The Iron Heel Strikes Again: Business culture in China (Updated)

Our friends, the Lumpenlogocrats, have a fascinating series on mobocracy in contemporary China. See here, here, and here. Ambivalent Maybe writes:

The Chinese are struggling to maintain an image of their economy as open and accessible, a place where entrepreneurs--foriegn and Chinese--can strike it rich as China transitions from a socialist to a market economy. It is at the moment, however, something like a 'Mobocracy,' where profitable businesses can be built, but on a constantly shifting semi-legal basis, always vulnerable to poaching by government officials, by people with better government connections, or some security guards with bailing wire.
...Near where we live in Beijing, for example, is an oddly shaped concrete plaza surrounded by an abandoned warehouse and a small strip of down-market restaurants. Our favorite grocery store--the High Honesty Supermarket--was here too, but closed down at the beginning of winter. But we continued to visit the plaza, to go to our usual restaurant there, and to buy vegetables from the farmers' market set up in the abandoned warehouse. Yesterday, though, we found that the gate leading from our apartment complex to the plaza had been wired shut. We had to walk all the way around the block to use another entrance.
According to employees at the restaurant, and sellers at the vegetable market, the owners of the plaza want the businesses to shut down and move away so that the plaza can be redeveloped into a housing high-rise. By closing the gates off, foot traffic through the plaza has been dramatically reduced, and by slowly strangling the businesses around the plaza, the landowners don't have to pay them any compensation to move them elsewhere. We'll make a point of walking the long way 'round from now on, but the toll on the businesses seems evident already. Some have already closed or are putting their merchandise on sale. Our favorite restaurant is usually packed at lunch times, but yesterday we were the only customers.

(Update) Third Party Dreamer adds:

So far the situation has not brought out the most typical and dramatic feature of China’s mobocracy, namely stick-wielding thugs. But it may only be a matter of time. I have read plenty of newspaper articles that begin with a dispute such as this one– developers want a family or a small business to get off of profitable land so it can be made into housing for rich people– and end with a gang of stick-wielding thugs (sometimes in the hundreds) scaring the little people off if they prove insufficiently malleable.

When we first arrived in Beijing there was an article about a family-run pheasant farm outside of Beijing that developers desperately wanted to remake. They offered the family some paltry compensation, but not nearly enough to pay for them to move the entire farm to a new location. The family refused, and the developer refused to offer more compensation. Both sides dug in their heels. Then one October midnight, out of nowhere 100 guys with lead pipes showed up at the pheasant farm. They broke in to the yard, bludgeoned every last one of the pheasants to death, and left. No one claimed responsibility, and no one seemed to know where the thugs had come from or who they were, but conveniently, they family no longer had a pheasant farm that would require extra compensation.

Anyway, fortunately this hasn’t devolved to that level yet, but it certainly has the makings of an ugly and all-too-typical conflict between small business owners and big companies backed (or entirely owned) by the state.