Macroeconomics Case Study

Chinese State-owned Enterprises – Redefining the Role of Government in Business

OR

Abstract:
China’s economy, since the start of the reform era in 1978, has seen stupendous growth aggregating over 10% for 5 successive years till 2007. Where economies the world over are advocating capitalism, China has embarked on becoming a ‘socialist market economy’, where the State continues to play an important role in the development of the economy. Chinese State-owned Enterprises (SOEs) are making news with a number of them appearing on the global lists of the world’s top companies. Domestically too, despite a thriving private sector, some of the most profitable companies continue to be state-owned. China may have undertaken liberalisation but politically the state continues to dominate major areas of economic activity. The case has been written with a view to understand government’s role in business. Giving the facts that contributed to the growth of China’s economy in general and the restructuring and development of its SOEs in particular, this case leads to an argument on – is state control of enterprises and protectionism hinder growth and is state-ownership a dead-hand? Are China’s SOEs well-equipped to compete in the cut-throat global environment without the government sops?

Pedagogical Objectives:

The case is structured to let the students analyse and understand:

• The factors that determine the competitive advantage of a nation
• China’s competitive advantage
• The competitive advantage of China’s SOEs
• The government’s role in the development of the SOEs
• Whether China’s SOEs are competent to contend in the cut-throat global environment.

Keywords : China, State Owned Enterprises, Competitive Advantage, Porter, Country Analysis, Global Competitiveness, Government in Business, Reforms, Global, Emerging, Economies, Opportunities

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