Abstract: A Big Business in China: The Wartime Expansion of the Yudahua Business Group

Juanjuan Peng

Abstract

As an important form of business institution that dominates today's Chinese economy, the business group is sometimes misidentified by social scientists as a post-1978 creation. Historians, in occasionally applying terms such as ''business group,'' ''group,'' and ''conglomerate'' in the studies of some pre-1949 business empires, seem to believe these ''groups'' were too embryonic to be comparable with today's Chinese business groups. While acknowledging that many early ''groups'' in China were mere loose alliances, I present a counterexample and suggest that some fairly integrated groups with a relatively clear hierarchical structure did exist in early twentieth century China. During the War of Resistance, Yudahua expanded from a small textile company with two cotton mills to a big business group that included six cotton mills, one national bank, one coal mine, one trading company, and a few other related businesses. The rapid business expansion was an unplanned response to the military and political crises; and it soon created a new managerial crisis that required further institutional changes. Eventually, a Central Office was established to coordinate among the member units, which defines a high level of ''groupness'' and a fairly clear managerial hierarchy.