Sunday, March 4, 2012

Mr. China

Many of us in India (and I am sure elsewhere in the world) have been mesmerized by the Chinese economic and industrial juggernaut. The external understanding of this process revolves around SEZs, FDI, and the Chinese government’s economic policies.

Tim Clissold’s Mr. China (Collins Business, 2004) suggests that the process of transformation of the Chinese economy was far less orderly and structured than it appears from outside. In particular, it highlights the role of foreign private equity in trying to consolidate and grow existing enterprises in China, and the huge challenges such an endeavour faced.

I found the parts that describe the change process from “factories” to “industrial enterprises” particularly insightful; they remind me of a HBS case we studied several years ago at IIMA on how a Soviet factory was managed. The book also highlights how important an institutional structure, rule of law, contract enforcement, and banking processes are for sustainable industrial development. These were clearly not in place in China till the late 1990s, though things have changed substantially now. In such an environment, private equity firms had to be as entrepreneurial as the firms they were funding!

Written in the style of a thriller, Mr. China is essential and fun reading for anyone interested in the growth of business enterprises in China.

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