Li, Lillian M.

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Swarthmore College Works History Faculty Works History 2001 Review Of "Encountering Chinese Networks: Western, Japanese, And Chinese Corporations In China, 1880-1937" By S. Cochran Lillian M. Li Swarthmore College, lli1@swarthmore.edu This work is brought to you for free and open access by . It has been accepted for inclusion in History Faculty Works by an authorized administrator of Works. For more information, please contact myworks@swarthmore.edu. Follow this and additional works at: https://works.swarthmore.edu/fac-history  Part of the History Commons Let us know how access to these works benefits you  Recommended Citation Lillian M. Li. (2001). "Review Of "Encountering Chinese Networks: Western, Japanese, And Chinese Corporations In China, 1880-1937" By S. Cochran". Journal Of Asian Business. Volume 17, Issue 1. 108-109. https://works.swarthmore.edu/fac-history/303 Book ReviewsEncountering Chinese Networks: Western, Japanese, and Chinese Corporations inChina, 1880-1937. By Shennan Cochran Berkeley, Los Angeles, and London:University of California Press, 2000, xii, 257 pp,In Encountering Chinese Networks, Shennan Cochran challenges the viewthat there have been culturally distinct Western, Japanese, and Chinese styles ofbusiness management and organization. This view had its origin in the Chandlerparadigm of the Western finn, which evolved from "personal capitalism" to"managerial capitalism;" the fanner stressed personal networks while the latteremployed "managerial hierarchies. It Japanese companies, according to otherhistorians, also had vertical hierarchies, but ones that penetrated even lower into theorganizational structure. Chinese businesses, on the other hand, have beencharacterized by their use of family and regional networks. Earlier economichistories saw the dependency on networks as a hindrance to efficient management,but in the 1980s, the success of the "Four Dragons" and the so-called Asian modelof development led to a more positive evaluation of the role of family values andsocial networks.In presenting the histories of six companies that did business in China in thelate nineteenth and early twentieth centuries, Cochran firmly rejects the notion thateach followed one style--either hierarchy or networks-to the exclusion of theother. Although some came closer to the expected paradigm than others, all ofthem-two American, two Japanese, and two Chinese-c-made some use ofcorporate hierarchy as well as of Chinese social networks. Since they were amongthe largest and most successful companies operating in China, clearly success did notdepend on one model or the other, but, rather, on flexibility in choosing strategies.The two American firms, Standard Oil and British-American TobaccoCompany (BAT), not surprisingly, best embodied the Western management system.Western-style hierarchy-including the recruitment and strict training of Westernand Chinese staff-was critical to Standard Oil's success in China. Yet for the firsttwenty years of its operation in China, 1883-1903, Standard Oil had depended onChinese agents or compradors to handle its business, and they in tum relied heavilyon their native-place networks. BAT also had a two-stage history. Initially itemployed a dual-track marketing system: the first was a hierarchy headed by anAmerican, James Thomas, and his English-speaking Chinese deputy, Wu Tingsheng.The second was a Chinese network headed by Zheng Bozhao. a commission agentwho was unable to speak English and uncomfortable with Westerners. WhenZheng's methods proved to be more competitive, BAT shifted to Chinese-stylemanagement that depended on networks of independent Chinese sellers. When BATmoved to manufacturing its cigarettes in China, most of the production process wasleft to Chinese foremen or "Number Ones."Of the two Japanese companies studied, Mitsui followed the pattern ofrelying on Chinese compradors until 1898 when it turned its attention to themanufacture of cotton products and began to recruit and train Japanese personnelexclusively. Engaging in direct marketing, Mitsui consistently undersold itsAmerican competitors. The Nagai Cotton Company, on the other hand, first used108Book Reviewsthe Japanese model exclusively, but after being the target of anti-Japanese protestduring the May 30th demonstrations of 1925, resorted to a hybrid system ofJapanese managers and Chinese labor recruiters.The two Chinese firms also differed significantly from each other. TheShenxin Cotton Mill, managed by China's best-known business family, the Rongs,was the classic example of reliance on Chinese family networks for the purpose ofbuilding managerial hierarchy, and the rejection of the Western model The ChinaMatch Company established in 1930 by Liu Hongsheng used Western-stylemanagement practices to build a company that competed successfully against moreestablished Western match companies. Yet Liu and his family controlled more thanhalf of the company's stock. In addition Liu carefully constructed a new-stylenetwork from the Shanghai St. John's Middle School and University alumni, as wellas drawing from his old-style Ningbo native-place network. The greatest challengefor both Rang and Liu, however, was securing the protection of the Guomindangleadership. After much difficulty Rang evaded control, while Liu succeeded informing a government -approved monopoly of the match trade.Based on extensive and painstaking multi-archival research and interviews,these six business histories constitute an important contribution to comparativebusiness history and Chinese economic history. Cochran convincingly refutes theidea that there must be a convergence of business models; yet he also argues againstessentialist notions of mutually exclusive and culturally determined Western,Japanese, or Chinese models. Indeed, as he concludes, the use of national modelsprovides "no more than a convenient point of departure for understanding the past,"or indeed the present, arguing instead for more attention to historical contingencyand context (p. 186). The author's earlier book Big Business in China: Sino-Foreign Rivalry in the Cigarette Industry, 1890-1930 (Cambridge, Mass., HarvardUniversity Press, 1980) was a path-breaking study. Rich in historical detail andinterpretive insight, this new book opens up more pathways and deserves to bewidely read by business historians, Chinese historians, and all those interested inAsian business today.Lillian M. LiSwarthmore CollegeChina and India: Economic Performance and Business Strategies of Firms in theMid-1990s. Edited by Sam Dzever and J. Jeussaud. New York: St. Martin's Press,1999.A book seeking to compare the economic performance of India and China isundoubtedly very welcome. First, as the editors note, India and China constituteabout 40% of the world's population, and both have embarked on a process ofeconomic liberalization. The result of this liberalization holds enormousconsequences for the people in these countries and also for the world economy atlarge. Second of all, there are few if any comparative studies of India and China.109

Review Of  Encountering Chinese Networks: Western, Japanese, And Chinese Corporations In China, 1880-1937  By S. Cochran

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Review Of Encountering Chinese Networks: Western, Japanese, And Chinese Corporations In China, 1880-1937 By S. Cochran

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