How Chairman Mao shaped the chairman of the board in Chinese companies — Q&A with Christopher Marquis

Christopher Marquis is a former vice president at J.P. Morgan Chase who has been researching Chinese companies and entrepreneurs for more than a decade, as part of his work as a business professor at Harvard, Cornell, and now Cambridge University.

Some of the fruit of that work is in a new book he co-authored with Kunyuan Qiao, Mao and Markets: The Communist Roots of Chinese Enterprise — which the Financial Times listed as one of the best books of 2022. (The CEO of Patagonia called Marquis’s 2020 book, Better Business: How the B Corp Movement Is Remaking Capitalism, an “important blueprint for how businesses can and should be both successful and a force for good.”)

I chatted with him at the very end of last year by video call about Mao and Markets. This is an abridged, edited transcript of our conversation.

—Jeremy Goldkorn

You are a business professor and most of your career has been at Ivy League schools. How did you get interested in the subject of Chairman Mao as a source of inspiration and practice for Chinese entrepreneurs?

Mainly from spending time in China. Also, I’ve always had a historical interest, directly out of college I was in a PhD program in history before I went to work at a bank for a while before eventually returning to school to get a PhD in sociology. So I am not a traditional China scholar with a PhD focused on a China topic.

In 2009, I started spending a lot of time in China to study social and environmental issues – which is my overarching research focus. I was a professor at Harvard Business School at the time and so got pretty good access to Chinese leaders. When I talked to them they would quote Mao, and have statues of Mao or the CCP flag displayed in their office. This was puzzling to me as these are people that were supposedly market-oriented entrepreneurs or leading large businesses, but at least on the surface they displayed a deep commitment to the CCP and Mao specifically.

In 2011 I spent time in Hunan researching a study of Broad Air’s work on prefab building technology and visited Mao’s birthplace in Shaoshan. The extent to which it was a shrine where people were literally worshiping him was a bit shocking. It was very different than my experiences visiting Monticello or Mt. Vernon and expectations based on my relatively limited amount of time in China at that point.

So I guess a big motivation was understanding this puzzle — was all of this just a display and if so what did such displays bring? Or was there something deeper?

Right. And if I can summarize a big book in just a few words, your new book is about how China’s businesspeople and entrepreneurs have learned many lessons from the Máo Zédōng 毛泽东 era, and that many of China’s most successful entrepreneurs have applied these lessons to their businesses. Is that fair?

Sure, that is fair, yes, many business people do use Mao’s ideas, particularly military strategies, in their business planning and operations. But I would put it a little differently.

What we try to do in the book is more about understanding how culture, society and institutions can have a deep and lasting effect on individuals and underlying political and economic systems. There is a rich social science literature on the lasting effects of early leaders that we believe helps better understand China today. In many ways, studying how Mao shapes business is a strong test of our ideas as in theory “Mao and Markets” should be like oil and water, and as we show in many cases, Maoist influence runs against the businesses economic interests.

When we in the West observe the last 40 years of China’s history, what we see is “Reform and Opening.” We see markets spreading but don’t actually recognize as much that there has been a deep red thread that has continued on since Mao. And this can be directly connected to how he shaped the CCP, institutions like socialization into the CCP and also political systems. Examining the lasting effects of all of these different aspects of the “imprint” Mao laid down is what I would characterize as the purpose of the book.

When Xí Jìnpíng 习近平 comes along with hardline strategies reminiscent of Maoist times, people were initially shocked and surprised. Actually, maybe now they aren’t so much anymore after the last few years and the 20th Party Congress. But I think initially people were pretty shocked by Xi’s strategies such as all his crackdowns on different industries, and increased nationalism, because they expected more of how the economy and politics were handled under Deng Xiaoping, Jiang Zemin and Hu Jintao. But actually his playbook very much draws on Mao in words and deeds.

It is in fact more of the same. It’s just that the same starts with Mao, not with Dèng Xiǎopíng 邓小平.

Exactly. That is what we try to argue and show through a variety of types of evidence, from large scale database analyses to case studies and analyzing historical materials.

Some people have strong reactions to comparisons between Mao and Xi, and admittedly, some of those are a bit simplistic. I want to be clear we are not saying Xi is Mao 2.0. What we are saying is a deeper understanding of Mao and his ideology and the institutions he created can help provide insight into Xi and CCP leadership.

We think it is important to recognize and study this in detail, as in addition to overemphasizing the liberalization of the reform and opening period, we have also observed a knee-jerk condemnation of anything labeled “communist.”

I was recently invited to give a lecture at a leading business school about the book and was asked for a title and said something like “the challenges and opportunities of competing in Communist China.” The person who invited me, who is of Chinese heritage, asked me if I can drop the term “communist” from the title because they were trying to avoid anything that might be political.

But this is a bit strange as how can you compete in China without the CCP being one of the main things in your mind? You see knee-jerk condemnation alot in politicians too.

To be very clear I am not supporting the CCP, and openly discuss and write about how they have perpetrated huge evils and injustices, with Xinjiang, Hong Kong and the horrible COVID opening as a few examples. But we need to get over the need to condemn them and do a lot better job at understanding the CCP, if we are going to be able to compete with China and Chinese companies in the long run.

And of the case studies you look at, what do you think is the one that is most accessible as a way of understanding this argument?

To me, I think Rén Zhèngfēi 任正非, founder of Huawei is a pretty good one. First because he’s someone that people know of, at least from the Mèng Wǎnzhōu 孟晚舟 case.

I think the case of Huawei and Ren Zhengfei is so interesting is because, it shows the difficulty that we in the West have in really understanding the system in China. Much of the rhetoric you see U.S. political leaders is like, “Oh, Huawei is state-owned company. It’s owned by the government in China.” From reports I’ve read, that is not exactly true. But to me, that is sort of besides the point because Ren Zhengfei says quite openly that he’s a devoted member of the CCP and ardent student of Mao and that his first priority is following the CCP. I think once you hear a leader say, “I’m following the CCP above all,” I think the ownership question becomes beside the point and sort of a red herring.

Huawei is also very interesting because Ren is one of the entrepreneurs who modeled a number of his business strategies after Mao’s military strategies. Mao was of course a disaster leading the country’s economy and is responsible for many tragic campaigns and deaths like in the Great Leap Forward and Cultural Revolution. But in the military realm his ideas and strategies were successful.

So in its early days, Huawei had trouble competing against the other big telecommunications providers like Lucent and Alcatel, so he used Mao’s “surround the cities from the countryside,” strategy of succeeding in rural areas, and from that success take the larger population centers.

This is the strategy Mao used to defeat the KMT and has been used by many businesses such as Pinduoduo competing against JD and Alibaba.

What about Jack Ma (马云 Mǎ Yún)? You also talk about Jack Ma in this context in the book. Ren Zhengfei is…I don’t want to use the word obvious, but Ren comes to mind if one thinks of a Chinese business leader who is communist. He was famously in the People’s Liberation Army, whereas Jack Ma has in fact got the opposite reputation.

Yeah, he is an interesting case. I don’t know if he explicitly hid it, but he was not public about his CCP membership for a very, very long time and it was a surprise when people found this out only a few years ago.

But like Ren, he also invokes Mao’s ideas for his strategies, for instance, he discussed using the Yan’an Rectification as an example for reforming Alibaba culture. He of course comes across as this dynamic English-speaking leader. But I do wonder the extent to which his CCP connections have aided his career. He had a couple failed enterprises before Alibaba, one of which was an online directory, and I do wonder about the extent to which his connections to the CCP and government actually were quite useful in establishing those enterprises and then being able to grow Alibaba.

For a long time, many of the products that they offered from Taobao and Tmall, and then Alipay and Yu’ebao and insurance products and business loans, all things that are touching on pretty sensitive areas. It’s surprising to me that he actually was not cracked down upon earlier. The CCP/government obviously wanted Alibaba to grow, but large banks — which are all state owned — were pretty annoyed as well because people were taking their savings out of banks to put them in the Yu’ebao money market fund, which was offering really high percent returns.

So, even though he was not as public as Ren, my guess is he likely has deep connections with the CCP.

Do you see this effect weakening or staying the same or even getting stronger with younger entrepreneurs? Somebody like Colin Huang (黄峥 Huáng Zhēng) at Pinduoduo or Zhāng Yīmíng 张一鸣 at ByteDance. Particularly Zhang Yiming, he strikes me as somebody whose mindset was much more forged by Silicon Valley than by the Communist Party.

This is one of the things we try to examine in this book, although not specifically in the context of these well known entrepreneurs, but by using some of the large scale databases we have assembled, supplemented by interviews with entrepreneurs. One of the academic papers we wrote on the topic that is the basis for some of what we present in the book examined how the timing of people entering the CCP affected how they ran their businesses.

Our findings, using advanced statistical techniques examining data on thousands of entrepreneurs, show that if you enter the CCP during Mao’s period, you’re much less likely to internationalize your business, that includes going global and accepting foreign investment. In many ways this is against the entrepreneurs economic interest, but very much in line with Mao’s anti-foreign and self sufficiency ideologies. Also, these entrepreneurs are more likely to engage in “common prosperity-ish” type of work which also flows from Mao’s ideas.

But our findings suggest that these more recent entrepreneurs – so socialized into the CCP in the post-Mao era – do have less of a deep red imprint, so to speak, although there is clearly a strong cultural influence from Chinese education, media, propaganda, etc all of which still emphasize Mao.

That said, given the trends of Xi and the CCP in the last number of years, the golden shares that they’ve been buying to have control of private firms, putting CCP people on the boards, the expansion of the CCP branches into even multinationals, all suggest to me that ideological commitment is more important now than ever, or at least in the last 40 years. I don’t think that this is a trend that is going to slow down.

The entrepreneurs have been less shaped by Red culture, but they are obliged to immerse themselves in it anyway!

How do you think this is going to affect “going out,” the ability of Chinese companies to go abroad? Obviously, TikTok has been an extraordinary mess. Perhaps that happened before Zhang Yiming was completely brought back into the clutches of the Party. He made a kind of mea culpa at one point a couple of years ago and promised to do his best to serve the country, etc.

But if you’re a Chinese businessperson right now and you’re still operating your primary business in China, how are you going to approach going abroad?

Yeah, I agree and that’s a good question. Zhang Yiming’s apology from a few years ago is an example of exactly the kind of strong influence of the CCP in business that has ramped up in recent years and I only see increasing in the future.

Chinese companies traditionally have not been as successful going abroad as companies from other countries; for instance those from Japan or Korea. China has a giant domestic market, and so companies and their products get very tailored to that market, and it makes adjusting to other countries and consumer markets more of a challenge.

But conversely, in the recent period, the government clearly wants companies to go global. Of course there is the “go global” push from the government for many years now. And the Belt and Road is an example too, there’s a lot of subsidies and push for companies to particularly go into developing regions like Africa and Southeast Asia. I sort of see that almost as a “surround the cities from the countryside” global strategy on the part of the CCP, although it appears to have mostly backfired. They’re building a lot of things, but it seems the more money they spend, the more they alienate the local populations.

As an entrepreneur, with the tension between China and the West, I would not be particularly focused on going global right now. A lot of the entrepreneurs today do some Western education in the U.S. or the U.K., or Canada, or Australia, or wherever. So, perhaps they’re able to actually adjust their strategies a bit more, but aside from TikTok, and maybe Tsingtao Beer, there’s not a lot of examples of Chinese consumer facing companies that have succeeded outside of China. This is not to say Chinese companies have not done tremendously well, there are lots of examples of gigantic and very successful, very innovative companies. But they grew that way by relying mostly on the China market.

It does seem that one area where interesting things are happening in the Chinese companies going global space is in electric vehicles. There’s a huge need for electric vehicles around the world, and China has developed a pretty robust EV sector. Importantly they are not only in the luxury, super high-priced segment like Tesla. I think companies like NIO or XPENG or BYD have already entered Europe and I just saw something that they are also entering Colombia. So I think that that is an area where I could see Chinese companies being a pretty dominant global force in coming years.

So, they have the right product, basically.

Yes, I agree.

One last question: You wrote the book together with Kunyuan Qiao. He is, I guess, American educated, but from China originally. How did you find working with him on this book in the sense of the cultural differences between the two of you in approaching this subject matter?

It has been an amazing work experience. I can’t say enough positive things about Kunyuan and his contributions to the book and research more generally.

And I’ve worked with probably 10 to 15 Chinese co-authors over the years. Many of them are my students and some are peers too — professors at leading Chinese universities.

For the most part, I have not run into huge cultural issues in these collaborations. I think perhaps the reason why is that the target that we have for our research and writing is leading Western academic journals, which at least until recently was very valued in Chinese universities.

Aside from these people-to-people connections though, over the years, my interactions with Chinese academia have become more and more disappointing. Some universities I have visited to speak at have tried to dictate the topics I discuss so I don’t mention anything “sensitive.” And some of my work and reputation have suffered anonymous and unfounded attacks from Chinese who think my work is insulting to China.

For example, I was quoted not that long ago in a major global media outlet, and the author of the article got some ranting complaints that what I said about Mao was wrong. So I then have to spend a number of hours putting together details to actually show that what I said is right. What a waste of time.

The sad thing is that even some people I thought were my friends and I respected as academics I have heard are saying negative things about me now. So I am pretty discouraged about researching China these days.

It’s interesting that those are the kinds of problems you’ve been having because I mean, from what I know of the work I saw, it’s not a critical book. You’re not really criticizing anyone. You’re sort of explaining a phenomenon. I mean, if you’re a rabid anti-communist, sure, nobody’s going to look good, but nobody would look good anywhere. But I mean, it doesn’t strike me as something that somebody should get offended by.

I totally agree. And this is what has in some ways been most upsetting and I think it limits the extent to which I will work on China topics anymore. What we are trying to do is provide a neutral social science investigation of how and why an early leader continues to have influence. Again, this is an established area of work in the social sciences and applying it to Mao’s influence on China is not a huge stretch.

But for instance, one of the academic papers underlying the book is titled Waking From Mao as Dream, and I heard that many Chinese found that title and focus of that article very offensive. In today’s environment with people being persecuted for so called historical nihilism, any writing or talking about Mao in any way is a potentially sensitive area.

It’s like talking about Jesus or something. You just can’t say the right thing basically.

I agree and I must admit the extent to which ideology has taken over academic discourse is another reason for my general pessimism about China’s future.