Reform of state owned enterprises and challenges in China

Abstract

PurposeThis paper aims to provide a review of the challenges facing the reform of SOEs, and to address the impacts of SOE reform on business executives, on the base of literature review and empirical data collected in Guangzhou, China.Design/methodology/approachA qualitative research on the base of literature review, supported by empirical data collected from surveys, interviews, and focus group discussion.FindingsAlthough China has made significant achievement in economic reform and the transition into a market system and civil society since 1978, there are still fundamental challenges associated with the reform of state owned enterprises (SOEs). It seems that privatisation will not necessarily solve the complex problems associated with SOEs. This paper suggests that a balanced approach reflecting the best of SOE provision and triple bottom line management appears to provide the best way forward for continuing prosperity in China. The current direction of SOE reform seems to have been driven by privatisation and economic rationalism, rather than a more balanced economic and social strategy. If this trend continues, the challenges for business executives, and the general society, can be overwhelming, and not lead to a more sustainable economy, let alone society, in the medium to long term.Originality/valueReform of SOEs has impacted on China fundamentally. Against the common view that business managers are the social group that is benefiting from SOE reform, this paper focuses on factors affecting the economic and social status of business executives, especially the challenges associated with the reform of SOEs. Supported by primary and secondary data sources, it draws attention to the situation that although the economic and social status of business executives continues to rise in China, insecurity and stress on business executives are growing. Reforms associated with changing SOEs are viewed as possible sources of challenges facing the Chinese economy and business life. Current SOE reform seems to have focused on the economic bottom line. A more balanced approach in the reform of SOEs is suggested for a more sustainable economy and society.