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Chen (2004)
Management >
Asian Management >
Lectures > Independent Research >
Chen - China >
Issues with CSEs > Further issues
> 1979 change > 1984
change > CSE future
CSE Future
Despite many significant changes to CSEs, some serious problems
remain.
As competition has increased in size and intensity, supply has
outstripped demand and many CSEs have
been unable to cope, due to their backwards methods and low quality.
State subsidies to cover their losses grew by 34%
in 1989. In comparison, township companies have done well, in part due
to their embarking upon joint ventures.
The number of obstacles which must be overcome are as follows:
- Total separation of government from CSE. The government
interferes in economic activities, including punishing companies for
increasing their productivity and having high taxes on the CSEs, as
compared with township firms.
- Development of the market system, as in many
industries it is still not developed enough. Confusion is prevalent
in the market and CSEs still tend to sell what they make, rather
than investigate what the market needs.
- Development of strategy. CSEs need to delete the
life-support and socio-political systems and develop their core
competences by forming strategic alliances. Joint ventures are
essential to technological development, as CSEs could learn to adapt
better to the global economy and changing market needs, but these
ventures are only exploited by township firms.
- The financial system needs to change further, including
increased transparency of the central bank's co-ordination and
introducing specialised banks.
Future continued
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