Navigating China's Feudal Governance Structures: Some Guidelines for Foreign Enterprises‪.‬

Introduction Since Deng Xiaoping initiated China's economic reforms in 1978, economic planners there have gradually reduced bureaucratic, central government control over enterprises while freeing them to innovate and eventually compete internationally (Nolan, 2001; Peng, 2000). This has unleashed additional market forces, that many hope will allow China to grow out of the central planning system and open its economy further to indigenous and foreign private enterprises (Naughton, 1996). As such, China's reforms have been broadly characterized as substituting market governance (over commercial transactions) for bureaucratic controls (CPC, 1984; Lee, 1987; Naughton, 1996). Although there are exceptions (e.g., Steinfeld, 1998), most observers presume that this reduction in central government control will lead to more empowered markets and firms (cf. Boisot and Child, 1988, 1996; Huang, 1990).