The road on Tiananmen Square is gray, but every once in a while, it will turn green.
And if you are attentive, you will notice the rifle carried by each forest-camouflaged soldier: identical across the thousands of men and women participating in the parade. That rifle is the Type 95, which serves as the standard issue firearm of the People’s Liberation Army of China. It is generally considered a decent gun, but what makes it interesting is how cheap it is: so cheap, that it is estimated that the majority of U.S. gun owners would buy one.
But in June 1989, a green Tiananmen meant tanks and soldiers, uniformed in olive, rolling over demonstrators, an incident that led former U.S. president George H. W. Bush, and every subsequent president, to ban the import of Chinese arms.
But what would have happened if the Type 95 was never banned? Would Smith & Wesson go out of business, buckling under the sheer weight of hyper-competitive Chinese pricing? Would Tesla go bankrupt had BYD electric cars never been disallowed? What about Apple if Huawei phones had hit the shelves at Best Buy?
One way or another, green streets in Beijing tell of crushed resistance at the hands of the People’s Liberation Army. But dark-inked signatures in Washington – pressed into paper by a 37-year-long legacy of presidents – tell a far more fascinating story. If even the free-market-loving Republicans of the late 1980s felt that the best means of protecting U.S. industry was an outright ban, it meant the United States believed (and continues to believe) that there exist immutable traits in Chinese corporations which U.S. businesses could never truly compete against in fair market conditions.
And it is true that China does have certain competitive advantages that aid its industries in consistently defeating its U.S. counterparts in many of the important sectors of today. But the most important factor is the Chinese embrace of market share above everything: over revenue, over brand value, over stock price, even over profit. If the U.S. corporation is to win, it must win without profit. The United States must design economic structures and cultural norms capable of rewarding victory by share dominance.
The doctrinal preference for market share is not new, and it is not the first time it has caused corporate America an existential crisis. In the late 1950s, Japanese executives began adopting what they referred to as “市場シェア至上主義” (Market Share Supremacism), enabled by dual economic structures of the Ministry of International Trade and Industry and the “keiretsu.”
The MITI was a powerful agency which backed large swaths of the private sector to pursue aggressive foreign expansion through massive investments. Because MITI’s directive was reinvigorating Japanese industry, shares held by MITI did not need to produce dividends. For instance, Japanese semiconductor companies, like the Nippon Electric Company, Toshiba, and Fujitsu, began dumping critical dynamic random-access memory computer chips at below market cost to gain market control at the expense of losing money on sales. And these firms could undercut without a loss-leading mechanism since access to capital by MITI was tied to the domination of international markets by Japanese industry. Because access to private capital was often tied to MITI investments, executives were suddenly freed of profit as a performance indicator to private shareholders, and capital was instead put towards market share growth (a metric MITI was concerned with).
However, because MITI did not prioritize the success of individual corporations but that of Japanese industry, singular focus on share meant vulnerability to takeover attempts by domestic competitors. This was an issue because sustained expansion could not occur under domestic pressure. For Japan, the solution lay in “系列,” or “keiretsu” (which literally translates to “system”). In a keiretsu, the member corporations own portions of the shares in each other’s companies in a system typically centered around a bank. This insulates each member company from stock market fluctuations and takeover attempts, enabling the long-term planning necessary for “Market Share Supremacism.”
The Japanese Market Share Supremacism movement would ultimately collapse in the face of U.S. voluntary export restrictions, like the 1981 automobile VER and the 1986 electronic tariffs. Because the United States constituted an overwhelmingly massive segment of the market for major Japanese industries like auto and electronics in the late 1980s, market share could never truly be replaced. When the asset bubble collapsed in the early 1990s, MITI became incapable of doling out investments at the same magnitude it had been doing, and the keiretsus lost their tight financial and operational bonds as banks restructured and sold off cross-shareholdings. There remains a greater cultural emphasis on market share among modern Japan’s corporate leadership, especially relative to their U.S. counterparts. Yet the “Lost Decade” of the 1990s sobered Japan away from the dichotomous disregard for any metric besides market supremacy, because a bankrupt company has zero percent market share.
China reanimated the Japanese creed of market conquest using similar mechanisms. Yet the United States finds itself unable to exorcize the Frankenstein-ish Chinese Market Share Supremacism with VERs and tariffs because it is a foundationally different system.
Like MITI, Chinese government investment utilizes successful corporations as geopolitical tools to intertwine economies and generate leverage. As such, the government is willing to front massive amounts of capital in the pursuit of international market control. This mechanism means that Chinese companies lack the pressure to generate capital and can endlessly pursue market share in a similar manner as the Japanese corporations of the 1980s and 1990s. But in capitalist Japan, MITI influenced private investment flows (which made up the vast majority of capital) by introducing policies and making investments. In China, there is far less of a need to influence private investment flows because over half of all domestic investment is made by state-owned banks or the government itself. As such, investment levels are far more insulated from fluctuations in response to U.S. tariffs or export restrictions, making a rapid collapse unlikely.
There are also differences in the mechanisms for addressing domestic competition. Like Japan, Chinese industry mitigates competition through a dense network of family-business relationships, especially in the case of “集團,” or “jítuán,” in Hong Kong. But unlike in Japan, these networks extend deeply and seamlessly into government since State-Owned Enterprises constitute over 60 percent of China’s market capitalization, making the priorities of the state (market supremacy) incredibly aligned with that of Chinese executives. The Chinese government is also far more commanding than MITI. This is not only in regard to the amount of capital available for investment, but also in that MITI rarely, if ever, influenced corporate strategy through punishment. Contrastly, the Chinese Communist Party is willing to make some of its wealthiest and most influential business leaders “disappear” for a few months if they are unwilling to toe the party line. As such, the CCP is far more equipped to prevent overwhelming domestic competition even if the relational, keirestu-like structures weaken like they did in Japan in response to economic pressure by the United States.
Finally, the United States is not as important in segments of the economy critical to China. The United States is certainly a major importer of Chinese goods—dominating categories like electronics, machinery, and consumer products—but it is no longer the singular market that determines the fate of Chinese industry. In contrast to the Japan of the 1980s, whose semiconductor and automobile sectors were deeply dependent on U.S. demand, China’s export portfolio today is geographically diversified and internally buffered. A significant share of Chinese manufacturing now feeds into intra-Asian supply chains, and domestic consumption accounts for a growing portion of total output. For Beijing, the United States is a valuable customer, not an indispensable one.
This means that any U.S. attempt to impose bans or export restrictions — justified, as before, on the basis of “unfair competition” — would fail to cripple Chinese industry in the same way it constrained Japan. A prohibition on Chinese products would simply redirect supply chains, not dismantle them, as production and capital reroute toward receptive markets in Africa, the Middle East, Southeast Asia, and Latin America. The United States does not constitute the overwhelming majority of China’s exports. Even if it did, production has been decentralized across Asia to combat restrictions through origin circumvention. The United States can wound, but not starve, a system whose scale and redundancy have been engineered precisely to outgrow its dependency on any single buyer. In this way, a ban will not work — not because it is not punitive, but because China already learned the lesson Japan paid for.
So if Chinese business cannot be made to abandon its Market Share Supremacism, competitiveness must be restored to the United States through the creation of an U.S. share-oriented doctrine. The financial structures that enabled Market Share Supremacism, like Japanese MITI and Chinese jítuán, can exist in the U.S. market economy, as evidenced by Japan. However, the mechanisms enacting and maintaining this shift must be fundamentally different from those in Japan and China. It is culture that converts the opportunity for share-oriented doctrine into a collective, conscious decision by businesses to pursue it.
In the West, Market Share Supremacism was generally understood as a corporate philosophy or management doctrine. In reality, the suffix “-主義,” in the Japanese word for the term, implies an ideological system of morality.
The market share movement in Japan was an ideological extension of the philosophical legacy of the Kyoto School, particularly the family of thought established by Nishida Kitarō. The school, which emerged in the early 1910s, attempted to assimilate Western philosophy with Zen Buddhist and Confucian ideas and to reformulate them into a “logic of place,” or “場所の論理.” Nishida posited that the self, the nation, or the business only existed relationally. There is no atomistic individual – only the subject constituted by interdependence, implying that entities (like corporate firms) had meaning only in relation to others.
Following 1945, Kyoto thinkers secularized Nishida’s family of thought into economic nationalism, in which MITI bureaucrats and executives understood individual firms as in service to the national body. By 1970, this logic crystallized into Market Share Supremacism, which held it was a company’s duty to expand its presence at the expense of revenue or profit for the interrelational victory of the nation, the keiretsu, and the corporation rather than of the individual shareholder or executive.
Chinese Market Share Supremacism does not trace its lineage from the Kyoto School. However, the Kyoto movement as a Confucian and Zen Buddhist confrontation (ideologies with deep Chinese roots) to Immanuel Kant and Georg Wilhelm Friedrich Hegel mirrored the Chinese embrace of a market economy. Rather than through a nationalist perspective, Deng Xiaoping’s rhetoric in the early 1980s understood “Socialism with Chinese Characteristics” as a collection of private firms working for the socialist collective of the people through the state.
Market share supremacists are ideologues, something many in the West have failed to understand. There is a long-lasting tradition in the United States of understanding business as fundamentally non-idealogical. In 1970, Milton Friedman’s landmark essay “The Social Responsibility of Business Is to Increase Its Profits” argued that corporations should not pursue social, political, or moral goals beyond profit maximization. According to him, the only responsibility of business is to its shareholders, and any deviation constitutes an inappropriate and undemocratic use of corporate power.
Friedman’s shareholder capitalism has defined the understanding of business in the United States for over half a century. Its effectiveness in defending democratic political and social institutions is subject to debate, but the reality is that it needs to be understood as a philosophy itself, not a descriptor. Competitive businesses set on ideology can exist in democratic societies – the United States’s current understanding is a collective, cultural decision to reject such a notion. Therefore, the question of addressing U.S. industrial competitiveness is a difficult question of culture.
Certain Silicon Valley circles have suggested that corporations should act as extensions of their founders’ values in a tool for individual expression. Others in the Trump administration advocate for economic nationalism justified by American exceptionalism. Some center-left Democrats and pre-2016 Republicans assert the neo-liberal idea of industry as a geopolitical force for creating mutually reliant economies and creating peace. Friedman’s capitalism is in the beginning of an unraveling, and it is difficult to say which cultural restructuring towards an U.S. Market Share Supremacism would produce the greatest result. But it is clear that it cannot directly port its internal logic from the Kyoto School or Socialism with Chinese Characteristics in the same way economic policies can be replicated – it must be a continuity of U.S. cultural development, collectively determined in public discourse.
Choosing share-oriented doctrine – choosing competitiveness – is an economic question, but, more importantly, a cultural one. We know what kind of financial structures enable Market Share Supremacism, but the question of choosing it remains unanswered. The United States has attempted to avoid it through dark-inked signatures on VERs and protective tariffs in Washington, but answering it will only come when the United States starts treating uncompetitive enterprise as a cultural issue.
The United States’s economic soul is in decay. So let Beijing keep its utilitarian parade. Let Kyoto keep its national prayer.
The United States must meditate on the margins.
Featured Image Source: CNN
