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The Stone Group: State Client or Market Pathbreaker?*

Published online by Cambridge University Press:  12 February 2009

Scott Kennedy
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Extract

In mid–June 1989, just a couple of weeks after the Tiananmen protests were brought to a halt, a small unit of Peoples Liberation Army soldiers occupied the headquarters of the Stone Group Corporation, then Chinas premier electronics company. The troops were accompanied by a working group composed of Beijing Municipal Communist Party and government officials, who were sent to investigate charges that Stone employees had participated in the crushed student protest movement. Just days before their arrival, three of Stones senior management, including its President, Wan Runnan, had fled China. Wan was one of 21 black hands named by the Communist leadership as having orchestrated the protests.

Type
Research Article
Information
The China Quarterly , Volume 152 , December 1997 , pp. 746 - 777
Copyright
Copyright © The China Quarterly 1997

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Footnotes

*

The author would like to thank H. Lyman Miller and Harry Harding for encouraging this research, and Anita Chan, Bruce Dickson, Corinna–Barbara Francis, Harry Harding, Mary Beth Kennedy, Jason Kindopp, Nicholas R. Lardy, H. Lyman Miller, Barry Naughton, Jonathan Unger and Martin K. Whyte for comments and suggestions on earlier drafts. An earlier version was presented at the First Annual PASS Student Conference on East Asian Studies, sponsored by the Pacific Affairs Study Society, George Washington University, Washington, D.C., 25 April 1997.

References

1 Wan made his way to Hong Kong by using a visa that had been issued to him weeks before to attend an electronics symposium in the colony that had actually already been held in late May. Interview No. 1. Interviews were conducted in 1994 and 1995 in the U.S., Hong Kong and China with former and current employees of Stone, its joint venture partners and the Stone Social Development Institute, and with Chinese journalists and industry analysts.

2 Kelly, David, ‘Massacre of a Chinese company’, Australian Financial Review, 4 October 1989, p. 13.]Google Scholar

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11 Perhaps the first such report is Qin Xiaoli, High–tech dreams find home on computer street, China Daily (Business Weekly), 26 June 1985. Also see Ma Yunong, Guannian youshi: Sitong chenggongde shouyao yinsu (Conceptual superiority: the chief factor in Stones success), Guangming ribao (Enlightenment Daily), 22 December 1986.]Google Scholar

12 One even called Wan Runnan, one of Stones founders, the Steve Wozniak of China, a reference to the co–founder of Apple Computer Co. Another compared him to Acers Stan Shin. Al Furst, High tech in China: the new private sector, Electronic Business, Vol. 14, No. 16 (15 August 1988), pp. 28–32; also see Dori Jones Yang, Can Chinese computers survive in the wild west? Business Week, 26 December 1988, p. 70; and Suttmeier, Richard P., ‘Laying corporate foundations for Chinas high–tech future’, China Business Review, Vol. 15, No. 4 (July–August 1988), p. 24.]Google Scholar

13 Interview No. 2.

14 Interviews No. 3 and 4.

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18 She was part of a group of conservative Red Guards who tried unsuccessfully to protect Qinghua president Jiang from being deposed by the more radical Red Guards led by Kuai Dafu. Cheng Li, University networks and the rise of Qinghua graduates in Chinas leadership, The Australian Journal of Chinese Affairs, No. 32 (July 1994), pp. 1–30.]Google Scholar

19 Li Chang was a secretary of the Communist Youth League before 1949, then became president of the Harbin Industrial University; in 1964 he became Qinghuas vice–president. Towards the end of the Cultural Revolution, he became Party secretary at CAS, then head of the Central Committee Organization Department, and finally the secretary of the Central Discipline and Inspection Commission.

20 Solinger, Urban entrepreneurs, p. 132.]Google Scholar

21 Interview No. 3. Li Wenyuan also served briefly as Stones first chairman of the board, though he probably did not have any real responsibilities. In addition, his younger brother, Li Wenjun, the head of the factory in which Stone had its first office, joined the company by 1985 and eventually became a member of the board of directors; Mang, Xia, ‘Shi nian feng yu lu nan wang guren qing’ (A windy and rainy 10–year road, difficult to forget feelings for old friends), Sitongren (Stoner), No. 180 (30 May 1994), pp. 8–9.]Google Scholar

22 The companys Chinese name is derived from the Chinese phrase, extend in all directions (sitong bada). Wan Runnan once said that the English name, Stone, was chosen because it reflected the Chinese saying, When you go out into the dark night, the first thing you must do is throw out a stone to see where the road is. More recently, he said that he liked the name because it also fit with the phrase used to describe Chinas reforms, feel the stones to cross the river (mozhe shitou guo he). Furst, High tech in China, p. 32; Interview No. 4.

23 Although the designation minban has been used to describe private, foreign–invested and collective enterprises, it most often is applied to those collectives whose assets came from outside the state or were transferred from the state through contracting, leasing or shareholding arrangements, and who are managed by individuals outside the state. Hu Deping, vice–chair of the All–China Federation of Industry and Commerce, once wrote that Stone was a people–owned, people–run, and people–operated collective enterprise (minyou minban minying jiti qiye). This distinguishes it from collectives that are government–owned but people–run (guanyou minban), government–owned and government–run (guanyou guanban), and jointly owned and run by the government and people (guanmin gongyou gongban). Since there is no clear legal distinction in terms of ownership between the various types of collectives, the most definitive de facto meaning of minban may be non–governmental, a common alternative translation for the term. Marc Abramson, Minban science firms in China, China Exchange News, Vol. 17, No. 4 (December 1989), pp. 12–17; Hu Deping, Dui Sitong de zhongxin zhuyuan (Heartfelt wishes to Stone), Zhonghua gongshang shibao (China Business Times), 16 May 1994, p. 2; Huang Rutong, A summary of views on the issues involved in a people–run economy, Jingjixue dongtai (Economic Dynamics), No. 9 (18 September 1994), pp. 36–39, cited in Joint Publications Research Service–CAR–94– 057; Solinger, Urban entrepreneurs, p. 133.

24 This is perhaps why some have mistakenly identified Stone as privately–owned. Calhoun, Craig, Neither Gods nor Emperors: Students and the Struggle for Democracy in China (Berkeley: University of California Press, 1994), p. 10; and Thomas Gold, Urban private business, p. 97.]Google Scholar

25 Young, Susan, Private Business and Economic Reform in China (Armonk, NY: M. E. Sharpe, 1995), pp. 105–107.]Google Scholar

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27 In a 1983 speech while deputy director of a research institute under the Ministry of the Electronics Industry, Li Tieying emphasized that Chinas electronics industry depended on basic research at universities and institutes. Tieying, Li, ‘To build a silicon river – a strategic proposal for China to advance into the age of microelectronics’, EDP China Report, Vol. 3 (29 June 1985), pp. 233–37.]Google Scholar

28 Zemin, Jiang, ‘Minister on how to speed up the development of Chinas computer industry’, EDP China Report, 15 November 1984, pp. 8–12.]Google Scholar

29 Simon, Denis Fred, ‘Chinas drive to close the technological gap: ST reform and the imperative to catch up2’, The China Quarterly, No. 119 (September 1989), pp. 598–630.]CrossRefGoogle Scholar

30 Roberts, John G., Mitsui: Three Centuries of Japanese Business (New York: John Weatherhill Inc., 1973).]Google Scholar

31 Cairu, Fu (ed.), Sitong yu Sitong wenhua (Stone and Stone Culture) (Beijing: Peoples Daily Publishing House, 1992), p. 47; Interviews No. 3, 4 and 15.]Google Scholar

32 Interview No. 4; Joel Kotkin, Red Guards new revolt as capitalists, Los Angeles Times, 12 June 1988, p. V–2.]Google Scholar

33 Interviews No. 5 and 6.

34 Interview No. 7.

35 Guowuyuan guanyujinyibu tuidong hengxiang jingji lianhe ruogan wentide guiding (State Council regulation on some problems concerning further promoting horizontal economic alliances), 23 March 1986, text carried in Jingji gaige (Economic Reform), No. 2 (April 1986), pp. 4–7.

36 For example, sales representatives would take notes at government meetings and show the reports to impressed officials as the meetings adjourned. Previously it might be days before summaries were prepared. Interview No. 8.

37 Stone Group Corporation in Beijing aims high, p. 141.

38 Stoner, No. 33 (18 June 1987), p. 3.

39 Chinas Entrepreneurs (2nd of series): Stones Wan spells time: efficiency, fortune, success, Xinhua News Agency, 31 March 1988.

40 By this time, fewer than 40% of Stones employees worked in Beijing. Stoner, No. 92–93 (22 January 1990), pp. 6–7.

41 Tung, The Chungkuantsun, pp. 64–66.

42 The author has been unable to find data on the exact number of enterprise groups nation–wide, but anecdotal evidence suggest that by the mid–1990s they numbered in the thousands. Stone was one of three enterprise groups allowed to form finance companies in 1987. By 1995, 65 enterprise groups had formed their own finance companies. China Financial Outlook (Beijing: China Financial Publishing House, 1996), p. 35.

43 Zhao had previously publicly praised Stone and Wan Runnan in the Beijing Talent Weekly, cited in Stoner, No. 23 (20 February 1987), p.]Google Scholar

44 Runnan, Wan, ‘Ye tan baohu’ (Also discussing protection), speech delivered at the National Debate on Information Technology Development Policy, August 1986, text carried in Stoner, No. 9 (8 August 1986), p. 27–4.]Google Scholar

45 Kelly and He, Emergent civil society, p. 29.

46 Asian Wall Street Journal, 7 June 1988, pp. 1, 6.

47 Rawski, Thomas G., ’Implications of Chinas reform experience’, The China Quarterly, No. 144 (December 1995), p. 1152.]Google Scholar

48 Interviews No. 1, 2, 3, 4, 15 and 16.

49 Corporate culture includes the shared values, symbols, rituals and standard operating procedures of a company. Terrence E. Deal and Allan A. Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life (Reading, MA: Addison–Wesley, 1982).

50 Dazhong, Zhang (ed.), Shichang jingji yu qiye wenhua (The Market Economy and Corporate Culture) (Beijing: Beijing University Press, May 1993).]Google Scholar

51 Hai Ning, Ming Ming, Xiao Dan and Huang Yong, Mubiao: Zhongguode IBM: fangwen Beijing Sitong jituan gongsi zongjingli Wan Runnan (Goal: Chinas IBM: an interview with the Beijing Stone Groups Chairman Wan Runnan), Zhongguo keji bao (China Sci–Tech News), 28 November 1986, p. 1; Interview No. 15.]Google Scholar

52 The term is most likely derived from the Japanese experience, where companies promote Mitsui People or Mitsubishi People. Stoner first appeared in June 1986. By 1994, it had a circulation of several thousand; most were given to company employees, but some were sent to other domestic companies.

53 Unless noted, information on Stone Culture is from Fu, Stone and Stone Culture.

54 Interview No. 15.

55 Interview No. 3.

56 Interview No. 9. Another source cites an early 1987 poll showing that 80% of the staff feel they are the masters of the company; 90% have job satisfaction in their work. Stone Group Corporation in Beijing aims high, p. 141.

57 Unlike model economic units, such as Daqing or Dazhai, there was no concerted media campaign directed from above about Stone. Nor did Stone receive any of the financial or administrative input from the state given to those models.

58 These included the State Council, the State Science and Technology Commission, the Commission on Restructuring of the Economic System, and the Ministry of Electronics Industry, which from March 1988 to March 1993 was merged with the Ministry of Machine Building and known as the Ministry of Machine Building and Electronics.

59 These included the All–China Federation of Industry and Commerce (gongshanglian), the China Non–Governmental Science and Technology Entrepreneurs Association (Zhongguo minban keji shiyejia xiehui), the China Association for Science and Technology, the National Triangle Entrepreneurs Club (Quanguo sanjiao qiyejia julebu), and the Electronics Avenue Entrepreneurs Salon (Dianzi yitiaojie qiyejia shalong).

60 Wan Runnan, Tansuo zhongde sikao: zai quanguo minban keji shiyejia zuotanhui shangde fayan zhaiyao (Thoughts during exploration: an abstract of a speech to a conference of the National Non–Governmental Science and Technology Entrepreneurs Association). Enlightenment Daily, 12 February 1987, p. 2.

61 See n. 44 and Nine–point proposal for enlivening large enterprises, Renmin ribao (Peoples Daily), 11 February 1988.]Google Scholar

62 White, Gordon, Riding the Tiger: The Politics of Economic Reform in Post–Mao China (Stanford: Stanford University Press, 1993), pp. 226–27.]CrossRefGoogle Scholar

63 Fu, Stone and Stone Culture; Interview No. 10.

64 Bonnin and Chevrier, The intellectual and the state. Goldman, Sowing the Seeds of Democracy in China.

65 Zhou and Cao were both students of Yu Guangyuan while at the Chinese Academy of Social Sciences, as was another Stone manager Cao Wuqi. Cao Siyuan studied political economy in CASSs Graduate Institute from 1979 to 1982, and Zhou was in the Institute of Marxism–Leninism–Mao Zedong Thought. Until 1988 Cao Siyuan worked in various parts of the State Council; his last position, which began in 1986, was as a researcher in the Commission for Restructuring the Economy (Tigaiwu). Zhou was a sociologist at Beijing University before he became director of the Stone Groups Comprehensive Planning Department

66 The speech, An appeal for the NPCs sessions to be open to the public (Wei renda pangtingzhi er huyu), was actually taped two months earlier.

67 Wan at first asked Cao Siyuan to be a consultant to Stone, but knowing he was no longer welcomed at the Commission because of his increasingly radical views, Cao made the initial suggestion to form the think–tank, which Wan accepted. Interview No. 11.

68 In December 1988, Cao also registered the think–tank under another name, the Siyuan Bankruptcy and Mergers Consultancy, with the Beijing Municipal Industry and Commerce Executive Management Bureau (gongshang xingzheng guanliju). In wearing two hats, SSDI was seen to be engaged in non–profit research, whereas the consultancy was interested in making a profit. The two, though, were in fact the same entity. Interview No. 11.

69 The four staff consisted of Cao, Li Xiangzheng, Gong Zhizhong and Zhao Qing. Li was interested in various formulas for cross strait reunification, and Gong was interested in bankruptcy and mergers. Zhao Qing was an administrative assistant. Zhou Duo was one of the guest scholars (kezuo yanjiuyuan), in addition to his full–time position at Stone.

70 SSDI also started a journal in early 1989, National Affairs Research (Guoshi yanjiu tongxun), but published only one issue.

71 For example, see his A thousand li journey is started by taking the first step – third discussion on building socialist parliamentary democracy, Shijie jingji daobao (World Economic Herald), 28 November 1988, p. 7, cited in Foreign Broadcast Information Service, China Daily Report (hereafter FBIS–CHI), 15 December 1988, pp. 15–18.

72 Stone also contributed funds to the World Economic Herald, a Shanghai–based I newspaper that carried bold discussions of political and economic reform before being shut down in April 1989.

73 Wans wife, father and younger brother were employees at the time. His younger brother, whose surname is Chu, was still on the board of directors as of 1997.

74 Interviews No. 1, 2 and 3.

75 Wan Runnan – Entrepreneur bent on subverting the government, Beijing Review, No. 25 (18–24 June 1990), pp. 23–25.]Google Scholar

76 Interview No. 6.

77 Ibid.

78 Stoner, No. 92–93 (22 January 1990), pp. 6–7.

79 Shen Hungfei, Some recent information about the Stone Company, Wen Wei Po Wenhui boo, 20 August 1989, p. 1, cited in FBIS–CHI, 29 August 1989, pp. 14–15.]Google Scholar

80 Solemn Statement by Beijing Stone Enterprise Group, Renmin ribao, 10 February 1990, p. 7, cited in FBIS–CHI, 14 February 1990, p. 11. After stopping briefly in Hong Kong in 1989, Wan moved to France. There, he helped establish the Front for a Democratic China, serving as its secretary general and then as chairman. Apart from politics, Wan has also managed a venture capital organization that specializes in high–technology products.]Google Scholar

81 Interview No. 2.

82 Beijing Review, No. 1 (1–7 January 1990), pp. 22–23, cited in FBIS–CHI, 5 January 1990, pp. 39–40.

83 In late June 1989, one company official said that business at the Stone Group continues as usual. As a company, the Stone Group is no longer involved in politics. Beijing Stone Group struggles for survival, China Informatics, 30 June 1989, pp. 196–97.

84 Commentator, Womende renwu: renzhen xuexi, tigao renshi, chaqing wenti, duohui sunshi (Our assignment: earnestly study, raise understanding, investigate and eliminate problems, and recover losses), Stoner, No. 81 (18 July 1989), pp. 1–2; Shen Guojun, Xinnian xianci (New Years greeting), Stoner, No. 91 (5 January 1989), pp. 1–2.

85 Stoner, No. 92–93 (22 January 1990), pp. 1–2.

86 Shen Hungfei, Some recent information; Beijing Stone Group struggles for survival.

87 Throughout the summer, Mitsui kept in daily contact with Stone to ensure its investments were safe. Interviews No. 7 and 12. In May Stone released another word processor, the MS–2403, then the only word processor that could alternate freely between complicated and simplified Chinese characters as well as handle ten foreign languages. A second facility built in Shenzhen to increase manufacturing capacity for its word processors began production as scheduled in July. Mitsui and Stone also continued plans to make power supply units and related computer peripherals.

88 Interview No. 6.

89 Interview No. 14.

90 Chen Daofu and Meng Jian, News from Stone, Jingji ribao (Economics Daily), 7 March 1990, p. 1, cited in FBIS–CHI, 6 April 1990, pp. 32–33.]Google Scholar

91 Interview No. 2.

92 Even though the government has not given up on its semiconductor industry, it has emphasized less sophisticated integrated circuits such as memory chips. Hui, Saiman and McKown, Hilary B., ‘China computes’, China Business Review, Vol. 20, No. 5 (September–October 1993), pp. 14–20.]Google Scholar

93 Hui, Saiman and McKown, Hilary B., ‘Working out the bugs’, China Business Review, Vol. 20, No. 5 (September–October 1993), pp. 21–24.]Google Scholar

94 In early 1994, the State Council issued an outline of an industrial policy and identified electronics as a pillar industry that would garner increased state investment and support. When Hu Qili, the Minister of the Electronics Industry, announced the names of six large electronics groups that would receive special attention, neither Stone nor any other minban firm was among them. Support for the same state–owned firms was reaffirmed in early 1997. Outline of state industrial policy in the nineties, Xinhua News Agency, 22 June 1994, cited in FBIS–CHI, 27 June 1994, pp. 44–50; Big enterprises lead in electronic industry, Xinhua News Agency, 23 January 1995, cited in FBIS–CHI, 24 January 1995, p. 61; Zhongguoxinwen she, 22 January 1997, available on–line from World News Connection

95 Peking University founder group rides RD wave to success, China Informatics, Vol. 12 (15 April 1994), pp. 77–81.]Google Scholar

96 When founded in December 1986, Great Wall was composed of 58 existing state–owned enterprises, five universities and four RD institutes that together employed 50,000 workers, including 15,000 engineers and technicians. Great Wall Computer Group Corporation inaugurated in Beijing, EDP China Report, Vol. 5 (30 December 1986), pp. 49–50.

97 Interview No. 8.

98 Stoner, No. 135, p. 1; Cheung, Tai Ming, ‘Stone keeps on rolling’, Far Eastern Economic Review, Vol. 142, No. 41 (13 October 1988), pp. 100–101.]Google Scholar

99 A few Stone subsidiaries managers, most of whom were local hires (not dispatched from Beijing), stole company assets. Others happily sold Stone products when its reputation was high, but when times were tough or when computers looked more profitable they wanted to sell products that competed directly with those made by Stone. Yi Chuan, Jingyi da qiye bing (Be on guard against big company disease), Stoner, No. 89 (2 December 1989), pp. 1–2.

100 Interviews No. 1, 2, 7, 12 and 14.

101 Stone sold printers produced by Okidata, Epson, Canon, Hewlett Packard, and Hamada; software from Lotus and Microsoft; and PCs from AT&T and Compaq.

102 Kennedy, Scott, ‘Reaching into all corners’, China Business Review, Vol. 22, No. 1 (January–February 1995), pp. 43–44.]Google Scholar

103 Wu Yunhe, Stone Agrees Microchip Deal, China Daily, 19 March 1996, p. 5. Teaming up with foreign partners has been a common strategy for many of Chinas larger companies. For example, by early 1997 Great Wall had three joint ventures with IBM and one with Intel. Dexter Roberts, Going toe to toe with Big Blue and Compaq, Business Week, 14 April 1997, p. 58. On the growing importance of such alliances, for both established multi–nationals and newer East Asian firms,]Google Scholar see Naughton, Barry (ed.), The China Circle: Economics and Technology in the PRC, Taiwan, and Hong Kong (Washington, D.C.: Brookings Institution Press, 1997).]Google Scholar

104 Stone Group Corporation brochure, 1996, p. 5.

105 Ning, Li, ‘Minister Hu calls for modern electronic information processing industry’, Beijing Review, No. 8 (20–26 February 1995), pp. 12–17. For a review of these and other government initiatives, see Wang Bian, Information industry in China – its present and future, China Information, Vol. 4, No. 2 (February 1997), pp. 17–19]Google Scholar

106 Stoner, No. 139 (30 July 1992), p. 1

107 SET had previously issued 450 million shares internally. Of the total 600 million shares, the Stone Group held 348 million (58%); Mitsui was the second largest shareholder, with 12 million shares (2%). For Stones own account and excerpts from various newspapers, see Stoner, No. 163 (15 August 1993), pp. 1–5.

108 To meet the demands of Hong Kong authorities, Stone placed many of its subsidiaries under SET in order to demonstrate that it had adequate assets in the colony. One international investment firm defines red chips as companies with either extensive earnings exposure in the PRC or as listed vehicles of the PRC parent ministries or companies. Red chip overview – The mainlanders are coming!, Asia Watch (Hong Kong: Bear Stearns Asian Research, 2 December 1996).

109 Interview No. 17.

110 Red chips began listing in Hong Kong in 1991, and by late 1996, about 70 red chips, including 23 H–share firms, were listed on the Hong Kong exchange. Red chips boom as political handover approaches, Canada China Business Council homepage (www.ccbc.com), 6 January 1997; and Kathy Chen, Staking a claim on the future, Asian Wall Street Journal Weekly, 9 December 1996, p. 2B.

111 In 1992 Stone obtained 61% of its foreign exchange through swap centres, 25% through exports and 14% through word processor sales in foreign currencies to firms inside China with surplus foreign exchange. Stone Electronic Technology Limited New Issue Prospectus (Hong Kong: Stone Electronics Technology, 30 July 1993), pp. 6–7.

112 In 1996, of 2.1 million PCs sold in the PRC, Legend had a 6.9% share, placing it second just behind IBM (6.9%); Great Wall had a 2.3% share. No figures are available for Stone alone, but Compaqs market share of 6.3% probably includes PCs sold by its manufacturing joint venture with Stone. Erickson, Jim, ‘Making of a legend’, Asiaweek, Vol. 23, No. 23 (13 June 1997), p. 50.]Google Scholar

113 Interview No. 1.

114 Ding, Ding, Sitongren renxin muzhongde Sitong jijing ruhe?’ (What actually are Stoners popular feeling of Stone?), Stoner, No. 143 (30 September 1992), pp. 4–5. Wu Yan, Sitongren qing nin chumou huace (Stoner please give counsel), Stoner, No. 159 (15 June 1993), p. 10. Jiekai nide gaitou, wenjuan jieguo: Sitong jiben shengren yuangong tiaozhan (Open your lid, survey results: Stone basically meets workers challenge), Stoner, No. 195 (15 January 1995), pp. 2–3.]Google Scholar

115 Yatsko, Pamela, ‘Employers paradise’, Far Eastern Economic Review, Vol. 157, No. 39 (29 September 1994), p. 69. Growing turnover at Stone and other high–tech minban firms, due in part to the relative attractiveness of foreign–invested enterprises, raises doubts about whether Chinese firms have maintained a dependency relationship over their workers. Corinna–Barbara Francis, Reproduction of danwei institutional features in the context of Chinas market economy: the case of Haidian districts high–tech sector, The China Quarterly, No. 147 (September 1996), pp. 839–859.]Google Scholar

116 Not to be deterred, Cao continued his work on economic reform. Since SSDIs registration was never formally revoked, he occasionally referred to his single operation as both the Siyuan Merger and Bankruptcy Consultancy and SSDI. By the mid–1990s, he had over 20 employees, and Cao re–emerged as a national authority on bankruptcy. Interviews No. 6 and 11. Also see Willy Wo–Lap Lam, Bankruptcy Cao plays the national percentage game, South China Morning Post International Weekly, 1 March 1997, p. Business.

117 Duo, Zhou, ‘Neige xuexingde liming’ (That bloody dawn), Zhongguo zhi chun (China Spring), June–July 1993, pp. 23–24. The company did, though, hire two of SSDIs members soon after their release. Li Xiangzheng first worked directly for Duan Yongji and then was editor of Stoner; Gong Zhizhong joined Stones legal department.]Google Scholar

118 Chuankuan Ding, ‘Gufenzhi yu Sitong changyuan fazhan’ (Stock system and Stones long–range development), Stoner, No. 137 (30 June 1992), p. 3.

119 This voluntary association is open to individuals and to state–owned, foreign–invested and private enterprises. Recent research has shown the Federation to be largely autonomous of state direction and to be a strong advocate of enterprises interests, largely because of the financial support of its members. See Jonathan Unger, Bridges: private business, the Chinese government and the rise of new associations, The China Quarterly, No. 147 (September 1996), pp. 795–819; and]Google Scholar Chan, Anita, The changing ruling elite and political opposition in China, in Rodan, Garry (ed.), Political Oppositions in Industrializing Asia (London: Routledge, 1996), pp. 161–187.]Google Scholar

120 China Report, Vol. 13 (March 1995), p. 54

121 By mid–1992, Duan was the standing vice–chairman of the China Non–Governmental Science and Technology Entrepreneurs Association.

122 Sitong quanti tongren wei Aolinpike zhili jingsai yongyue juanzi (All of Stone colleagues donate funds for Olympic intelligence contest), Stoner, No. 142 (4 September 1992), pp. 1–2; Stoner, No. 203 (30 August 1995), pp. 2–3.]Google Scholar

123 Stone Group brochure, 1994; Stoner, No. 154 (30 March 1993), p. 3; Stoner, No. 187 (15 September 1994), p. 2; Stoner, No. 194 (30 December 1994), p. 1.]Google Scholar

124 Correspondence with Stone Group, November 1996.

125 Between April 1994 and March 1995, 2,600 entrepreneurs had donated RMB 367 million through Project Glory. Irene So, Firms back poorer areas, South China Morning Post, 25 March 1995, p. 8, cited in FBIS–CHI, 27 March 1995, pp. 70–71.

126 Ye, Zhang, Foundations in China: a survey report, in Yamamoto, Tadashi (ed.), Emerging Civil Society in the Asia Pacific Community: Nongovernmental Underpinnings of the Emerging Asia Pacific Regional Community (Singapore: Institute of Southeast Asian Studies; Tokyo: Joint Center for International Exchange, 1995), pp. 523–531.]Google Scholar

127 Lu Liqin and Wang Shuqi, Kouwen xiandai qiye liniande shijian (Inquiring into the practice of the modern enterprise concept), China Business Times, 27 May 1994, p. 5.]Google Scholar

128 Functional ownership implies substantive control over a companys assets, the ability to receive returns generated by those assets, and the responsibility for bearing the risks associated with possession and control of those assets. Margaret M. Blair, Corporate ownership, Brookings Review, Vol. 13, No. 1 (Winter 1995), pp. 16–19. Stone holds that since the state has no equity investment in the company, if liquidated, only Stone employees would be entitled to any surplus assets. Stone Electronic Technology Limited New Issue Prospectus, p. 136

129 One source from a competitor thought that Stone probably used connections to sell its products, though he could not cite a specific example. Correspondence, August 1994.

130 The relative paucity of financial and technical assistance that the government gave firms like Stone contrasts strikingly with South Korean, Taiwanese and Japanese governments efforts to aid priority firms in the same sector. Robert Wade, Governing the Market: Economic Theory and the Role of the Government in East Asian Industrialization (Princeton: Princeton University Press 1990); Jung–en Woo, Race to the Swift: State and Finance in Korean Industrialization (New York: Columbia University Press, 1991); and Anchordoguy, Marie, Computers Inc.: Japans Challenge to IBM (Cambridge, MA: Harvard University Council on East Asia Studies, 1989).]CrossRefGoogle Scholar

131 These associations did not act to guide Stones business choices; nor did they encapsulate the range of its relations with the government. Thus Stones history does not fit neatly into a corporatist framework.

132 Chinas recent experience differs markedly from the developmental state model used to describe late industrialization in East Asia. For the model and a critique, see Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford: Stanford University Press, 1982); Okimoto, Daniel I., Between MITI and the Market: Japanese Industrial Policy for High Technology (Stanford: Stanford University Press, 1989).]Google Scholar