Friday, July 23, 2010

UPDATED-Still Lost in Translation: 垄断 ≠ Monopoly

UPDATE: I have added some comments from Don Clarke of China Law Prof Blog at the bottom of this article.

Preface: My Twitter acquaintances sometimes accuse me of being pedantic, an inconvenient malady to suffer when one is restricted to 140-character soundbites. While most of this article may indeed sound overly pedantic, it has a real-world application concerning the role of foreign automakers in the Chinese market. If you read to the end, I promise it will all make sense. What you see here is the scaffolding surrounding an intellectual edifice that is still under construction. If you find this sort of thing boring, you may want to skip grad school. :-)

A few months ago, I wrote a series of posts (the first of which is here) in which I attempted to get a handle on the terms guo jin min tui and guo tui min jin. Part of the upshot was that many English speakers wrongly translated the latter term as “privatization” when in fact that was not the intention of the Chinese speakers who introduced the term. Furthermore, since the former term is the exact opposite of the latter, we translated it as “nationalization”, which was also incorrect.

Whether my dissertation will ultimately provide a better understanding of business-government relations and industrial planning in China remains to be seen. But one of the unexpected by-products of research in Chinese language documents is a discovery that, in many cases, Chinese and English speakers, even when relying on dictionaries and professional interpreters, often have very different concepts in mind for what they think is a common term.

Doesn't 垄断 mean monopoly?

The latest example is 垄断 (longduan) which is always translated as “monopoly.”

Google Translate, Babelfish and my Concise English-Chinese Chinese-English Dictionary all give the English word “monopoly” as the translation of "longduan". And, with the exception of Babelfish, they give “longduan” as the Chinese translation of of the English word "monopoly". (Babelfish, gives 独占 (duzhan) as the translation of monopoly.)

The context in which this discrepancy came up was my search for documentation of how China’s government and auto industry bureaucracy views the presence of foreign automakers in China’s market.

The first comes from a collection of essays on the auto industry written by a former Policy Research Director in China’s auto industry bureaucracy, published in 2009. This particular essay, written in 1998, was regarding the role of foreign automakers in China:

My translation (again, assuming 垄断 means “monopoly”):
The ultimate aim of the multinational corporations (MNC) is to use joint ventures to gain capital, technology, products, market control and monopoly so as to achieve the longer term strategic purpose of occupying China’s big auto market.
This next one comes from a book published by the Ministry of Science and Technology intended to be used by government and auto industry officials and academics as a companion reference to the eleventh five-year plan. The series editor is one of the Vice Ministers of Science and Technology. It was written in 2009.
跨国公司的这一策略对我国经济发展的影响较之于单纯的股权控制更为隐藏、深入,严 重削弱了国有经济的主导作用和制力,增强了跨国公司在中国市场的垄断地位。
My translation:
The impact of MNC strategy on China's economic development is hidden and much deeper than just equity control. It seriously undermines the state-owned economy and manufacturing power and enhances the MNCs' monopoly position in the Chinese market.
My first thought was, well, they simply don’t know what a monopoly is. In English, the word “monopoly” is pretty easy to understand. It comes from the Latin monopolium, mono meaning “one” and polium meaning “to sell”. It defines a situation in which a single company controls all, or nearly all, of the market for a particular product or service. In other words, the absence of competition.

But in the case of China’s auto market, there’s simply no way that any foreign company has a monopoly. First of all, the foreign automakers in China are not a unified group. There are dozens of foreign companies trying to sell cars in the China market, and competition among them is quite fierce. Second, even if the foreigners did have a unified group, foreign brands only comprised about 70 percent of passenger cars sold in 2009, down from about 80 percent in 2004.

What does it mean in Chinese?

Thinking the problem may lie, not with the word longduan, but with its translation into the word “monopoly”, I took a closer look at the Chinese word:


垄 (long) is defined as a ridge of earth dividing plots of farmland, and you can see that in the parts of the character. The top part 龙 is “dragon” and the bottom part 土 is “earth or soil”, so a 垄 is like a dragon lying in the fields dividing different plots of land. If my knowledge of Chinese history is correct, this refers to earthen walls or ridges made of stones separating one family’s plot of land from another, meaning that each family was responsible for its own plot. (In feudal China, the economic benefits derived, not to the family, of course, but to a landlord.)

断 (duan) means to break off, to sever or to judge.

Together, these two characters seem to indicate something that separates one part of something from another. What I don’t see is any meaning indicating that one party gets everything and all others get nothing. Nor do I see any indication that one party even gets most of something while others are left to share a small portion, though that could be implied -- and it might certainly describe the current situation in which foreign brands (collectively) occupy about 70 percent of China's passenger car market.

So the problem here isn’t that the Chinese don’t know what “monopoly” means; the problem is that I didn’t know what longduan means. Now that I do (and assuming my analysis isn’t way off base), I am able to read the above passages with a better understanding.

Now for the application

What these passages are lamenting is not the exclusive right to the Chinese market by a unified group of foreigners, but the fact that the foreigners have any market share at all!

The common refrain that surfaces repeatedly in official and semi-official documents is the fact that Chinese joint venture partners have learned very little from their foreign partners aside from how to assemble and sell cars. The all-important design element continues to exceed their grasp. There exists an almost palpable resentment of the fact that China has handed over market share to these foreigners without getting the technology they were expecting in return.

What’s even more amazing to me is that this complaint has been consistently aired throughout the past two-plus decades – which leads to a much more interesting question: If the lack of technology sharing has been a problem for so long, why does China continue to welcome new joint venture partners?

For the answer to that question, you’ll have to read my dissertation, but please feel free to venture a guess in the comment section below. :-)

UPDATE: I consulted with Don Clarke of the Chinese Law Prof Blog on how the term 垄断 is defined in China's anti-monopoly law.

Don says: "It is understood in Chinese legal discourse to be the Chinese equivalent of the English term "monopoly". The economic tests used in China to measure the degree of longduan in a market are similar in principle to the tests used in US antimonopoly law."

He adds further that, when we see officials using the term 垄断 as I excerpted above, they are just "misusing the Chinese word the way an American politician might misuse an American word".

In other words, don't confuse discourse for policy.

Thanks, Don, for your insight!


  1. In Through the Looking Glass, Humpty Dumpty reportedly said in rather a scornful tone, "When I use a word, it means just what I choose it to mean--neither more than less." Nevertheless, as the term "monopoly" has such a specific legal meaning, honed by hundreds of court cases, isn't it just too important of a word for creative translating?

  2. Very good question, Mao Ruiqi.

    China's anti-monopoly law, as far as I know, is called "反垄断法". Presumably the law defines what 垄断 means.

    I know exactly whom to ask about this. Maybe he will be kind enough to comment here.

  3. Thank you for adding Don's clarification. Yet, now I wonder, in a land where discourse frequently transmutes into policy, i.e. national secrets act, without prior notification, does Don's clarification mean as much there as it would, say in Peoria?

  4. That's a good question, Mao Ruiqi.

    If I represented one of the foreign auto companies in China, I would be concerned about what it means when officials repeatedly refer to my presence as a "monopoly", especially when it clearly is not.

    There's no question in my mind that the Chinese resent the presence of foreigners, and I guess that's not terribly surprising. Who wouldn't prefer to be self-sufficient in everything?

    I think the foreigners are tolerated because they bring something that helps China to achieve its goals. As long the Chinese are benefiting, the foreigners' position is secure.

    I have a pretty good idea of what that "something" is, but I would rather not speculate until I have better evidence.

  5. Off-hand I'm thinking you have an excessively narrow view of monopoly in western civilizations.

    I'd argue that legal definitions are too narrow by necessity. It's one thing to say someone has achieved status as a monopoly, it's another thing to prove they can't be anything else to a point where legal remedies are required.

    We also have a concept of oligopoly. Essentially the same thing as monopoly, but including several actors instead of a single one. The difference between a foreign owned car oligopoly and a foreign owned monopoly is whether you choose to distinguish them beyond "us" versus "them". There is little difference in substance to a startup competitor.

    When you go a step further and realize that these foreign car companies share operational details right down to having the same labour unions and part suppliers, one could argue that in some respects there is effectively cultural/operational collusion. They are not really entirely independent entities when considering these integrated external relationships.

    I'd argue in western culture, the meaning of monopoly isn't an absolute state (complete absence of competition), but a position of influence (the ability to set terms for the industry). To the extent that microsoft can force hardware manufactures like intel to cater to their software goals, they operate as a monopoly that derives benefits unavailable to other software competitors. It is not about the absence of competition. It is about the wielding of power stemming from market position to create advantages that do not derive from benefits to consumers. And 70-80% market share is plenty to achieve that sort of influence, even if spread among an operationally integrated oligopoly instead of a single monopoly.

  6. Fair enough. Setting aside whether my definition of monopoly in the West is too narrow, I would still argue that foreign automakers hold nothing approaching a "monopoly" in China.

    First of all, the only way these companies are allowed to do business in China is by entering a 50% (or less) joint venture with a state-owned Chinese partner. Everything these companies do in China is sanctioned by the state.

    Secondly, China has an anti-monopoly law which it did not hesitate to apply to keep Coca-Cola from taking over Huiyuan juice. (Huiyuan has a 33% market share and Coke less than 2% in juices.) If China truly viewed foreign automakers as a collective unit then the law could be applied. It hasn't been, and it will not be.

    I'm not sure I understand how having the same labor unions would make competitors into partners. GM and Ford both hate the UAW. It's a source of weakness to both, not strength. Any anyway, foreign unions have no presence in China. Furthermore, Japan, Germany, France and Italy all have completely different, unrelated labor unions.

    While you are correct that foreigners do share many of the same parts suppliers, so do the Chinese manufacturers. TRW, Bosch, Delphi, Wanxian -- they all make parts for everyone, both Chinese and foreign. That's hardly a point of collusion.

    GM wants to eat VW's lunch and vice-versa. Their employees may gather for beers on social occasions, but on the capitalist field of battle, they are very much enemies -- despite the fact that they have a common partner in Shanghai Auto.

    I stand by my original conclusion. There is no foreign monopoly, only Chinese resentment that they have yet to figure out how to design cars.

    But they are rapidly closing the gap.


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