Overcoming barriers to enterprise in new China: Cases from the property-development industry in a regional city

Abstract

This research investigates the survival and growth of private enterprise in China through studying the experience of three private property-development enterprises and their strategies to overcome barriers. Although China’s private sector is becoming a significant contributor to its economic growth, the process of how specific enterprises operate has not been thoroughly researched. This study uses existing literature on China’s private sector and property-development industry to identify impediments to successful operation likely to be encountered by private property developers in China. These impediments include regulatory, land-access and financial barriers as well as imperfect company management.

This research confirms the importance of personal networks and trust in China’s property-development industry. It further finds that networks are not the cause of Chinese business activity, but are an adaptive entrepreneurial response to uncertainties in the business environment. Scott and Bruce’s (1987) stages of small business growth illuminates the analysis which finds that Chinese business behaviour is governed as much by the stages of development of business as by any overarching cultural factors. This is contrary to much academic commentary, which has focused on the use of networks (guanxi) to explain Chinese business behaviour. In the case narratives developed for this thesis, networks, especially relationships with government officials, were important to address barriers in the early stages of growth. In later stages, managerial capacities of the enterprise determined performance.

This research provides deeper understanding of how private property-development enterprises survive and grow in China. This was achieved through detailed record and analysis of the actions of the case narrative enterprises in operating in the difficult and complex business environment of China. Important information was collected through in-depth interviews with key informants, company documents and media reports. This research has both academic and practical implications. It contributes to entrepreneurship literature through providing in-depth examples of how private property developers overcome barriers to growth. It contributes to policy debate by illustrating the actual experience of Chinese entrepreneurs operating in this industry.