Book Review

Asia

Sherman Cochran presents a fascinating in-depth analysis of business practice in six large and successful corporations in China in the late nineteenth and early twentieth centuries. Two of them are Western (Standard Oil; British American Tobacco Company), two are Japanese (Mitsui Trading Company; Naigai Cotton Company), and two are Chinese (Shenxin Cotton Mills; China Match Company). His purpose is to reconsider the conventional scholarly wisdom about the organizational features and managerial structures of enterprises in China in order to answer two hotly debated issues in Chinese business history. Did Western, Japanese, and Chinese businesses use Western-style, top-down corporate hierarchies, or did they rely on Chinese-style, laterally configured social networks based on region and kinship?	1
The scholarly literature, Cochran argues in an incisive introductory essay, suggests an either/or scenario. Scholars of Western and Japanese management emphasize the use and efficacy of top-down managerial control, with Japanese companies achieving greater vertical depth and control at the lower levels of their organizations. In contrast, scholars of overseas Chinese enterprises (mainly sociologists) stress the preponderance of lateral social networks based on native place and family. This scholarly picture is further complicated by the tendency of scholars to highlight synchronic models at the expense of diachronic historical process. This results in a somewhat skewed picture that minimizes the evolution and change of organizational patterns over time and often neglects cases of successful resistance to corporate control by marketing and labor networks.	2
Similar interpretive divides, according to Cochran, characterize the study of specific business operations in the China setting, especially those related to marketing, labor, and the organizational character of Chinese trade and business associations (huiguan; gongsuo). Some scholars argue that multinational corporate hierarchies, aided by compliant middlemen (compradores), successfully introduced and controlled the marketing of new products, while others assert that marketing was controlled by powerful merchant-middlemen and their networks. Studies of Japanese corporations suggest that they succeeded in direct management and discipline of Chinese labor, while critics assert that they failed to eliminate Chinese labor contractors (Number Ones) and their control of Chinese factory workers. Finally, scholars disagree over the extent to which Chinese trade and business associations functioned as protocapitalist corporate hierarchies or remained as social networks.	3
To address these contentious issues, Cochran develops his case studies to highlight corporate organizational structure and the management of marketing and labor. And his findings confound us: nothing fits the mold! Standard Oil, after two decades of reliance on Chinese commission agents and merchant-middlemen to market kerosene, responded to intense Dutch and British competition by creating an elaborate and successful marketing structure from 1903 to 1914 that extended from its corporate headquarters in Shanghai all the way down to county-level distribution centers. The company invested heavily in the transition to a corporate system, not only constructing a vast distribution infrastructure of storage facilities, canneries, and transport tankers but also recruiting and rewarding a large staff of Western sales representatives and Western-trained Chinese supervisors who successfully enforced the company's marketing policies and procedures over local commission agents.	. . .