PART TWO: THE EMPIRICAL WORK: THE PROFILE OF THE
STRATEGIC GROUP ENTREPRENEURS

In this part of the work we are concerned with a profile of the character of the
entrepreneurial strata. This requires that at some points we have to go into some
detail in order to elucidate this profile, and work through spatial and structural
differences. Only in this way can we obtain a differentiated picture of the en-
trepreneurial strata.

1. Choice of the research localities, methodological procedures and frame-
works in the regions studied

1.1. Choice of areas to be surveyed and methodological procedures

The set of questions described in the introductory chapter cannot be answered
for the whole of either China or Vietnam. Apart from the size of China, in the
case of both countries an analysis of the entire country would be made more
difficult by a significant regional diversification and unequal development. The
choice of an area that is representative for the entire country appears to us to be
almost impossible. The rapidly developing Southeast and East of China exist in
sharp contrast to less developed Central China and the still less developed
North-West, whereas in Vietnam the urban centers Ho Chi Minh City and Ha-
noi constitute the main centers of development. There are at times considerable
contrasts between on the one hand the level of appearances or official state-
ments as criteria for selection, and on the other hand the true state of affairs or
reality, and these would have made the search for a representative region more
questionable in addition. As a result we chose for the survey regions, in each
case one which had played a role as forerunner, since in those areas the pro-
gress of privatization and the formation of an entrepreneurial strata was at the
most advanced stage, and that region may at the same time have played the role

ered in about the state of the privatization process in both national and regional
contexts, about the role of the private sector of the national/regional section of
the economy, and about local development strategies. Considering the statisti-
cal inexactitude, this data collection reflected mostly the state of knowledge of
the institution that was in each case asked. As well as what has just been men-
tioned, legal stipulations and administrative regulations for the private sector
were also collected in order to be able to determine the differing regional and
local emphases.
The survey of entrepreneurs was completed by interviews with 203 officials
(ranging from the lower right up to the ministerial level) at the Central Party
School in Beijing in 1996. Since the data from the survey of the Vietnamese
officials was not at this author's disposal, no comparison of the answers was
possible between the two countries. Not least because of reasons of balance, as
a result only selected results of the survey of officials have been included. Of
the 203 officials interviewed who gave their answers to a standardized ques-
tionnaire, 86% of them were people who had first joined the Party after 1984.
Only 2.5% were members at the beginning (1979) of the process of reform.
Readers might derive the impression that the information about China in our
study is more complete than that concerning Vietnam. This may be due to the
development of the private sector being further advanced and more accepted
there. Regular, random survey surveys have been carried out by social scientists
there, and the results of those have gone into this study. In Vietnam in contrast,
the private sector represents still a rather sensitive area, and this made it more
difficult to research into that sector and collect information about it. Conse-
quently the amount of knowledge about the private sector is significantly larger,
and more material and information was at our disposal. Beyond this certain
questions could not be asked in Vietnam.
LOCALITIES; PROCEDURES; FRAMEWORKS
79
As far as the statistical data is concerned, there was in both countries a variety

The second phase of fieldwork was carried out in the province of Henan (re-
gion of middling development) and Gansu (less developed region). Within
Henan we concentrated on the city of Luohe in the southern part of the prov-
ince. At the time of our survey Luohe consisted of one urban district and three
counties. Our survey took place in the inner city and in a county approx. 40 km.
away (Yancheng).
Within the north-west region of China, Gansu, our partner institution had
chosen the city of Baiyin as the urban zone, and Jingtai County some 60 km
away which is administered by Baiyin; this was to be our rural region. Baiyin is
a newly created city dating from 1956 some 80 km from Lanzhou, the capital of
the province. It consists of two urban districts and three counties, and owes its
creation to a large state sector company (called Baiyin) working with non-
ferrous metal, of which it is the largest producer in the whole of China. About
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
80
90% of the inhabitants came – in the course of the company’s development –
from outside the province.
The choice of private entrepreneurs was made using our specifications (in-
dustrial firms of different sizes) by the local administrative officials for industry
and trade. When visiting the companies, an employee of the local administra-
tive office to which the company was subject accompanied us. The task of
those officials consisted of making the appointment and a short introduction. In
each case we carried out a qualitative interview lasting about two hours using
guidelines, then followed questions using a standardized questionnaire. The
individual questions had been explained to the respondents beforehand so as to
avoid misunderstandings. The quantitative statements about the economic state
of the company were generally written into a special form by accountants, then
checked by the entrepreneur, and in some cases also corrected. After that fol-
lowed a tour of the company with a concluding round of questions.
In total, we spoke with 178 entrepreneurs, of whom 169 were men and 9

1
We
chose this county as our rural area in a highly developed area. In Tien Son our
work was more strongly checked by the local authorities than it had been in
Hanoi. An employee of the industry department there, arranged for us in each
case one day in advance, 3-4 appointments that were all kept with one excep-
tion. When visiting, there was first a short introduction made by the official, we
explained the questionnaire, and then followed the questions. The visit was
concluded with a tour of the company and a final round of questions.
The questions using the question form lasted some 1.5 – 2.5 hours. This was
followed by a qualitative interview that took 1 – 1.5 hours in which particular
points raised during the questionnaire section were once again explored, and
the respondent asked for clarification. During that digressive answers could
well be offered in response to sensitive questions. The written answers
understandably were throughout more reserved than the oral ones. Only in one
case, did a respondent make a fully-blown airing of his grievances in his writ-
ten answers insofar as he expressed himself critically about the government and
the administration, and then personally signed his statements with large strokes.
The quantitative answers about the enterprise were partly made by the entre-
preneurs themselves, partly by the accountants. In no case did we obtain a view
of the company’s balance sheets. Moreover their reliability should not be over-
estimated. In a short conversation that we had during the temporary absence of
the official from the local authorities in Tien Son, the interviewed entrepreneur
made it known to us that he had a number of balance sheets: one for internal
company uses, and for the local authorities. A young, university graduate did
the accounts.
All in all 202 interviews were carried out with entrepreneurs, of whom 164
were men and 38 women. In the course of the first phase of the research in
North Vietnam, 51 entrepreneurs were spoken with in Hanoi, and 31 in Tien
Son county. During the second phase of fieldwork, we interviewed 51 entrepre-

thing the tortuous and long-lasting application procedure, secondly in the po-
litically conditioned fear of ethnic Chinese entrepreneurs of declaring invest-
ments made by Chinese living abroad.
3

We sought the entrepreneurs by making use of a publicly available list of in-
dustrial companies in Ho Chi Minh City, and visited without any previous
announcement whereas in Thu Duc appointments were made in advance. Chi-
nese entrepreneurs reacted in a considerably more reserved and cautious way
than their Vietnamese colleagues. The reserve shown by the ethnic Chinese
made clear the complicated relationship – weighed down by the past – between
the economically, extraordinarily successful Chinese minority and the Viet-
namese majority, in which one could detect amongst other things a certain note
of envy. A Vietnamese entrepreneur stated that the Chinese products were of
better quality, and complained at the same time that the Chinese only share
their company secrets amongst themselves, and keep them hidden from the
Vietnamese. Apart from two exceptions, all the entrepreneurs that we encoun-
tered were available for interviews and to complete the questionnaire. After that
a tour of the factories took place that helped us to a better assessment of the
respondents and their abilities.
In Danang there were two organizations cooperating with us, the DACSME
(Advisory Center for Cooperatives, Medium and Small Enterprises of Quang
Nam Danang Province), and the training center linked to them. They put to-
gether a list corresponding to the criteria that we had stipulated containing 36
companies of which we interviewed 22 after previously making contact. Of all
the places where we conducted research, the conversational atmosphere in
Danang was the most open both on the part of the entrepreneurs and the au-
thorities. At that juncture when we were present, an administrative re-
organization of the province’s administration in Quang Nam Danang was going
on, and there was a major burden to the workload of the local government as a

latter applied particularly to those areas that could be classified as politically
sensitive because they referred to the party or political assessments. For par-
ticular questions as a result, comparisons in some cases cannot be made. Unlike
in China, we were not allowed to take the questionnaires home with us to Ger-
many. They had to remain in the partner institutions in Vietnam, and we were
only allowed to make copies.
There were less weighty problems resulting from particular groups of ques-
tions whose sensitivity was already known from previous research investiga-
tions, and resultantly were no surprise:

• Private entrepreneurs understandably spoke unwillingly about their income,
profits and taxes. They were also not very forthcoming about the origins of
the starting capital for their companies; this could be explained by some of
the starting capital having been obtained illegally from community assets
likewise governmental/collective assets. To some extent, false answers
were given about the number of employees since these figures might be
seized on by the fiscal authorities in order to set the amount of tax due; (the
tax authorities justified this method with the alleged inexactitude of the
book-keeping by private companies from which they could not derive the
real turnover of the company).
• The real state of relations with the local cadres was only spoken about
freely and openly to a limited extent. The state of such relationships could
be estimated, however, through our own personal observations.
• Political attitudes were not expressed freely and openly especially during
those interviews where an employee of the local authorities was present.

But in total, the restrictions were far fewer than had been feared before the start
of the research.

PART TWO: THE STRATEGIC GROUP ENTREPRENEURS

1.2. The framework conditions in the research areas

Generally speaking the economic level of development in a region forms the
basis for the development of private companies. The level of income influences
the sales possibilities, level and extent of industrial development, determines
the technical opportunities, the qualifications of the workforce as well as the
circle of customers. The infrastructure (such as transport connections, water
and energy supply) provides the basic preconditions for production and trans-
port. For a better understanding of the regional development, a short, compara-
tive profile of each of the regions researched into will now be provided, one
tailored to our theme, whereby we refer to data which was available at the time
of our research.

LOCALITIES; PROCEDURES; FRAMEWORKS
85
1.2.1. Framework conditions in the research areas of China
At the time of our research (1996/97), the areas where we carried out study had
the following populations:
4

A comparison between important development indicators in the researched
provinces shows that Zheijiang lay clearly above the national average values
for all factors, Henan a little and Gansu clearly under. An exception (in the
contrast Henan/Gansu) were the average wages in the public sector because the
state and large collective industries were concentrated in a few central places in
which higher wages were paid. In Henan on the other hand the companies were
considerably more widely scattered with for the most part lower wages outside
of the urban centers.

Table 12: Development indicators of the provinces researched into in

whereby these created over 50% of the industrial gross output and more than a
quarter of the financial income of Fuyang. 4
The dates refer to the end of 1995.
PART TWO: THE STRATEGIC GROUP ENTREPRENEURS
86
Luohe is situated on the north-south, traffic axis that connects Henan by means
of a railway line and a highway with the north and south of China. The cities on
the north-south and east-west traffic axes of the province have experienced
rapid development in recent years due to their better infrastructure. At the same
time the population of Luohe had an agrarian population of 83%, in Yancheng
County over 90%. All the same in 1994 about 40% of the workforce were al-
ready employed outside the primary sector. But the total indicators for Luohe
were only slightly above the average in the province whereas Yancheng only
seldom reached the average value. So Luohe can be classified as a place of
middling development in Henan, and lower-middle development in contrast to
the national standard.

Table 13: Development indicators in the researched cities and counties:
Zhejiang (1994, in Yuan)

Zhejiang Hangzhou Fuyang GDP per capita 6,149 9,924 7,003
Gross output Agri. per capita 1,629 841 1,200
Gross output Ind. per capita 13,326 18,270 16,313
Urban income per capita 4,691 5,007 no data