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3.3.3 No Explicate Tax Law
Traditionally, Chinese taxation system was based on implicate orders, formal or informal, central or local, rather than explicate tax rules. It is a well-understood and universally accepted fact of life in China that government officials would adjust fee rates on a firm by firm basis in response to perceived changes in firm profitability. It means obviously that, amount of tax was substantially decided by local tax authorities. For this reason, it was reasonable for businessmen to keep good relations with local authorities. In the Chinese context this sort of personal connections or Guanxi have remained a key element of Chinese organization. Moreover, lots examples illustrated that, Chinese businessmen even intended to make their children to be officials. However, reputation of an official is radically important. As mentioned above, honor of a family may be deemed as personal honor by Chinese. Under those circumstances, even though a son was an official, his father had to regulate his own behaviour as a support of his son. Individuals are therefore more concerned about the feeling of those with whom closer personalistic ties (Guanxi) exist. It is clear that owners of CFFs could be likely to accept stakeholder theory.
3.4 Distinct Relationship between Employers and Employees
There is a different opinion of Employment to western theory, which can be another fact to support my assumption. In ancient China, because of closed circle of CFFs, employees were mostly from local region. Since the family was conceived by Chinese as the basic social unite, family ties or feelings are strongest. From these basic units, a network of class is formed and degrees of relationship with people from the same village or locality (Tongxiang). In some senses, people who share the same surname would be considered to have the same ancestor. Therefore, local employees had special relations with their firms. At that time, when a person was employed by a family firm, he was wholly owned by the firm. Generally, he would work for free at the first three years; on the contrary usually he had to present gifts to the employer, called Shifu, at some festivals. If he was lucky, he would be paid for daily life during the first three years. Most of them had to leave home and stay in firms all the days, even in the nights. Chinese have a general thinking, “once to be a Shifu, always to be a father.” This could indicate special relations between employees and employers. In this situation, employers looked employees as their own children, not the same of course. Because to betray Shifu was the most horrible thing, the employee could be seen as pan-family members. In some cases, that employee succeeded to be a general manager would still possibly happen. Therefore, there is no suspicion of part of stakeholder theory that is whether CFFs will care employees’ interests.
3.5 China after 1949
In modern China, when Deng Xiaoping came into power in 1978, Communist Party sought out an efficient China that can compete in world markets. Under Deng''s leadership and reforms, "the switch from a planned economy to a more market-oriented economy, and from autocracy to the ''open door,'' brought a thrilling economic boom," which was much needed in order for China to survive. However, for some reasons, it is impossible for China to apparently discard Communism. Alternatively, China’s reformers intentionally leave China’s current ideology ambiguous. It would be more accurate to say that, China’s regime is not real Communism presently. According to this, the Chinese Communist Party encourages people to follow some rules, which can be easily found the original from Confucianism, instead of explicit Communism principles. Under those circumstances, “Help each other!” (Huxiang Bangzhu), “Look after others!” (Guanxin Taren), “Protect environment!” (Baohu Huanjing), “To be honest and liable!” (Chengshi Shouxin) and other rules are adopted as basic tenets of Chinese behaviours. As a major part of China’s economy, CFFs would be keener to accept these rules, which are not opposite to Chinese traditional notions. The relative success of Communism in China has often been partially attributed to the fact that its ideologies are similar to those of Confucianism, and therefore easier for the Chinese people to accept than a set of principles that might run contrary to those of Confucianism. It can be seen that, the way of CFFs management is consistent with stakeholder theory.
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