SHA 315
Chinese Business and
Economic Development

Rollins Shanghai Center
Fall 2010
T-Th 10:30-12:30


Pictures 2010

Dr. Thomas Lairson
Gelbman Professor of International Business
Professor of Political Science


China Pictures

Even with the global economic crisis, China and its Asian neighbord remain the most dynamic and fastest growing region in the world. Further, China is a very different business environment for those accustomed to western business systems. Students of international business will need to adapt and adjust to a radically transforming world, with Asian markets and competition an unavoidable reality. This course is designed to provide students with details about the business and economic environment.

China remains a communist country with a significant legacy of a command economy. But it is also a market economy. Understanding this mixture - capitalism with Chinese characters - is a major aim of this course. This requires considerable background combined with detailed examination of Chinese and foreign firms operating in China.

We begin with several classes on on the historical development of the Chinese economy. This includes the nature of the command economy developed duringthe Maoist era and the period of economic reform under Deng Xiaoping. There are several quite different economic regions in China which offer a variety of business environments and resources. Chinese business culture is a topic that leads us on to more specific features of the economy and business: the exceptional role of the government - national and local - in the business system; the nature of the consumer economy; and the role of foreign direct investment and international trade. The nature and operation of firms in China includes both foreign and emerging domestic firms, high technology operations in China, and the nature and future of the Chinese auto industry. Understanding future trands involves a consideration of the eroding position of price advantages in production, including changing demands of workers, shifting bases of competitiveness and the role of energy in the Chinese economy. We conclude with a discussion of the global financial crisis and the enormous role of China in that process.


Goals of the Course:

Required Text:

Barry Naughton, The Chinese Economy, MIT Press, 2007.

Ted Plafker, Doing Business in China: How to Profit in the World's Fastest Growing Market,
Business Plus, 2008.

Course Grade:

Midterm exam
Final Exam
Research Paper

Grade for the Course: There is no curve for the grade in this course; that is, you must meet an absolute standard set by me to succeed in the course. This means everyone can obtain an "A" but everyone can also receive an "F."

There is no extra credit in this course.

Participation The participation grade for this course involves coming prepared to every class and being ready to make a contribution to the class period: asking informed questions, offering thoughtful comments, and answering questions posed to the class. You can earn a zero in participation by not participating.

You have three choices for the research paper. 1) a paper comparing two Chinese firms from a list I provide. 2) an analysis of the future of the Chinese auto industry using readings I provide; or 3) writing a paper using sources in several sections of the syllabus where additional readings are provided.

Option 1. You will need to analyze the two firms based on the following:

Comparative financial data
Historical background on the firm
Relationship to the government
Ownership of the firm
Competitive environment of the firm
Future prospects

Option 2

In the syllabus below is a section on the Chinese auto industry with a set of additional readings. The readings focus on analyzing the industry's future based on understanding the major global forces at work. You will write a paper using these sources in making a five years forecast on the Chinese auto industry.

Option 3

There are several parts of the syllabus where additional readings are provided. You may write a paper that uses these readings intensively to define and develop a topic.


Attendance: You are expected to be in class for each scheduled session, and you must be on time. Class attendance will taken every day. Anyone who misses more than three classes will be penalized by one-twelfth of their FINAL grade for each absence over three. Thus, a student who misses eight classes (equal to one-third of the classes in this course) and who otherwise earns a "C" will in fact receive an "F" for the course.

Makeup exams: No makeup exams are given "after the fact," that is, after the exam has occurred unless I have been contacted before the exam. If you miss the exam and have not contacted me before the exam, you will not be able to take a makeup.

Classroom behavior: There are several forms of inappropriate behavior in this class. You may not sleep in this class; you may not have extended private conversations in this class; you may not bring food to this class; and you may not get up and leave this class unless you are ill.



Membership in the student body of Rollins College carries with it an obligation, and requires a commitment, to act with honor in all things. Because academic integrity is fundamental to the pursuit of knowledge and truth and is the heart of the academic life of Rollins College, it is the responsibility of all members of the College community to practice it and to report apparent violations.

The following pledge is a binding commitment by the students of Rollins College:

The development of the virtues of Honor and Integrity are integral to a Rollins College education and to membership in the Rollins College community. Therefore, I, a student of Rollins College, pledge to show my commitment to these virtues by abstaining from any lying, cheating, or plagiarism in my academic endeavors and by behaving responsibly, respectfully and honorably in my social life and in my relationships with others.

This pledge is reinforced every time a student submits work for academic credit as his/her own. Students shall add to all papers, quizzes, tests, lab reports, etc., the following handwritten abbreviated pledge followed by their signature:
"On my honor, I have not given, nor received, nor witnessed any unauthorized assistance on this work."
Material submitted electronically should contain the pledge; submission implies signing the pledge.

Disabilities Statement

Rollins College is committed to equal access and does not discriminate unlawfully against persons with disabilities in its policies, procedures, programs or employment processes. The College recognizes its obligations under the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990 to provide an environment that does not discriminate against persons with disabilities.

If you are a person with a disability on this campus and anticipate needing any type of academic accommodations in order to participate in your classes, please make timely arrangements by disclosing this disability in writing to the Disability Services Office at (box 2613) - Thomas P. Johnson Student Resource Center, 1000 Holt Ave., Winter Park, FL, 37289 or call 407-646-2354 for an appointment.

Schedule of Activities:


Week 1

31 Introduction to the course (pretest)


2 The Legacy of the Command Economy

Naughton, Chinese Economy, 55-83; 231-240 skim

Background material

The Economist China Survey I II
Asia's recent growth

Week 2

7 Economic Reform I

Naughton, Chinese Economy, 240-248; 85-110.


9 Economic Reform I and II: Bottom-Up Capitalism - Township and Village Enterprises

Naughton, 271-292

2008 Style Land Reform

“The long march backwards,” The Economist, October 2, 2008

Week 3

14 Economic Regions in China

Edward Tse, "The China Challenge"


William Overholt, "Hong Kong or Shanghai?"

Additional Material
An American Entrepreneur in Shangha

Out of Shanghai's Shadow: Why Hong Kong Is Becoming China's New Financial Services Center

Hong Kong/Guangzhou/Shenzhen/Guangdong

In Chinese Boomtown, Middle Class Pushes Back

At the Beating Heart of an Export Machine

Hong Kong map

Hong Kong Factsheet

Additional Material:

Knowledge@Wharton, "Restructuring Guangdong's Economy: Moving Up the Value Chain as Exports Go Down"
Can Huang and Naubahar Sharif, "Manufacturing Dynamics and Spillovers: The Case of Guangdong Province and Hong Kong, Macau, and Taiwan","
Becky P.Y. Loo, "Export Expansion in the PRC since 1978: A Case Study of the Pearl River Delta"
Acquisition of technology capability through special economic zones (SEZs): The case of Shenzhen SEZ
Fu-Lai Tony Yu, "Technological Strategies of Hong Kong Firms"
Leo Goodstadt, "Hong Kong's Long March to Democracy"


Richard Silberglitt, "Emerging Technology Opportunities for the Tianjin Binhai New Area," RAND, 2009, 1-18.


Week 4

16 Chinese Business Culture

Plafker, Doing Business, 78-123.

Jin Ai, "Guanxi Networks in China: Its Importance and Future Trends"

Kenneth DeWoskin and Ian Stones, "Facing the China Corruption Challenge"

Cracking the China Market

Guanxi (The Art of Relationships): Microsoft, China and Bill Gates’ Plan to Win the Road Ahead (Video)


21 and 23 The Chinese Government and Chinese Capitalism

Thomas Friedman - US versus China

Plafker, Doing Business, 48-77; 147-178

Bruce Dickson, "Integrating Wealth and Power in China: The Communist Party's Embrace of the Private Sector"

Yang Yao and Linda Yueh, "Law, Finance, and Economic Growth in China: An Introduction,"

Linda Yueh, "China's Entrepreneurs"

Wubiao Zhou, "Bank Financing of China's Private Sector: The Payoffs of Political Capital"

The Economist, "The Art of Chinese Massage"

Mary Gallagher, Contagious Capitalism, Introduction

David Barboza, "State-Owned Bidders Fuel China's Land Boom"

Susan Feng Lu sndYang Yao, "The Effectiveness of Law, Financial Development, and Economic Growth in an Economy of Financial Repression"

Axlexei Shevchenko, "Bringing the Party Back In: the CCP and Market Transition in China"

Additional Material:

Margaret Pearson, "The Business of Governing Business in China," World Politics, 57 (January 2005) 296-322.

Shaomin Li, et al. "The Road to Capitalism: Competition and Institutional Change,"

Michael Wines,"China Fortifies State Businesses to Fuel Growth"

Minxin Pei, "China's Governance Crisis"
“The Perils and Promise of Chinese Banking,” McKinsey Quarterly, 2006
Scott Kennedy, “The Extent of the Government’s Control of China’s Economy, and Implications for the United States” Testimony Before the U.S.-China Economic and Security Review Commission, May 2007.

Yasheng Huang, "Just How Capitalist is China?"
World Bank, Doing Business in China, 2008
Changhong Pei and Lei Peng, "Responsibilities of China After Accession to the WTO"

Week 5 1/2

28 Business in China

Plafker, Doing Business,; 19-47; 124-146

David Barboza, "Apple Making New Push Into China,"

Janamitra Devan, et al. "A Consumer Paradigm for China"

Knowledge@Wharton, "Sales and Distribution in Today's China"


American Chamber of Commerce, American Business in China, 2009

China Income Premium


Midterm Exam


Week 6

5 Internationalization of Chinese Economy: Foreign Trade and TNCs in China

Naughton, Chinese Economy, 401-423; 375-398


7 Chinese Firms

Naughton, 297-328

Knowledge@Wharton, "The Emerging Chinese Company"

Andrew Grant, "How Corporate China is Evolving"

Ambition of a Wolf: Portrait of an SOE in China

Mary Teagarden and Dong Hong Cai, "China's Global Companies"

Additional Material:

Geert Duysters, et al. "Internationalization and Technological Catching up of Emerging Multinationals: A Comparative Case Study of China's Haier Group"

Up, up and Huawei

Knowledge@Wharton, "Huawei Technologies in Africa"

Peter Nolan and Godfrey Yeung, "Big Business with Chinese Characteristics,"



9 - 16

Cultural Excursion

Week 7

19 and 21 High Technology in China

Naughton, 349-374

Wei Xie and Steven White, "Sequential Learning in a Chinese Spin-off: The Case
of Lenovo Group Limited"

Dieter Ernst, "Can Chinese IT Firms Develop Innovative Capabilities Within Global Knowledge Networks?

Google in China

Google's China Strategy

Knowledge@Wharton, "Winners and Losers: Internet Search in China"

Yuval Atsmon and Max Magni, "China's Internet Obsession"

China Internet Data

China's Social Media




Week 8

28 and 28 Chinese Auto Industry

JIanxi Luo, "Chinese Independent Auto Firms"


John Moavenzadeh, "China's Impact on US Autos"

GM and Ford in China

The Economist, "Ford Sells Volvo to Geely"

Keith Bradsher, "ChinaVies to be the World Leader in Electric Cars"


Research Option

The Future of the Chinese Auto Industry

China, WTO and Cars

Filipe Barbosa, "A Look at China's Auto Industry"

Filipe Barbosa, "Rethinking China's Auto Industry Prospects"

Global Forces: Introduction
The Great Rebalancing
Energy and Environment

The Global Grid
The State and Markets
Electrifying Cars


Week 9

2 The Changing Structure of Prices in China

Naughton, Chinese Economy, 179-208

Pfalker, 179-200

New York Times, "What do China's Workers Want?"

Case Study: Foxconn


4 Changes in China's Competitive Environment

Christoff Bliss, et al. "China's Shifting Competitive Equation,"

Knowledge@Wharton, "Chinese Manufacturing in an Age of Resource Price Volatility"

Huawei to Enter US Market, Maybe

Jimmy Hexter and Jonathan Woetzel, "Bringing Best Practice to China

Knowledge@Wharton, "Is China Still Competitive for Global Manufacturers?"

Five Reasons Why China Will Rule Tech


Week 10

9 and 11 How China Competes on Global Energy

Naughton, Chinese Economy, 329-348

Richard Lester and Edward Steinfeld, "China's Real Energy Crisis"

Keith Bradsher, "China Takes Lead in Clean Energy, With Aggressive State Aid"

Daniel Yergin and Scott Roberts, "Riding the Tiger"

Keith Bradsher, "In Crackdown on Energy Use, China to Shut 2000 Factories"

Martin Jones, et al. "China's Green Opportunity"

Knowledge@Wharton "The Dragon Turns Green: China's Manufacturers Adapt
to a New Era"

Hongyi Harry Lai, "China's Oil Diplomacy: Is it a Global Security Threat?"

Knowledge@Wharton, "Renewable Energy in China: A Necessity, Not an Alternative"

June Dreyer, "Sino-American Energy Cooperation"

Knowledge@ Wharton, "The Race for Energy: What wil it Mean for Western Firms?"

The Economist, "Melting Asia"

Sarah Wang, "The Answer to China's Energy Demands May be Blowing in the Wind"

Keith Bradsher,"China Leading Global Race to Make Clean Energy"



Joanne Guth and Melissa Ginsberg, "Energy Use in China: Trends in Oil Demand and Imports"

Hengyun Ma,et al. "China's Energy Economy: A Survey of the Literature"

Energy Information Administration, "China: Country Analysis Brief"

Week 11

16 and 18 Trade, Finance and Economic Crisis in US-China Relations

Niall Ferguson and Moritz Schularick, "Chimerica and the Global Asset Boom"

Changing Fortunes of Financial Power and Clout?

Mark Lander, "Dollar Shift: Chinese Pockets Filled as Americans' Emptied"

Knowledge@Wharton, "Attached at the Wallet: The Delicate Financial Relationship
Between the US and China"

Knowledge@Wharton, "China'sCurrency Policy"

Michael Wines and Keith Bradsher, "China's Leader Says He Is 'Worried' Over U.S. Treasuries,"

Keith Bradsher, "China Losing Taste for Debt From US"

Keith Bradsher, "China Grows More Picky About Debt"

Yashung Huang, "Global Imbalances and China"

Eric Altbach and Michael Cognato," Understanding China's Sovereign Wealth Fund"

McKinsey Global Institute, "The New Power Brokers: Gaining Clout in
Turbulent Markets"

Bibo Liang, "The Political Economy of US Trade Policy Toward China"



Paul Bowles and Baotai Wang, "Flowers and Criticism: The Political Economy of the Renminbi Debate"


Research Paper Due


Final Exam



World's Richest Cities in 2020


The Near Future in China and Asia

Andrew Cainey, et al., "Capturing the Asian Opportunity"

Knowledge@Wharton, "The Road to China"