Capitalism with Chinese Characteristics

As a final act of his presidency - it will end at the Communist Party meeting beginning November 7 th - China's Jiang Zemin wants businessmen to join the Party leadership. Marx and Mao are probably spinning in their graves. Who are these businessmen President Jiang wants to court and how do they operate? Kenichi Ohmae offers a portrait.

Officially, China remains Communist. Yet companies in China face far fewer regulations than in Taiwan, Korea, Japan, Germany, France, and Sweden. Even in comparison with the US, China is a capitalist paradise - so long as you steer clear of the central government. For example, tariffs (which are set by the central government, but administered locally) are low or nonexistent for companies that take advantage of China's regional systems of tax-free zones and tax benefits.

None of this was conceivable as recently as 1992, when Beijing's proclamation of "one country, two systems" - and the decision to peg the mainland's currency, the Renminbi, to the Hong Kong dollar - unleashed the floodgates of foreign investment. Money poured into the Shenzhen and Shanghai stock markets, as did direct investment to build factories and offices in tax-free zones.

The trappings of entrepreneurial culture are everywhere. The face of General Electric's longtime boss Jack Welch is in bookstore windows across China, although his latest book is probably a pirated edition because China still has a way to go on copyright protection. Many managers attended China's elite foreign language schools (which trained spies during the Cold War era) and then headed to America for an MBA. Back home, they practice just-in-time manufacturing, 360-degree performance evaluations (including bosses reviewed by subordinates), and re-engineering - all with unmatched resourcefulness and purposefulness.