Abstract
China’s accession to the World Trade Organization (WTO) has marked the beginning of a new era of China’s opening-up to the world. This development will lead to the full opening up of the Chinese construction market to overseas construction companies. This has brought significant challenge to the domestic construction firms, in particular, these state-owned construction enterprises (SOCE). Efforts have been made by the Chinese government for improving the competitiveness of SOCEs in order to compete with overseas firms. Various reforming mechanisms have been introduced such as merger and leveraged buyout (LBO). Using an example, the research reveals the applicability of LBO principles in improving the competitiveness of the SOCEs in China. The example suggests that the LBO mechanism has good future in application to enhance the competitiveness of the SOCEs by altering the corporate governance and capital structure although the difficulties exist in promoting the mechanism under the current Chinese financing mechanism.
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