Do you have a Mao in your JV?


Although it has been more than 30 years since Mao Zedong passed away, his influence can be found in the management tactics employed by some Chinese executives and if not identified or addressed, these tactics could undermine the JV.

For a moment, consider the way Mao wielded power: by keeping the country in a state of chaos, often playing one group against another. To make a change in the political landscape, Mao would orchestrate a movement that sucked in the entire population, such as the campaign against Liu Shaoqi (the number two leader in the Chinese Communist Party) and his allies, then resort to a mixture of agitation, networking, and rallying to mobilize people at the grass roots to denounce certain cadres, or senior officials. Most of the cadres would be forced out of their jobs, and Mao would rehabilitate a few. Deng Xiaoping was denounced in this manner, rehabilitated, and then denounced again.

A study performed by Garry D. Bruton of Texas Christian University in Fort Worth found several Chinese chief executives who employ a business version of that tactic: They cement their authority by keeping even senior managers in a constant state of uncertainty, sometimes mobilizing lower-level employees to criticize and pressure mid- and upper-level executives.

A wireless-paging company studied offers an example. Rather than directly fire some of her middle managers, the CEO mobilized lower-level employees to defy them, leaving them with no choice but to resign.

In another instance, a former general manager of a call-centre that had to quit after her subordinates were directly mobilized by the parent company’s CEO to circumvent her orders and pressure her to resign.

High-profile Chinese business leaders who have used this and other Mao-style tactics to dominate their managers include Zong Qinghou, the founder and former CEO of Wahaha, the French-Chinese beverage joint venture. Zong recently circumvented the formal organizational procedures during a dispute and mobilized Wahaha employees to publicly denounce the French management.

A multinational partner of a Chinese firm should recognize Mao’s tactics and regard their use as an indication that the company is dealing with an authoritarian leader who tends to be secretive (secretiveness was a characteristic of many of the CEOs studied) and who is likely to bypass formal decision making processes. Such companies often have unclear organizational structures and CEOs who can easily invalidate any of the company’s agreements and obstruct the JV’s attempts to implement official approaches.

Recognizing a CEO’s inclination for Mao-style tactics isn’t easy, but the chief executive’s age is often revealing. Mao left an lasting imprint on the thinking of Chinese people who are now in their forties or older. Another indicator is a firm’s inability to select a second in command or successor. The foreign partner should also take note of small details: For example, one way to anticipate management reshuffles is to pay attention to clues such as who sits where at dinner and who gets invited to play golf with whom.

A multinational that chooses to work with a CEO who uses Mao tactics needs to have effective procedures – both formal and informal – in place for monitoring the Chinese leadership. A JV should create a standing executive committee with members from both companies that meet frequently and monitors the CEO and the decision-making process. Additionally, a multinational should always be ready with a contingency plan to prevent the Chinese leader’s attempts to get around organizational procedures.

Had Wahaha’s French managers anticipated Zong’s tactic, they might have been able to defuse it by providing rank and file workers with objective information on the dispute.

Perhaps you have similar experiences? Please feel free to comment.

5 comments to Do you have a Mao in your JV?

  • Bill Kane

    Thanks for the insightful article.

  • Thanks for sharing this David — it is very helpful.
    Actually, I think that this management tactic can be found at many companie — including WOFEs — not just JV. Using a good performance appraisal system and building the right company culture should help to prevent this, but nothing beats keeping a close eye on management style.

  • Raj Rajabali

    An amazing eyeopener. Young managers in China need to read this.Managerial Politics is a reality. There very little one can do stop it, but there are fortunately tools and processes that could be implemented to control it. A professional HR as well as board of Director is necessary to stop companies turning into small “banana republics”.

  • David Petersson

    Thank you Bill, Gaoming and Raj,

    I think the motivators that drove Mao Zedong are very different from what drives modern business leadership. Mao had his stakeholders (the poor rural class) that he had to care for while the modern executives would be more concerned with satisfying the (wealthy) owners/investors. Mao, certainly applied war strategies from Sun Tze and was a master at operating in the communist framework. Fortunately, such tactic are less and less prevalent today and will probably die out as market economics grow stronger.


  • Yes, this is insightful.
    I’ve been working here in China for over 13 years now and can see examples of just such behavior.

Leave a Reply