Open AccessStrategic Investment, Uncertainty And Distribution Reform In The P.R. China: Why A Gradual Reform Strategy Works
Author(s) -
Clement Kong Wing Chow
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v12i3.5796
Subject(s) - flexibility (engineering) , china , competition (biology) , investment (military) , distribution (mathematics) , economics , market economy , transition (genetics) , process (computing) , economic system , industrial organization , microeconomics , management , ecology , mathematical analysis , biochemistry , chemistry , mathematics , politics , political science , gene , computer science , law , biology , operating system
This paper attempts to provide an explanation to the success of the gradual reform strategy of China by showing that such a strategy can minimize the uncertainty created in the process of transition from a centrally-planned economy to a market economy. In a commitment versus flexibility game, low uncertainty motivates enterprises to adopt a strategy of pre-committing their investment which is crucial in sustaining a faster growth rate in the industry. In addition, Chinas successful use of market forces of competition and entry is also an important factor in the transition process.