Navigating China's feudal governance structures: Some guidelines for foreign enterprises

The culture space in which a company conducts transactions reflects the extent to which information is codified and widely diffused. Widely diffused information and well-defined laws define a market culture, for example. Other types of defining cultures include the bureaucratic (China before reforms), the clan (strong in Japan), and the feudal. With poor or no codification of laws and weakly diffused information, key individuals can wield much power in their feudal areas. Ironically, China's reforms, which devolved power from its central government to provinces and localities, have fostered a feudal-type of culture. Seemingly arbitrary rules, regulations, taxes and fees, often directed at foreign enterprise, can seriously disrupt a business unless it takes steps to understand and work with its local social and power structure.