Doing Business in China For Dummies®

Figuring Out the Chinese Business Scene

The most common types of businesses in China include the following:

✓	Companies owned by the government: China still has many state-owned companies kicking around — they’re a product of the old days when the government owned everything. Although they play a lesser role in today’s economy, these companies are still significant in China.
✓	Privately owned Chinese companies: Privately owned companies are fast becoming the backbone of the business scene in China. Supporting smaller businesses has become a priority for the Chinese government.
✓	Foreign-invested companies: Foreign investors from nearly every corner of the world — large, brand-name multinationals to small- to medium-sized family-owned companies — continue to flock to China.

The business scene is constantly changing, with a lot of relatively new businesses flourishing while many larger, older, and unprofitable companies bite the dust. All in all, China is teeming with young and old, large and small, and private and state-owned companies. (For more on China’s economy, please see Chapter 2.)

Getting state-owned businesses in shape

When China first started down the path to fix its economy, the state owned almost all of China’s businesses. In the late 1970s, about 80 percent of China’s gross domestic product came from state-owned enterprises (SOEs). The SOEs provided most of the jobs for China’s hundreds of millions of workers. The big state companies also gave the workers social and healthcare ...