which correspond to three forms of capital, i.e. human capital, relational capital and institutional capital. Based on several reported cases of bankrupted private enterprises, the limitations of these institutions are discussed. These include some common problems that have surfaced among private enterprises, such as the high debt ratio of enterprises, familistic management and the weakness of personal trust.
ISSN:1680-2012