China is new to the world of ruling by law, and many Chinese statutes were derived from other countries, such as France, Germany or the United States. So it may seem impossible to some that China may "export" some of its laws concerning corporate governance to other nations.
Scholars gathered in Beijing to attend the International Workshop on Stakeholder and Gatekeeper Roles in Corporate Governance on May 14 and 15. And many scholars present said there is a definite possibility that nations will look to China as a guide for developing corporate law.
Chen Su is a scholar with the Institute of Law at the Chinese Academy of Social Sciences. He was on the Company Law Revision Experts Panel of the State Council's Legislative Affairs Office.
Chen told chinadaily.com.cn that China's economy is developing fast, and the methods this country employs to make laws concerning the interests of corporate stakeholders may draw the attention of lawmakers in other countries. A stakeholder is defined by R Edward Freeman as a "group or individual who can affect or is affected by the achievement of the firm's objectives." Freeman is an American philosopher and professor of business administration at the Darden School of the University of Virginia.
Helmut Kohl, dean emeritus and civil law professor at Frankfurt University, said companies in developed economies are diversely controlled unlike those in China.
Large companies in China are State-owned or State-controlled, which, according to Durham University corporate law professor Roman Tomasic, helped them suffer less because their corporate behavior was not based on market trends only.
Tomasic said the rest of the world learned something from China, as it suffered less than others during the financial crisis.
John Ritchie is a business lecturer at Durham University. Aside from differences in corporate control, he said Chinese companies are over-governed while their Western peers are under-governed. There should be something in between, he said.
Tomasic told chinadaily.com.cn that people in developed countries always rely on market conditions and shareholders' value to create law and be successful in business. But, he added, the market does not always function well. And focusing on shareholders' value does not guarantee long-term survival of companies.
Tomasic, like many other scholars, advocates that stakeholders' interests – rather than shareholders' interests only – should be protected. If a company goes bankrupt, it will not only hurt shareholders, but, he said, it will hurt the interests of all the parties involved.
Stakeholders, as Tomasic explained, include the company's shareholders, its employees, its creditors, customers and suppliers. More broadly, stakeholders also include the government and the community within which the company operates. And he said all of their interests should be accounted for when creating laws.
An increasing number of scholars believe the "shareholder value" concept prevailing in the West is limited. Too much of a focus is placed solely on factors like annual performance, which many said could be an inaccurate judge of success, especially in the long term.
But scholars who attended the workshop said a new, dominating concept is yet to be formed.
The "stakeholder value" concept is most frequently discussed in the academic sector, as lawmaking activities show limited movement in this direction, Tomasic said.