Lecture 6 Self-organization as a Mode of Governance

“…in The Book of Songsit is said: „He makes no show of his moral worth, yet all the princes follow in his steps.‟ Hence the moral man by living a life of simple truth and earnestness alone can help to bring peace and order in the world. In The Book of Songs it is said: „I will keep in mind the fine moral qualities which make no great noise or show.‟ Confucius remarked, „Among the means for the regeneration of mankind, those made with noise and show, are of the least importance.‟ … „The workings of almighty God have neither sound nor smell. There is nothing higher than that.‟”

—The Doctrine of Dynamic Balance

Do Chinese have an indigenous set of management theories? It is necessary to see a fact before answering this question. Chinese enterprises indeed are very great – a phenomenon that should never be overlooked – despite so many problems with Chinese organizations as we have discussed above.

It is true and necessary that a large number of Chinese enterprises are taking their European or American counterparts as templates from which they learn modern management methods. But we have also seen that Chinese enterprises have already defeated a lot of companies from other countries in numerous fields, especially in the manufacturing sector. A student of mine studied one of such cases. She investigated a village that specializes in producing chain blocks. Products made by businesses run by local villagers have been sold worldwide and represent 70% of the domestic market. The second case is the China Commodity City (often shorted as CCC), a large wholesale market of Yiwu, a city in Zhejiang Province. Today, there are about 30,000 foreigners who make regular purchases in Yiwu, which is by far the world leader in terms of particular consumer goods. The third case is ―no-brand-name‖ mobile phones (most makers of such mobile phones are small but actually not copying others' products and, instead, have their respective brands and R&D departments). ―No-brand-name‖ mobile phones with advanced features such as dual cards, writing pad and high-speed camera are priced only somewhere between 600 and 700 yuan, as opposed to similar products from international brands priced at up to three times as high. Chinese-made ―no-brand-name‖ mobile phones have been exported to many regions such as India and South America, where they are important competitors for products from major brands. Why are ―no-brand-name‖ mobile phones so competitive? This is because makers of

① This is one of the main six books editted by Confucius. It is also translated as the Book of Poetry.

83 ―no-brand-name‖ mobile phones are able to launch about a thousand models a year to meet the needs from niches ranging from senior citizens, children and migrant workers to white-collar workers. In reality, Chinese can usually provide very good products unless they are short of technological expertise.

How then have Chinese enterprises made all this happen? This indeed results from particular organizational structures. Why are Chinese enterprises so great in some organization structures such as the ―one town, one industry‖ model in Yiwu, the outsourcing service network model in the construction industry and the field of high-tech manufacturing services, as well as the platform model of Alibaba and MediaTek (the latter provides technology platforms for the

―no-brand-name‖ mobile phone industry)? And why are large companies such as state-owned companies, conglomerates and monopolized firms in China often the synonyms of inefficiency, hierarchy and wastage? These are the questions we should think about.

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