AM Lecture 2

Structure and power of SOEs

SOEs were often subject to two systems: the line (the central mining industry) and the block (local government institutions)

SOEs played a dominant role in oil, telecommunications, aviation, power, and steel, meaning that they didn't allow any outside investment in any of these fundamental industries.

Things are changing now, due to the need to improve technology, as found in the West, meaning that they need to accept outside investment.

Management traits

Who do SOE workers take their orders from, the State or the investors?

Management traits in SOEs, which vary in strength, include:

• Lack of co-ordination over enterprise goals
• Increasing bureaucracy
• Low levels of efficiency and lack of accountability
• Increasing risk aversion
• Decision making depend on reactions to instructions from the government. SOEs didn't have to seek their market, as the State provided them with what they needed. This meant that there was essentially no marketing activities.

Distortions and outcomes of central planning

Two stage reform period

The Sichuan experiment

Western governance reforms

Effects of "Corporatization"

The Learning Organisation

Change motivation

Chinese culture

Chinese management and tradition

Sinoelectronics - Case study

Other studies and remarks on Chinese management

Conclusions