Enterprise China

Chapter 5HOW TO COMPETE IN CHINA: STRATEGIC OPTIONS AND ACTIONS

So far, we have examined how Enterprise China is more than a collection of Chinese enterprises; it is the combination of the state and commercial business in ways and to a degree never witnessed in modern history. We examined in some depth Enterprise China's three‐part competitive strategy: eliminating dependence, dominating domestically, and competing globally. We also illustrated the progress Enterprise China has made on each pillar. Of the three strategic pillars, competing globally is the newest and consequently has the furthest to go before reaching its objectives.

Although it was discussed in Chapter 1, the level of control and influence that the state has on the Chinese economy is worth repeating here. Through 150,000 SOEs in China, the state directly controls 30% to 40% of the economy. The state dictates who runs these companies and how they run them relative to the strategic goals of the state. However, to think that the state's influence starts and stops with SOEs is a mistake. The state exercises significant influence over POEs and their leaders. The state choreographed the cancellation of ANT Financial's IPO as well as the humiliation of Jack Ma. It orchestrated the delisting from the NYSE of Didi. Both high profile events served as powerful lessons and reminders to the CEOs of Chinese POEs that the state's nod of approval is required for all significant strategic and financial decisions. Today, no ...