Dilemmas of Corporate Governance in China

Authors: Michael MILES and Ping ZHANG
Published in: Vol:8 No.1 / 2007

      The concept of corporate governance to China has deep historical roots. The process of the Dong-Zhang system in the Ming dynasty represents a direct attempt of the Chinese culture to deal with the innate dilemma of management of the relationship between corporate owners and their hired corporate managers.
      This paper briefly explores the historical development of corporate governance in China and outlines the dilemmas faced by corporations and the Chinese investor in relation to issues of governance. Findings indicate that some progress has been made in development and promotion of legislation to ensure more transparency and representation of stakeholder needs.
      At the same time, weak implementation and supervision of existing legislation is highlighted as a limiting factor in the development of stronger governance practices. The cultural strengths and drawbacks of Confucianism are highlighted as a potential mechanism for the strengthening of corporate governance structures and processes.