From Familiar Ties to Family Ties

It is even harder to turn friends into ―family members‖, i.e. pseudo-family ties. Since there are, after all, interests-based exchange relationships between the two sides, certain ceremonial acts are generally needed, in addition to getting emotionally closer to the other side, so as to place those relationships into the field of ―families‖ accepted by social norms, thereby turning them into family ties under the interests-irrelevant need rule. There are generally three most important ceremonial acts – marriage, adoption and becoming blood brothers.

There are three approaches, since the ancient times, to developing familiar ties into family ties in China. The first approach is marriage. There was a tradition in China that two children – one was supposed to be a boy and the other a girl – were engaged to each other even before they were born. And this was intended to get the two families so close as to become a single one. The

second approach is adoption, which reached the peak in the Tang Dynasty (AD. 581-907). The

phenomenon of adoption remains common in Japan where much of the Tang culture is retained. The third approach, or the one that later on became most prevalent in China, was becoming blood brothers. And this phenomenon was most common in the Song Dynasty (960-1279) . At this time, merchants from Shanxi Province emphasized the idea of ―Rely on friends when away from home‖ since they kept traveling in a dynasty with flourishing industry and commerce. It

was also at this time that Guan Yu (the most famous general in the Three-Kingdom period, AD.

220-280)worship began to emerge from among these merchants and, later on, spread to more people thanks to his loyalty to Liu Bei (Guan Yu's blood brother and supervisor). I refer to the

―family members‖ in this context as ―pseudo-family ties‖ since they are not confined to the same ancestry, surname or army. Like in the case of real family members, the family ethics applies to pseudo-family ties.

The first company has, CL Industrial as we have said above, transformed itself into a virtual business marketing platform that specializes in design and services. Nonetheless, how can a virtual company that has contracted out the entire manufacturing and processing business control product quality, lead time, costs and services? Chinese SMEs are globally renowned for flexibility and low costs resulting from networks of partners. Unfortunately, however, the SMEs in such networks are less loyal than are Japanese companies, as they sometime prioritize costs over anything else and partner with whichever makes the lowest offer. Consequently, all of them are involved in price competition that leads to a continuous decrease in gross margins and, ultimately, even the final winners will be struggling, not to mention making big money.

The aforementioned virtual company had an outsourcing service provider as one of its partners. With excellent technologies, timely delivery, honesty and diligence, this provider was the one with which this company worked most often and had the closest ties. But he had a relatively high cost of outsourcing services despite the best quality. The provider had a beautiful daughter, say, Mary, for example, who then majored in music and was always his pride. By the time when Mary graduated with a master's degree, the provider played, for Mr. A, the DVD of her public music performance. Seeing such an elegant and cultured girl, Mr. A couldn't help praising her within himself. Three years later, the youngest son, say, Peter, for example, of Mr. A got to know the girl at an exhibition as part of the World Expo. Later on, the provider met Peter at the banquet as part of the wedding of Mr. A's eldest son. He felt that Peter knew just how to deal with others and was mature and polite. Since neither Mary nor Peter was in love with anyone, they began dating with blessings from their parents and later on, as were expected by all, married.

In the story above, it took four years for the two parties to turn from acquaintances into familiar ties and then into family members. When it comes to developing relationships with the provider, the patience of Mr. A is visible in addition to luck. Since they already worked with each other closely before the marriage, it is predictable that the provider works, after the marriage, as the only outsourcing service provider for Mr. A's company, which has even contracted out the after-sales service to the former. And the company also has transformed itself smoothly into a marketing platform and design service provider with low costs and high margins. Marriage aimed at deepening ties similar to the aforementioned ones has of course become less common, nowadays, than becoming blood brothers.

Damages to Relationships

It is difficult, as we have said above, to establish family ties with strong instrumental exchanges, and it is also costly to withdraw from them. This has been fully demonstrated by the story of DoubleStar, which was China's leading sports shoe brand. A fight for ownership of the group broke out between Wang Hai, the President of the group, and a couple, Liu Shuli and Han Junzhi, who are his nominal son and nominal daughter respectively, in April 2008. It is beyond question that Wang Hai had built a loving and effective home-like context for this couple, as he had granted them a high power for internal contracting and, hence, allowed the realization of their individual interests largely go beyond restrictions of the collective. The new market-oriented restructuring and reform, however, reclaimed all their powers suddenly and thoroughly. This let them feel that they had been deprived of what they deserved and been improperly treated. These feelings were stronger than the sense of belong to the collective. And that was how the family ties and mutual trust, which they had strenuously built, broke up. Not only was it impossible for both sides to maintain the partnership, but there were even wars of words and prices between them as competitors to each other in the market, let alone maintain any positive tie.

This case enables us to see why it is very difficult to turn the family ties with strong instrumental exchanges in the third phase in the figure 4.1, once they break up, into the ones in any other phase. It is impossible for the involved parties to return to the original expressive ties and difficult even to be like general acquaintances. Instead, they are like strangers or even enemies.

To avoid such breakup of ties, Chinese always emphasize two things: business is business even if you are dealing with your real family members; it is always advisable to define rules before you make a deal with someone else. Partnerships, if they are short of an effective governance mechanism, pseudo-family ties are also prone to become problematic. The DoubleStar case, once again, lets us see the necessity of governing an organization under rituals and laws together. It was delays in initiating governance under formal rules that made the DoubleStar Group become an example of failure.

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