Ownership and performance in Chinese manufacturing industry

Abstract The relation between various ownership types and performance measures for 1036 firms in China is examined. State owned enterprises (SOE) are consistently less profitable than mixed enterprises (ME), collective owned enterprises (COE), joint ventures (JV), and foreign owned enterprises (FOE). The SOEs and FOEs are also less productive than MEs, COEs and JVs. The surprisingly low productivity for FOEs may result from the learning curve for international investors doing business in China. Owned by local governments, COEs are more profitable and productive than the central government owned SOEs, possibly because of closer monitoring and harder budget constraints, and better employees and management. The performance of MEs, mostly newly privatized firms, is weaker when related to assets, possibly due to the anomaly that capital investments following their public offerings are not yet on line. The co-existence of economies of scale and over-employment is also evident among Chinese enterprises.

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