"Guanxi" is a huge factor in dealings involving the Chinese government, and even in day to day Chinese business. One difference between the Chinese and American system of connections and favors may be that Chinese put a heavy emphasis on family relations, which doesn't seem overly prevalent here. Well, save for certain notable exceptions.
On another note, the problem of "guanxi" extends to the microlending arena. China's lending capital for microloans is small, and even then, the funds are generally directed to those with connections to the government. I'm working with a nonprofit called Wokai (http://www.wokai.org), and we're working to raise loan capital from people around the world for microloans to Chinese farmers. We operate pretty similarly to Kiva, except that due to Chinese regulations we can't return money to lenders - therefore, we solicit contributions that turn into perpetual loan capital.
I don't think outsiders grasp how much of an impact the emphasis on "guanxi" and family relations has on everyday life in China. On one hand, you can see this as 90% of Chinese billionaires are the kids of high ranking officials.
Bot on the other hand, you can see this as 90% of Chinese kids of high ranking officials are expected to marry someone who is successful/will make them look good. Anyone who's dated an Chinese girl whose parents are relatively successful (especially if they are East Asian themselves) will probably tell you a thing or two about having to measure up to standards.
In Chinese society, people use their relationships to leverage life (and by extension, business and politics) to the full. Thus, it's not acceptable to marry below you because if you do, you may be forced to hire the relatives of your lowly mate. It is shameful if your family is not doing well, and it is shameful if your close relatives don't have a job. This is the cost of sticking together, having strong friendship and family bonds-- you do not want any relationships that are too one-sided or unsustainable.
While modernization has weakened this system nontrivially, it does feel that it is still the norm, and we have reason to believe it will continue (at least to a greater extent than here in the West). The reason is that China has too many people, too many mouths to feed. China produces many more engineering students than does the US. But most of them aren't hireable. There's a reason why we're still "better".
Finding the right talent in China is even more formidable than it is here, and it always has been, thanks to the fact that China has 3x more people per acre of arable land than the average country (cited from Stratfor but I can't find the link).
Now I'm not saying that the system is fair or even efficient compared to the Western system, but using the family to extend one's goals is a byproduct of Chinese society.
I would argue there is some wisdom in what they do. Here in the West, our HR departments often prefer to hire people who are referrals. There's an implicit understanding that good workers like to hang out with other people who are good workers. In this light, the Chinese are merely extending that wisdom beyond the workplace.
There may be some wisdom, but not a whole lot. Hiring on referrals is based on the idea that people will not refer idiots to you for fear of depleting their social capital, providing you with a fairly strong selection mechanism for talented candidates. Being forced to hire the relatives of your mate regardless of their skills does not strike me as very beneficial.
Hiring on referrals is tricky. It's like what Steve Jobs and Joel Spolsky have said. The A ppl hire the A ppl but the B ppl hire the C ppl. So yes, it's less than ideal when you can be already be reasonably certain that credentials mean something (i.e. someone with a degree in chemical engineering is at least halfway capable of maintaining a part of a chemical plant), or you can look at things like what sort of papers they've published, what OSS projects they've contributed to, etc.
As for the hiring relatives regardless of their skill... this matters when skill really matters. When you're in a winner-takes-all field like finance or tech, it can be very much less than ideal and we myopically don't recognize that the rest of the world gets on without being exceptional at problem solving.
The flip side to the hiring relatives bit is that native-born Chinese are generally able to extract higher loyalty and work ethic from their relatives because of these same bonds. There is the feeling that you are all together.
So for all the talk of China steamrolling the world, I just don't believe it. You have to look at what benefits and costs this sort of culture provides. You get high societal stability, and a caring family that will support you, but one that can in some ways hold you back as well. Their societal structure may have worked extraordinarily well with manufacturing, but tech? I refuse to ever say that someone, or some group can't do X, however I will say the jury is still out on this one.
What's even more "interesting" is the exception to that rule, Huang Gyangyu, up until recently the richest man in China, its "Sam Walton", who was arrested and is still being held for "insider trading", when arresting someone in China for insider trading is sort of like a character on The Sopranos getting arrested for saying fuck. With no formal education or family ties to speak of, he started his business at 16. Of China's billionaires, Wang was the only one who was 1- a Christian and 2- not a member of the Communist Party. And now he's in prison.
This is what I use while I'm in China: http://www.witopia.net/welcome.php - Highly recommended given how much China is blocking these days. On other US/European sites that aren't blocked, I often find it is faster on the VPN than it is direct as well. Because I'm generally in Canada I can now also access Hulu.
The news is from 2006, but it's a reminder following a recent scandal and but it's also a reminder of the difficulties outsiders (both inside and outside of the country) face in trying to become successful in China.
This is the unavoidable consequence of China's political/economic system. It's not surprising at all.
What makes me worry is that the Chinese government has a far larger influence on Chinese companies than most other countries and that makes economic reliance on China a very dangerous move.
It also makes people used to totalitarian regimes to the point of making them tolerable. They shouldn't be. Chinese people deserve better.
Really, what business is this of yours? I feel like Westerners are always looking down their noses at the Chinese political situation but people don't seem to take into account China's historical context. China IS getting better (and rather rapidly). Less than 100 years ago, China still had an Emperor. With that in mind, how many centuries has Western democracy had to mature?
My personal belief is that democracy develops very gradually, sometimes punctuated by sharp periods of rapid change (e.g., revolutions, foreign colonization).
Every human being deserves better, Chinese or not. We are all on the same boat after all.
And yes. China is making some progress, but, still, it has a long way to go. Switching from an imperial totalitarian state to a communist one (also an unavoidable consequence of the past couple thousand years of Chinese history) makes for not that much of a change after all. At least not much when you consider the human condition.
And it is my business as it shifts the "Overton window" towards a position more on the totalitarian end of the spectrum. While recognizing China made a lot of progress in the past century (making up for the couple thousand years before) it is still unacceptable. Mind you my children will have to live in a world where a totalitarian state ruled with iron fist by a political aristocracy is a major commercial partner of just about every other country. And this arrangement may start putting ideas into some minds that would be better if left empty.
Karma for introducing me to the term Overton window. And I do agree with you that we should encourage China to continue to liberalize. I just wanted to try to offset what I feel is a somewhat one-sided view of the Chinese situation.
I'd also like to point out that, despite how the Western media often presents it, the CCP isn't monolithic. Power swings between two poles: Beijing and Shanghai (Beijing being the political and military hub, Shanghai being the economic hub). For example, Jiang Zemin represented the South and was what we would consider more economically liberal and now Hu is more friendly toward the military, more focused on 'political stability', and more representative of the North. I highly suspect the next president will be a conscious swing back to the 'liberal' side of the spectrum.
And the power hubs tend to alternate every decade or so. I suspect when democracy does start to trickle down to the Chinese population, the party will split somewhere along this line. We just need to give it a few more decades.
Here's hoping that world events allow them time to do so.
What is required is a way for one bunch of people to say "hell, the people running the government right now are idiots. Idiots I say! Let's completely do things differently!" and be able to assume power and change things without force of arms or violence.
And do this on a regular basis.
I know I'll feel better when that day comes. Because well, sometimes the folks running things are idiots. And they have all the guns.
While the fight for human rights and equality is certainly commendable, we must not fall into that pit that westerners always do and risk doing more harm than good. Not all societies are built to accept democracies, and not all cultural mindsets are ready for it. Taking China into perspective, if you are not Chinese and haven't lived in China in the past 50+ years, there is no way you can say or claim that you know what is needed there. I'm not making any assertions that their govt is something praise worthy, but who are we to say that a western style democracy will work best for their society? It's the same thing in Iraq and Afghanistan: We are trying to apply OUR ideals to a culture that doesn't have a clue what to do with it. Just because it works for us doesn't mean it'll work for them. Just look at the African states, and well, closer home, the Philippines. The Philippine constitution was modeled after the US's, and so far, all they've had were a succession of presidents that have made a mockery of the system. Why? Because western govt ideals don't allow for unique Philippine cultural attitudes.
So,
I know the chinese govt is oppressive and has yet to embrace the concept of human rights. I do believe the ruling regime and its system of govt should be abolished and wiped off the face of this modern world.
I know that working conditions in China will make the average McDonald's burger flipper in middle america thank his lucky stars he was born on american soil.
But, without knowing the nuances of its culture, what it considers 'tolerable' and what makes it 'tick', all you are doing is applying western ideals AS YOU SEE IT, to a culture that isn't nec. asking for it.
The best analogy I can give is it is like forcing a 6 month old baby to walk. You can't without damaging the hell out of the kid's psyche. It will walk when it is damn well ready.
China worries a lot of people because of the force they are becoming, culturally, militarily politically. I think people associate 'democracy' with all sorts of things that are not directly derivative, but the general idea is reasonable.
China does not have even the pretence of many institutions that are considered essential by many westerners. Democracy is one. Rule of law is another one that is usually lumped together (incorrectly, in my opinion) with democracy. A certain form of system neutrality is an important new world institution.
Another institution or value doesn't seem to have the right word. Libertarianism would be close but it carries far to much excess baggage, mostly US-specific. Basically, the idea that states should limit their involvement in certain areas.
People are worried that China's ascent means that 'rule of law' (or at least, a certain interpretation of this) is optional in the 21st century.
I don't think it's unavoidable, but centralization will tend to have these sorts of effects without other controls and institutional checks, yes.
One could imagine a benevolant, meritocratic oligarchy, in which the hiring and promotion process had a strong process of only advancing those up the chain who had demonstrated a certain level of competence, e.g., many successful large engineering organizations.
That's because its harder to bribe people in China compared to the USA. There you need to do a shady deal and pay a ton of money, so family gets the inside track.
In the USA, all it takes is a 100K at election time, and its completely legal.
I can't imagine that it's harder to bribe people in China than in the USA. In fact, I think much, much more bribery per capita happens in China than in the US. The Chinese legal system is very weak.
Still, the U.S. political system allows for such an outlier as Obama[1] to get on the top. It would've been impossible if it was only the issue of getting the most lobbyist beef behind.
[1] Not idealising him here, but his ascent was both extremely untypical and very American at the same time.
I don't see anything different in this respect in China than I do in many western societies. Having a leg up is definitely a pre, anywhere. It may differ in degree but certainly not in principle.
The news was 90% of Chinese billionaires are actually kids of government officials. That would be like if the billionaires in the UK were children of parliamentary officials or if the billionaires in the USA were children of senators and representatives. It's wrong to equivocate the Chinese situation with simply having "connections." It's a fundamental structural difference between China and "western societies."
Also, what you're implying in the weak sense is probably wrong. Billionaire lists are easily found on the internet and if you look at the bios of the people on such lists, I would assert the opposite - most of the billionaires in western countries started out with few significant connections at all.
There's a difference in degree here too though: there's a massive difference between "son of a lawyer" and "son of a central committee member". Gates is considered one of the more privileged billionaires, because his mother was on the board of directors for United Way and his father was a prominent lawyer. That seems like a crack down from his parents being President or in the Cabinet.
It also ignores counterexamples like Steve Jobs (from a working class, blue collar family), Larry Ellison (Jewish immigrants who worked as modest government employees) or Larry Page and Sergey Brin (children of professors).
Hm well professor is not exactly middle class either... Actually children of professors are probably the best prepared to make a great career more than anyone else. Parents with connections, lots of knowledge and more time than people working in the industry - that's the perfect mix. I know a few sons of professors, they just surf through life.
Buffet's father wasn't a politician until after Buffet was rich. If anything, in western countries it's easier to become a government official because you're related to someone rich than it is to get rich because you're the kid of a government official.
Chinese citizenship: Wong Kwong Yu, Zhang Li, Zhang Jindong, Chu Mang Yee, Zhang Cheng Fei, Guo Guangchang, Liu Yongxing, Xu Jiayin, Liu Yonghao, Lu Guanqiu, William Ding, Zong Qinghou, Li Wei, Song Weiping, Liang Wengen, Chen Fashu
Hong Kong: Li Sze Lim
Australia: Shi Zhengrong
USA: Roger Wang
Nineteen if you count these other guys. All reside in China.
Interestingly enough, this list does not include the people listed at the bottom of the article: Hu Haifeng, Winston Wen Yunsong, Jiang Mianheng, Li Xiaopeng, and Levin Zhu.
One interesting thing about the article is pointed to a specific, one-way path. Sons of high government official became wealthy entrepreneurs. They didn't and apparently couldn't become high government officials themselves. Their offspring perhaps also cannot become high official. Moroever, they will eventually have to compete with the sons of new high officials, since the high officials themselves are apparently drawn from all over.
An interesting trend and perhaps more interesting than just the simple concentration of power - though power often likes to concentrate.
I didn't mod you down, but I read you plea for critiques and am happy to give you one.
"Getting a leg up" is a broad phrase that could mean anything from knowing people at the local country club to paying off government officials for special treatment.
In western societies, the idea is that governments change on a regular basis. This prevents, in theory, high-ranking government officials from getting into bed on a permanent basis with companies. Note that corruption doesn't magically go away: what probably happens is that you trade off one set of crooks for another. But -- and this is a very important but -- it changes.
Some types of getting a leg up are certainly fine. Some aren't. It's a really important distinction to make, because it lets some systems flex and adapt and leaves others incapable of it.
I think the common element is that the people around you are the key to your lot in life. In western societies that is being born into some money or knowing people that have some, in China it means the party.
Neither of those are a guarantee, but statistically speaking you'd expect people with connections or with parents in high places to do better than those without.
Rags-to-riches stories exist, but for every pauper that 'made it' there are hundreds if not thousands or more that don't stand a chance.
In a fair society everybody has equal chances at birth, but such a society does not exist (or at least I'm not aware of one). China is 'unfair' because it apparently gives the children of the party bosses extreme advantages, the west is unfair because if your parents have money you're likely to leverage that.
Oh, and I absolutely agree that this is the kind of 'leg up' that should be illegal, it's cronyism pure and simple. But then again, so is the 'Bush dynasty'. Or is there a gene for politics ?
That's the common element, sure. And we see this everywhere, no matter what the political system.
Some of the stats on wealth creation are interesting. If I remember correctly, it's very unusual for children of rich people to also generate a lot of wealth on their own. That's why you see one rich guy trying his best to keep his kids from squandering everything. If you're lucky you send them to a lot of schooling and they do acceptably well.
It's the hustlers that make the money, no matter the system.
I don't think you can have "fair" -- it's an overloaded term and can be stretched to fit anything. What you can have is enough controlled chaos and change that patterns are not easy to spot and exploit.
I'm not familiar with the term "Bush dynasty". Do you mean the fact that a bunch of them are in politics? If so, you'd have to add the Gores, the Kennedys. and a lot more to that category. I'm concerned that we're creating a system of nobility here with all of the offices that effectively have no competition and all of the families that hand down political power, but that seems a little off-topic for this thread.
I wouldn't say China is unfair because children of bosses get the goodies. I would say China is unstable because the same bosses rule for generations and the same kids get the same handouts. We see this pattern in a lot of places, but China has it the worst.
It's just the type of thing that Chinese communism was supposed to stop from having, so if anything you'd think they would be sensitive to this.
I think they are as much 'believers' as religious leaders are 'believers'.
Self delusion goes a long way towards apologizing for taking a bit more than you're giving, especially when you don't respect those that you are taking from.
To all those that feel the need to mod this down if you do not agree with me then feel free to write why you don't agree.
Do you think that having a leg up is somehow detrimental to your progress ? Is it a coincidence that people with connections (or party affiliations) have an easier time of amassing wealth in China ? Is that same coincidence at work when the son of a politician makes a fortune or becomes a politician himself in a western society ?
This is impedence mismatch between you and the community.
Your readings and experiences have caused you to form some opinions about how the world works (i.e., connections are very important), but most people here think that connections don't matter as much as you think.
I'm not that surprised that people here think that way since most of us here hope to make something brilliant and rock the world (and thereby make tons of money).
My two cents: In mature industries (e.g., telecom, entertainment, construction, banking, automobiles, healthcare, pharma) connections are almost the only thing that matters (both in China and in the US), but in dynamic sectors such as computers connections are much less important.
On another note, the problem of "guanxi" extends to the microlending arena. China's lending capital for microloans is small, and even then, the funds are generally directed to those with connections to the government. I'm working with a nonprofit called Wokai (http://www.wokai.org), and we're working to raise loan capital from people around the world for microloans to Chinese farmers. We operate pretty similarly to Kiva, except that due to Chinese regulations we can't return money to lenders - therefore, we solicit contributions that turn into perpetual loan capital.