While Russia and other former Socialist countries in Eastern Europe have rejected communism and initiated rapid transitions to market economies, China has refused to change its political institutions. Instead, it has set its course on the economic institutions of "state socialism," not by revolution, but by evolution, or gradual economic reform, since the late 1970s. The idea of "privatization" is fairly new for the Chinese government.; This study attempts to determine the viability and suitability of privatization as an alternative to the maintenance of state-owned enterprises (SOEs) in China. This thesis focuses on four objectives: (1) an examination of the current phenomenon of privatization worldwide, (2) an examination of the role, present status, and performance of SOEs in China, (3) an evaluation of the Chinese economic, social, political, and business environment for possible privatization of SOEs, and (4) the development of a model for privatization that would be suitable and feasible in the Chinese business environment.; Privatization is generally a complex process and divestiture alone is not enough for the whole privatization program. Governments should create suitable environments for the success of privatization efforts. The privatization model and the decision tree can be applied to any country considering the adoption of privatization.; The presentation of the privatization proposal for China suggests that the Chinese government should focus on job creation, increasing the role of the private sector, and attracting foreign capital. In terms of priorities of selling SOEs, the profitable ones should be the best candidates for the first priority, the small and medium SOEs making less profit and facing competition should be the second priority, and the unprofitable large SOEs which no investors are willing to purchase should be the last priority.; The study also examines the Chinese retail industry and the joint venture between Shanghai Hualian Commercial Group and Hong Kong China Resource Group in order to provide understanding of the Chinese SOEs' privatization process. Evidence shows that the Chinese retail industry reform has been following the guidelines set forth in the proposed decision tree. China has been gradually liberalizing trade restrictions and encouraging private job creation and has divested its small inefficient SOEs through closures and mergers. The next task of dealing with large SOEs will be the expansion of the number of the joint ventures with the private sector to expand the newly-formed enterprises' capabilities to compete with each other.
展开▼
