Part Two
Releasing the Dragon
by Albert Koopman
Grappling with change, and not short of resistance at the top level of the Communist Party leadership during the late 80’s and early 90’s, Deng Xiaoping announced that ‘plunging into the sea of business was good‘ (xiahai)….and that ‘making money was acceptable’
But … in a Sate of transition …..evidenced in all political transformations, a whole new set of problems emerge. Bureaucrats have a tough time giving up their vested interests!
As power is devolved to lower levels … right to the Village level…….. so there appears numerous ‘leaders’ who want to claim their piece of the action…… claiming ‘connections’ at the most lofty of government levels. Some have this access…… most do not. Most start their own businesses! Wealth permitting!
The first group to benefit from the ‘opening’ up of China were the military leaders and cadres who were co-erced into streamlining their operations.
Most of them went into retirement and were given gracious packages …. such as struggling State-owned hotels and MTV Entertainment locales to look after….. and make connections. Many failed…but many also succeeded….. creating some innovative ways to utilize their connections (guanxi) And established businesses! Wealth permitting!
To the extent that they became wealthier, this new…. moneyed ‘class’, also became the single biggest ‘market’ segment of first time consumers…… of washing machines ……cars . ….microwave ovens … TV’s…. cell phones …… and so on. And established businesses! Wealth permitting!
Along with them, an ‘army’ of farmers … who were lucky enough to be compensated for their lots under an avalanche of property development in the countryside……joined in an even more apparent consumer frenzy. And also established business! Wealth permitting.
After a few years, a third mini-segment of consumers emerged. A mass sell off of State Owned Enterprises put disproportionate compensation packages into the pockets of departing bureaucrat managers.
Besides multitudes of workers being discharged and having to return to their villages,… empty handed, the ‘Fat Paycheque Wangs’ of the world went on to establish businesses. Wealth, of course, permitting.
Traditional Chinese are very hesitant consumers …. preferring to save and to live their lives conservatively. One never knows ‘where lurketh the next malevolent Emperor’.
So… if wealth did not quite permit…. favors were called in from the guanxi and the extended family……. and businesses were once again created.! Tens of thousands of them.
History had caught up with China …… from being the wealthiest Empire in the world in the mid 1850’…. to slipping into 3rd World Status in the mid 1900’s…. to becoming the next wealthiest country after the USA at the turn of the last century.
Seemingly…. The Dragon lay dormant for the longest time…. murmured for a short decade or two and then …. in the late 1980’s early 90’s sprung alive when Deng Xiaoping woke him up!
(more…)
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