Tài liệu PRIVATE ENTREPRENEURS IN CHINA AND VIETNAM PART 2-1 ppt

PART TWO: THE EMPIRICAL WORK: THE PROFILE OF THE
STRATEGIC GROUP ENTREPRENEURS

In this part of the work we are concerned with a profile of the character of the
entrepreneurial strata. This requires that at some points we have to go into some
detail in order to elucidate this profile, and work through spatial and structural
differences. Only in this way can we obtain a differentiated picture of the en-
trepreneurial strata.

1. Choice of the research localities, methodological procedures and frame-
works in the regions studied

1.1. Choice of areas to be surveyed and methodological procedures

The set of questions described in the introductory chapter cannot be answered
for the whole of either China or Vietnam. Apart from the size of China, in the
case of both countries an analysis of the entire country would be made more
difficult by a significant regional diversification and unequal development. The
choice of an area that is representative for the entire country appears to us to be
almost impossible. The rapidly developing Southeast and East of China exist in
sharp contrast to less developed Central China and the still less developed
North-West, whereas in Vietnam the urban centers Ho Chi Minh City and Ha-
noi constitute the main centers of development. There are at times considerable
contrasts between on the one hand the level of appearances or official state-
ments as criteria for selection, and on the other hand the true state of affairs or
reality, and these would have made the search for a representative region more
questionable in addition. As a result we chose for the survey regions, in each
case one which had played a role as forerunner, since in those areas the pro-
gress of privatization and the formation of an entrepreneurial strata was at the
most advanced stage, and that region may at the same time have played the role

of a trendsetter. In order to make a comparison more feasible, our study was
also carried out in a rather backwards region as well as one with a “middling”
level of development. However one area should not be all too backwards since
in such regions only very few private companies exist. It is precisely in poorer
areas that entrepreneurial potential, capital and markets are in short supply.
In order to reduce the number of private companies that are the subject of
study to a realistic number, we limited them in each case to an urban segment
and a township in a rural area. Beyond that the large number of companies as
well as forms of companies compelled a limitation to a partial area. As bearers
of privatization, private entrepreneurs stood in the middle of our field work.
Since within the private sector the percentage share of industrial companies is
the highest, we concentrated on this partial segment (industrial entrepreneurs).
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
78
Measured by the stated goals of the reforms, the industrial sector has anyway
increased in importance. The industrial entrepreneurs can be divided into large
and small entrepreneurs. In China we took over the criteria used by the Com-
mission for the Reform of the Structure of the Economy, which in 1996 classi-
fied companies with an annual turnover of over five million Yuan (about
$500,000) as “large companies”. 50 out of 178 companies examined fulfilled
these criteria. In Vietnam in contrast there were only a few large companies in
this sense, namely only 21 (10.4%). Due to this low proportion, I refrained in
the latter case from this differentiation.
Data was collected and ascertained at the macro-, meso- and micro-levels
during which the main focus was on the micro-level. At the macro- (central)
and the meso-level (provinces), the data that we ourselves ascertained, served
the primary function of assisting us in embedding the information gathered in at
the micro-level into a larger, superordinated context. At the macro- and meso-
levels we obtained new data in each case in a similar way. Through the evalua-
tion of statistics and documents as well by means of interviews, data was gath-

ered in about the state of the privatization process in both national and regional
contexts, about the role of the private sector of the national/regional section of
the economy, and about local development strategies. Considering the statisti-
cal inexactitude, this data collection reflected mostly the state of knowledge of
the institution that was in each case asked. As well as what has just been men-
tioned, legal stipulations and administrative regulations for the private sector
were also collected in order to be able to determine the differing regional and
local emphases.
The survey of entrepreneurs was completed by interviews with 203 officials
(ranging from the lower right up to the ministerial level) at the Central Party
School in Beijing in 1996. Since the data from the survey of the Vietnamese
officials was not at this author's disposal, no comparison of the answers was
possible between the two countries. Not least because of reasons of balance, as
a result only selected results of the survey of officials have been included. Of
the 203 officials interviewed who gave their answers to a standardized ques-
tionnaire, 86% of them were people who had first joined the Party after 1984.
Only 2.5% were members at the beginning (1979) of the process of reform.
Readers might derive the impression that the information about China in our
study is more complete than that concerning Vietnam. This may be due to the
development of the private sector being further advanced and more accepted
there. Regular, random survey surveys have been carried out by social scientists
there, and the results of those have gone into this study. In Vietnam in contrast,
the private sector represents still a rather sensitive area, and this made it more
difficult to research into that sector and collect information about it. Conse-
quently the amount of knowledge about the private sector is significantly larger,
and more material and information was at our disposal. Beyond this certain
questions could not be asked in Vietnam.
LOCALITIES; PROCEDURES; FRAMEWORKS
79
As far as the statistical data is concerned, there was in both countries a variety

of data principally because the quality of the statistics has improved signifi-
cantly in the last 15 years. But reports at the lower levels of administration are
not always reliable, and in addition there is a certain lack of clarity in the ter-
minological definition and categories of the non-state sector and of the private
sector; as a result unambiguous classifications become difficult. Above all, in
Vietnam for political reasons data is distorted or covered up. An example of
this is that foreign investment is classified as going into the state sector so as to
imply a faster level of growth in it as compared to the private sector. As a result
we treated official statistical data as trend indicators, and do not expect that
they represent reality in a detailed way.

1.1.1. The survey in China
The first phase of fieldwork was concentrated on Beijing (survey of administra-
tion at the central level) and in the East Chinese coastal province of Zhejiang.
In the middle of the 1990s, the province was in first place concerning the
growth rate in the private economy and the value of the GDP of that sector. So
Zhejiang represents in our study the more developed region. The high level of
development achieved manifested itself too in relatively modern company
management as well as in the equipping of the companies. Some firms there
already possess total capital of more than 100 m Yuan.
Within the province itself, we chose as our urban region the province capital
Hangzhou, since here the largest number of registered private companies are
based, and the highest growth rate in the private sector has been recorded.
Hangzhou consists of 5 urban districts. In both of the central city districts
Shangcheng and Xiacheng, private companies predominate in the areas of ser-
vice industries and trade. In three others the secondary sector dominates. As a
result we concentrated on two of those three districts namely Gongshu and
Jianggan. As a rural region we chose Fuyang county some 50 km southwest of
Hangzhou; in Fuyang in recent years, the private sector has likewise developed
well both quantitatively and qualitatively.

The second phase of fieldwork was carried out in the province of Henan (re-
gion of middling development) and Gansu (less developed region). Within
Henan we concentrated on the city of Luohe in the southern part of the prov-
ince. At the time of our survey Luohe consisted of one urban district and three
counties. Our survey took place in the inner city and in a county approx. 40 km.
away (Yancheng).
Within the north-west region of China, Gansu, our partner institution had
chosen the city of Baiyin as the urban zone, and Jingtai County some 60 km
away which is administered by Baiyin; this was to be our rural region. Baiyin is
a newly created city dating from 1956 some 80 km from Lanzhou, the capital of
the province. It consists of two urban districts and three counties, and owes its
creation to a large state sector company (called Baiyin) working with non-
ferrous metal, of which it is the largest producer in the whole of China. About
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
80
90% of the inhabitants came – in the course of the company’s development –
from outside the province.
The choice of private entrepreneurs was made using our specifications (in-
dustrial firms of different sizes) by the local administrative officials for industry
and trade. When visiting the companies, an employee of the local administra-
tive office to which the company was subject accompanied us. The task of
those officials consisted of making the appointment and a short introduction. In
each case we carried out a qualitative interview lasting about two hours using
guidelines, then followed questions using a standardized questionnaire. The
individual questions had been explained to the respondents beforehand so as to
avoid misunderstandings. The quantitative statements about the economic state
of the company were generally written into a special form by accountants, then
checked by the entrepreneur, and in some cases also corrected. After that fol-
lowed a tour of the company with a concluding round of questions.
In total, we spoke with 178 entrepreneurs, of whom 169 were men and 9

women; 69 in Zheijang, 60 in Henan and 49 in Gansu of whom 108 were in
urban areas and 70 in rural.

1.1.2. The survey in Vietnam
In Vietnam we concentrated in the phase of the field work on the capital Hanoi.
As far as the number of registered private companies is concerned, it lied in
national terms in second place behind Ho Chi Minh City. A further reason for
the choice of Hanoi was of a practical research nature: both our partner insti-
tutes were situated in Hanoi, and had not only their best contacts in that area
but also the most experience there in empirical research.
Since according to our partner institutions in Hanoi, there were no adminis-
trative urban districts that one could term purely industrial areas, we chose Hai
Ba Trung a district that possesses a comparatively large number of private
companies in the productive domain. From the local administrative office re-
sponsible for industry there, we obtained a list of private companies in the sec-
ondary sector. In the course of our research, it became clear that the list was
unreliable since numerous companies had become insolvent, moved, or despite
the details contained in the address could not be located, indications of a high
degree of fluctuation in the private sector. The lack of telephone numbers or the
existence of wrong phone numbers on the list of companies, forced us to seek
out the private entrepreneurs using a map of the city and without having previ-
ously made contact. Nevertheless this type of surveying was successful in all
cases.
Following that, we continued the study in the neighboring district Dong Da.
There we were able to note down from an up-to-date list of about 80 registered
firms, some 40 addresses and phone numbers. Our visits were usually an-
nounced by phone.
LOCALITIES; PROCEDURES; FRAMEWORKS
81
Some 25 km north of Hanoi there is Tien Son county in Ha Bac province.

1
We
chose this county as our rural area in a highly developed area. In Tien Son our
work was more strongly checked by the local authorities than it had been in
Hanoi. An employee of the industry department there, arranged for us in each
case one day in advance, 3-4 appointments that were all kept with one excep-
tion. When visiting, there was first a short introduction made by the official, we
explained the questionnaire, and then followed the questions. The visit was
concluded with a tour of the company and a final round of questions.
The questions using the question form lasted some 1.5 – 2.5 hours. This was
followed by a qualitative interview that took 1 – 1.5 hours in which particular
points raised during the questionnaire section were once again explored, and
the respondent asked for clarification. During that digressive answers could
well be offered in response to sensitive questions. The written answers
understandably were throughout more reserved than the oral ones. Only in one
case, did a respondent make a fully-blown airing of his grievances in his writ-
ten answers insofar as he expressed himself critically about the government and
the administration, and then personally signed his statements with large strokes.
The quantitative answers about the enterprise were partly made by the entre-
preneurs themselves, partly by the accountants. In no case did we obtain a view
of the company’s balance sheets. Moreover their reliability should not be over-
estimated. In a short conversation that we had during the temporary absence of
the official from the local authorities in Tien Son, the interviewed entrepreneur
made it known to us that he had a number of balance sheets: one for internal
company uses, and for the local authorities. A young, university graduate did
the accounts.
All in all 202 interviews were carried out with entrepreneurs, of whom 164
were men and 38 women. In the course of the first phase of the research in
North Vietnam, 51 entrepreneurs were spoken with in Hanoi, and 31 in Tien
Son county. During the second phase of fieldwork, we interviewed 51 entrepre-

neurs in Ho Chi Minh City in South Vietnam, 30 in the village Thu Duc about
25 km away to the east, 22 in the central Vietnamese city Danang and 10 in the
village Duy Xuyen administered by Danang. As our main emphasis we carried
out interviews in the Ho Chi Minh City districts 1, 3, 5 and 10. Districts 5 and
10 belong to that area of the city, Cholon, which the Chinese community had
earlier dominated, and that in the course of an administrative reform was split
into three.
2
Carrying out the survey in the four city districts made it possible for
us to visit not only Vietnamese but also Chinese companies. The inclusion of
Chinese companies turned out to be necessary since the ethnic Chinese have
once again attained a dominant role in the economy of the city. These firms
have already attracted significant amounts foreign capital (we assume a number
of billion US $). But that was often unregistered capital from ethnic Chinese in


1
In 1997 Ha Bac was divided into two new provinces

Bac Ninh and Bac

Giang.
2
Interview with the director of the Office for Industry in Ho Chi Minh City 26 November 1996.
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
82
other countries, in many cases relatives of Viet Hoa (Vietnamese Chinese) in
Ho Chi Minh City. Vietnamese studies in 1997 suggest that already 2,000 com-
panies owned by ethnic Chinese had been recipients of such investment, and
about 30,000 jobs created thereby. The reason for the non-registration is for one

thing the tortuous and long-lasting application procedure, secondly in the po-
litically conditioned fear of ethnic Chinese entrepreneurs of declaring invest-
ments made by Chinese living abroad.
3

We sought the entrepreneurs by making use of a publicly available list of in-
dustrial companies in Ho Chi Minh City, and visited without any previous
announcement whereas in Thu Duc appointments were made in advance. Chi-
nese entrepreneurs reacted in a considerably more reserved and cautious way
than their Vietnamese colleagues. The reserve shown by the ethnic Chinese
made clear the complicated relationship – weighed down by the past – between
the economically, extraordinarily successful Chinese minority and the Viet-
namese majority, in which one could detect amongst other things a certain note
of envy. A Vietnamese entrepreneur stated that the Chinese products were of
better quality, and complained at the same time that the Chinese only share
their company secrets amongst themselves, and keep them hidden from the
Vietnamese. Apart from two exceptions, all the entrepreneurs that we encoun-
tered were available for interviews and to complete the questionnaire. After that
a tour of the factories took place that helped us to a better assessment of the
respondents and their abilities.
In Danang there were two organizations cooperating with us, the DACSME
(Advisory Center for Cooperatives, Medium and Small Enterprises of Quang
Nam Danang Province), and the training center linked to them. They put to-
gether a list corresponding to the criteria that we had stipulated containing 36
companies of which we interviewed 22 after previously making contact. Of all
the places where we conducted research, the conversational atmosphere in
Danang was the most open both on the part of the entrepreneurs and the au-
thorities. At that juncture when we were present, an administrative re-
organization of the province’s administration in Quang Nam Danang was going
on, and there was a major burden to the workload of the local government as a

result; however they willingly agreed to an appointment for the conversation
with us.
The choice of research location in Vietnam had to take into account that pri-
vate industry has been concentrated in particular places, and is above all located
in urban areas. Comparable rural industries as in China do not exist – apart
from the traditional craft villages. The two poles of development, Hanoi and Ho
Chi Minh City have significantly shaped the Vietnamese developments,
whereby the development conditions in the two cities are not identical. Foreign
observers have suggested that the northern and southern parts of the country
might develop in different directions. Insofar the choice of these two places


3
Cf. Vietnam Economic Times, February 1998: 18/19.
LOCALITIES; PROCEDURES; FRAMEWORKS
83
appears to have been justified. In addition to that the number of registered pri-
vate companies is extremely small in the poorer provinces so that research there
would hardly have been worthwhile. Thus according to the ‘Statistical Year-
book 1995’ in the 12 northern provinces of Bac Bo (with the exception of Ha
Bac which was studied), in 1994 there were merely 96 industrial companies i.e.
an average of 8 per province! So we chose Hanoi and Ho Chi Minh City as two
highly developed regions, and Danang as a region of middling development.

1.1.3. Practical research problems
We have already mentioned the general set of problems associated with statis-
tics and official data on which however, native and foreign researchers are
dependent, and that should be understood primarily as statements about trends.
Whereas in China there were only a few objections made to our questionnaire,
in Vietnam a whole range of questions had to be reformulated or deleted. The

latter applied particularly to those areas that could be classified as politically
sensitive because they referred to the party or political assessments. For par-
ticular questions as a result, comparisons in some cases cannot be made. Unlike
in China, we were not allowed to take the questionnaires home with us to Ger-
many. They had to remain in the partner institutions in Vietnam, and we were
only allowed to make copies.
There were less weighty problems resulting from particular groups of ques-
tions whose sensitivity was already known from previous research investiga-
tions, and resultantly were no surprise:

• Private entrepreneurs understandably spoke unwillingly about their income,
profits and taxes. They were also not very forthcoming about the origins of
the starting capital for their companies; this could be explained by some of
the starting capital having been obtained illegally from community assets
likewise governmental/collective assets. To some extent, false answers
were given about the number of employees since these figures might be
seized on by the fiscal authorities in order to set the amount of tax due; (the
tax authorities justified this method with the alleged inexactitude of the
book-keeping by private companies from which they could not derive the
real turnover of the company).
• The real state of relations with the local cadres was only spoken about
freely and openly to a limited extent. The state of such relationships could
be estimated, however, through our own personal observations.
• Political attitudes were not expressed freely and openly especially during
those interviews where an employee of the local authorities was present.

But in total, the restrictions were far fewer than had been feared before the start
of the research.

PART TWO: THE STRATEGIC GROUP ENTREPRENEURS

84
1.1.4. Cooperation partners and institutional surveys
The main partnership organization in China was the Institute for Management
which is an offshoot of the State Commission for the Reform of Economic
Structure, in Vietnam the National Political Academy Ho Chi Minh (Institute of
Sociology) and the Institute of Sociology in Hanoi. In the provinces, counties
and cities of China the local departments of the above mentioned State Com-
mission were responsible, in Vietnam varying additional partners.
In addition we visited the Central Council of Cooperative Union and Small
and Medium Enterprises of Vietnam (VICOOPSME), a non-state organization
for the private Sector; the Business Club, in which around 500 state and non-
state sector companies were organized, and the Center of Economic Training,
Advice and Information (Cetai) which was linked to it, as well as the Hanoi
Union Association of Industry and Commerce; in Ho Chi Minh City the Union
Association of Industry and Commerce UAIC, which with 1,700 members was
the largest and most influential association representing private industry in
South Vietnam; the Management Training Center MTC; in Danang
VICOOPSME Quang Nam Danang likewise the DACSME (see above.) and the
training centers connected with them.
We made contact too with German institutions in Vietnam that in their work
over many years have collected important practical experience and built up
good contacts with the Vietnamese. Amongst those can be included both the
Friedrich-Ebert- and Konrad-Adenauer-Foundation, the Deutsche Entwick-
lungsdienst (DED) (German Development Service), the office for small and
middle-sized companies of the Handwerkskammer (Chamber of Handicrafts) of
Koblenz city and last but not least the resident experts of the Gesellschaft für
Technische Zusammenarbeit (Association of Technical Cooperation, GTZ) all
of whom willingly exchanged experiences with us and provided valuable aid
and assistance.

1.2. The framework conditions in the research areas

Generally speaking the economic level of development in a region forms the
basis for the development of private companies. The level of income influences
the sales possibilities, level and extent of industrial development, determines
the technical opportunities, the qualifications of the workforce as well as the
circle of customers. The infrastructure (such as transport connections, water
and energy supply) provides the basic preconditions for production and trans-
port. For a better understanding of the regional development, a short, compara-
tive profile of each of the regions researched into will now be provided, one
tailored to our theme, whereby we refer to data which was available at the time
of our research.

LOCALITIES; PROCEDURES; FRAMEWORKS
85
1.2.1. Framework conditions in the research areas of China
At the time of our research (1996/97), the areas where we carried out study had
the following populations:
4

A comparison between important development indicators in the researched
provinces shows that Zheijiang lay clearly above the national average values
for all factors, Henan a little and Gansu clearly under. An exception (in the
contrast Henan/Gansu) were the average wages in the public sector because the
state and large collective industries were concentrated in a few central places in
which higher wages were paid. In Henan on the other hand the companies were
considerably more widely scattered with for the most part lower wages outside
of the urban centers.

Table 12: Development indicators of the provinces researched into in

comparison (China, 1995, in Yuan)

China Zhejiang Henan Gansu


GDP per capita (1996) 5,634 9,455 4,032 2,901
GO Agri. per capita 1,679 2,065 1,433 1,187
GO Ind. per capita 7,587 18,726 5,181 3,383
Urban income p. capita 3,893 5,718 3,029 2,894
Rural income p. capita 1,578 2,966 1,232 880
Average wage public
sector per capita 5,500 6,619 4,344 5,493


Source: Zhongguo tongji nianjian 1996 and 1997.
(NB: GO= gross output; GDP=gross domestic product; Agri=agriculture; Ind.=Industry)

In a contrast of the area researched into (cf. also Table 13-15), in developmen-
tal terms the superiority of Hangzhou as opposed to Luohe and Baiyin was
confirmed. Within Zheijiang province, Hangzhou with a quarter of the non-
agricultural population, 13.7% of the population of the province and 22% of the
gross output had a leading position. Hangzhou represented without a doubt the
most highly developed region of urban areas in China. One could state the same
about Fuyang whereby in both cities the non-agrarian sector was already of
more importance than the agrarian which is shown too by a comparison with
the province an under-average per capita of population share of the agricultural
production value. But in 1994 in the area Greater Hangzhou, already 31.6% of
the working population (in the urban districts 83.9%) were working in the sec-
ondary or tertiary sector, in Fuyang only 15.2%. On the other hand in 1998
already 62.5% of the non-agrarian workforce were in the private sector,

whereby these created over 50% of the industrial gross output and more than a
quarter of the financial income of Fuyang.


4
The dates refer to the end of 1995.
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
86
Luohe is situated on the north-south, traffic axis that connects Henan by means
of a railway line and a highway with the north and south of China. The cities on
the north-south and east-west traffic axes of the province have experienced
rapid development in recent years due to their better infrastructure. At the same
time the population of Luohe had an agrarian population of 83%, in Yancheng
County over 90%. All the same in 1994 about 40% of the workforce were al-
ready employed outside the primary sector. But the total indicators for Luohe
were only slightly above the average in the province whereas Yancheng only
seldom reached the average value. So Luohe can be classified as a place of
middling development in Henan, and lower-middle development in contrast to
the national standard.

Table 13: Development indicators in the researched cities and counties:
Zhejiang (1994, in Yuan)

Zhejiang Hangzhou Fuyang


GDP per capita 6,149 9,924 7,003
Gross output Agri. per capita 1,629 841 1,200
Gross output Ind. per capita 13,326 18,270 16,313
Urban income per capita 4,691 5,007 no data

Rural income per capita 2,225 2,785 2,647
Average wage public
sector per capita 5,597 6,118 5,277


Sources: Zhejiang tongji nianjian 1995 and Hangzhou tongji nianjian 1995.
(NB: Agri. = Agricultural; Ind.= Industry; Income)

For a large number of the indicators, Baiyin was above the average in Gansu
but under the average for the whole of China as well as for that of Luohe. The
pay in the public sector was an exception to that; it was relatively high due to
the large subsidies for the heavy industrial sector was distant regions. Jingtai
did not reach the average in the province very often so that Baiyin/Jingtai may
be classified as under-developed regions even if the city has a special role be-
cause of the concentration of the state sector there. The urban sector is to be
found in markedly agrarian surroundings (in 1995 about 80% agricultural popu-
lation, 58.5% of the workforce were working in the agrarian sector). Apart from
the two centers of the province, Lanzhou (capital of the province) and Tianshui,
Baiyin plays an important role amongst the 14 cities and administrative districts
(of which five were urban). Calculated in absolute numbers it had the third
largest gross output (industrial place two, agricultural place ten), and the sixth
highest per capita GDP. Concerning the per capita income of the peasantry, the
city only reached place ten. Re-calculated on a per capita basis the leading
positions change somewhat.