Chinese Management System

Introduction

As China is said to be world’s most manufacturing country where there are many small and medium enterprises (SMEs), many overseas companies have attracted to China by setting up their operations there including a joint-venture with Chinese organisation. The joint-venture approach with Chinese business can benefit the overseas entities with establishment of relations. Different types of companies can be formed in China such as state-owned enterprises (SOEs), foreign invested enterprises (FIEs), township and village enterprises (TVEs). In order to work with Chinese business well, they must understand China culture first.

Chinese management system is not just using universal business laws like Western business but the roles of culture

It has concluded that four major models were developed including economic development model, environmental model, behavioural model and open systems model. As we have to look into Chinese business structure, open systems model which seems to be the most comprehensive of the four will be discussed here.

Open systems model, known as Negandhi and Prasad model, was developed in 1971 by Negandhi and Prasad in response to cultural and environmental factors of business practices. Prior to success of the model, it was carried out throughout the comparison among companies in the same culture to see whether they are similar to each other in term of management practices. As a result, the management process depends not only on external environmental constraints and culture but on management philosophy.

Figure 1.

According to Figure 1, management philosophy is defined as management attitudes toward employees, consumers, suppliers, stockholders, government and community. Though the management philosophy is not relevant to environment and culture, it also influences on the management process and

As stated by Confucian ethics, family is most important as business foundation in which all key family members contribute their income to the common fund for business. The business owner regards the business as the private property of the core family and their ownership rights are unlikely to be shared as long as the business has enough capital to run. Top management positions in family business are typically for key family members while secondary management positions are sometimes reserved for close relatives or those who have been loyal to their business for long