Paternalism and Personalism in Chinese Companies
To understand the structure of power and organization in chinese companies, the concept of personalism and paternalism is very important. It is a structure that dominates in Chinese companies. China’s experience with it’s rulers and colonial powers has left marks in the present life. Just watch the opinions about China-Bank on rating platforms like Kununu, to see the many complains about so called “flat hierarchies” and the “low promotion prospects” by German citizens.
Institutions Are Products Of Their History
Paternalism is a predominant form of organisation in chinese businesses. It is a system in which the owner has the total control and makes all the decisions. The company eventually becomes a family business. If the business did not already start as a family business, family members can buy non-family shareholders.The decision-making process depends on one person only. There is almost no sharing of power and responsibility. The employees do not know much. This way they always have to ask the person in charge for instruction. With this strategy the business man can hold his power. Diligence and loyalty are more important than qualification. It is an inner circle of family members and clansmen, that is only for insiders. Even the own employees the inner circle treats with distrust. There is also a fear of employees becoming too experienced, because they can leave the company to become a competitor.
Business Is a Family Matter
Majority of Chinese business men have a desire to pass their business down to their children. Once the children are old enough to work, they become initiated in the family’s business. The owner still has power over the decision-making process after his retirement.
The Inner And Outer Circle in Chinese Companies
The idea of an inner and outer circle penetrates chinese society in many ways. For those who love to watch eastern martial art movies, a good example is the kung fu master, who always has an inner circle of loyal and dedicated disciples, that follow his lead and never question the master. The outer circle (other less close students) can leave the school anytime and go to another master if it suits them. The masters quality of life highly dependends on his inner circle of disciples.
Inner Cirlce As a Result of Distrust
There is a big sense of distrust and fear of fraud among the people. China has a huge history of experience with cruel emperors and colonial powers. Laws were implemented by officials, which were corrupt. The citizens could not rely on the officials decision-making and interpretation of laws. Business men were exploited by their officials and lived in a hostile environment during the times of colonial government. People experienced discrimination by the foreign rulers in times of great social instability. Given this distrust and negative experience, the business men preferred to work with the individuals within their own social circle and family.