Value, Investors, Markets, States and the Global: Exploring the Meanings of Everyday Practice of Cross-Border Financial Investment in China

This paper is based on interviews and observations carried out with employees working in the financial industry in Shanghai, Beijing and Hong Kong. The paper concentrates on employees working for companies buying small and medium enterprises (SMEs) in China, partly or wholly, in particular people working in Mergers and Acquisitions, Private Equity and Venture Capital. This constitutes the main channel of foreign financial investment in China, given the regulations about listed stocks and bonds. The analysis uses anthropological theories of money, power and globalization, in line with previous researches carried out by the author with stock brokers, hedge funds and fund managers in New York and Paris.

The paper shows that there is a widespread conflict concerning the method of valuation of SMEs, foreign investment employees (whether Chinese of foreign nationals) tending to use discounted cash flows, and local sellers tending to use asset prices or comparable variables. These controversies concern the definition of what is being purchased, as well as the kind of financial interests and rationales that are supposed to justify the transactions and their price. Practitioners make sense of these conflicts by linking financial identities to social identities, defined by nationalities, cultures and age, among others. This sense making renders possible the financial relation of power that determines prices, and it is linked to the institutional setting in which actors operate: the role of the Communist Party, of the State-Owned Assets Administration and Supervision Committee, and the laws and regulations of financial practice in Europe and the United States. Mainstream financial theory, from which financial methodologies are derived, is embedded in the presupposition of neo-classical economics and the liberal account of the role of markets and investors in an optimal allocation of social resources. In order to stabilize their personal careers and the organizational rules of profit seeking and commercial positioning, employees situate these identities, conflicting methodologies and institutional settings within accounts of the world and the possible roles that China would play in it, in particular, its ambivalent position within a teleological discourse about the universalization of global finance.

The paper thus allows for a critique of the descriptive limits of the figure of a single-minded maximizing investor. It also shows that the notions of “market” and “state”, which mainstream financial theory purportedly differentiates, are made sense of differently by each actor, in a context where they are redefined by financial practice and financial regulation. Thus, the paper contends that the notions of “investor”, “market” and “state” cannot be used as analytic categories, but that we must understand them as complex, often fluid and ambiguous concepts with which financial employees make sense of their professional activity. The fieldwork and interview based research incites thus us to go beyond the concepts of “market” and “state” in order to account for global financial power relations.