Understanding Corporate Governance in China

Bob Tricker and Gregg Li
(Hong Kong University Press)

Unlike the West, which sees corporate governance as a necessary way to regulate business, China sees corporate governance as the means to economic growth for the benefit of the people and the State.

When Gregg Li and I worked together in Hong Kong, around twenty-five  years ago, we did not imagine that within a couple of decades, China would:

●  become the second largest economy in the world

●  have some of the most significant companies on the New York Stock
Exchange board

●  create an affluent, car-owning middle class able to travel to Hong Kong, Europe, and North America, with their the children of some of them being educated in English public (i.e. private) schools

●  build smart cities using information technology to run activities in a virtually cashless  society

●  develop a modern transport network of motorways and railways

●  launch a ‘belt and road’ strategy to link China with Europe by sea an land.

In the 1980’s, the Chinese authorities decided to create a modern enterprise system, leading to a market economy. A new companies’ law was enacted in 1994 permitting the formation of companies.  Many state owned enterprises (SOEs) were corporatized and some floated a minority of their shares on the stock market.  New companies were created; some family firms, others reflecting national, provincial, or local interests.

China recognized, at the outset, that corporate governance was fundamental to economic development.  Corporate governance systems are experimental and evolving.  Unlike the West, which sees corporate governance as a necessary way to regulate business, China sees corporate governance as the means to economic growth for the benefit of the people and the State.  This book tells that story.

Bob Tricker