The changing Chinese culture and business behaviour

During the past three decades China has been transformed from one of the world’s most isolated and backward economies to its fastest growing and most dynamic economy. Since 1978 China’s GDP has grown by 10% per year on average. The Chinese economy was worth 21.09 trillion yuan in 2006 or 2.65 trillion dollars (China Daily, 2007). If the current growth momentum continues, China will overtake Germany to become the world’s second largest trading nation in 2008. The living standard of 1.3 billion Chinese people has been rising in general and particularly in coastal regions. The World Bank estimates that approximately 500 million Chinese people have been lifted out of poverty since 1980. Many people see China’s successful transformation as a result of China’s well-planned strategy to move towards a market system after Mao. But we can recall that China did not seem to have a crystal-clear vision as to where to go exactly when Mao died. Looking back, had China had any successful development strategy, it would have been the old Chinese wisdom of ‘‘groping for stones to cross the river’’ (Nolan, 2004). It is China’s entrepreneurial spirit, its humility to learn from the West, its courage to experiment new things, and its determination to never give up that have tuned China around after Mao. For almost three decades, since the founding of the People’s Republic of China (PRC) on October 1, 1949, China was in constant internal political turmoil where economic development had hardly been a real focus. In particular, the Cultural Revolution (1966–1976) ruined China’s economy and destroyed the moral foundation of Chinese society. In the mid-1970s China was isolated from the rest of the world and poor in absolute terms. Being poor was considered ‘‘glorious’’ in the old Communist China; a prevailing political slogan in China at that time was: ‘‘Prefer poor socialism not rich capitalism!’’ Private ownership and private business were condemned as capitalist evils. When Mao died on September 9, 1976 China was in its history’s deepest crisis. An intensive debate was taking place in China as to what ideological direction China was to move in. In December 1978 the Chinese Communist Party with Deng Xiaoping as its new leader eventually reached the compromise that it is the reality, not anything else (not even the Communist dogmatism nor Mao’s Little Red Book) that constitutes the only criterion to verify truth. Deng Xiaoping is quoted as saying: ‘‘It doesn’t matter if the cat is white or black; the cat that can catch the mice is the good cat!’’ This was the turning point of China’s development and probably the most important breakthrough in contemporary Chinese politics, which enabled China to turn down, slowly but surely, its old ideological, institutional and cultural taboos to move beyond Mao. After some initial successful experiments made in agriculture in terms of ‘‘household responsibility system’’ China was setting out to make bolder reforms in urban regions. In 1979 China promulgated its first jointventure law to attract foreign capitalists to invest in China. The reform experiment started in 1980 in south China (Shenzhen, Zhuhai, and Shekou) in terms of Special Economic Zones, where the old socialist ‘‘iron rice bowl’’ (tiefanwan) was broken down and people were allowed to earn more by performing better. Modern infrastructure, production facilities and logistics networks were built up and special tax and land policies were implemented to attract foreign as well as domestic entrepreneurs to invest in these zones. People who lived in China at that time could hardly forget the meaning of the ‘‘Shenzhen Speed’’: building an entire floor of an