Purpose -The purpose of this paper is to examine how the Chinese economic reform process has engendered significant changes in the structure and management of work organizations. Central to this process has been the "marketization" of state-owned enterprises (SOEs). The paper reviews the attempts to reform SOEs as conducted, primarily, under the modern enterprise system (MES) and group company system (GCS) programmes. Design/methodology/approach -The paper analyses institutional issues relating to organizational restructuring, describes the evolution of the SOE "problem" in China, and discusses case evidence of enterprise reform in one of the largest SOE-dominated industries, iron and steel. Qualitative field data, collected regularly (mostly yearly) since 1995, were derived from in-depth interviews with executives of ten large SOEs that have restructured as part of MES and GCS programmes. Findings -It is suggested that the historic reluctance of SOEs to embrace reform stems from three main factors -the opaque nature of property rights, the failure of ministries to produce a firm strategy for channelling surplus labour and the inability of government agencies to offer a sense of managerial autonomy to SOE executives. Recent policies designed to overcome these problems together with kindred ones for separating government functions from business operations in the drive to prepare SOEs for global markets are described. It can be argued that China's preference for gradual reform reflects the wider reform context where economic restructuring has not been accompanied by a greater expression of political democracy. Originality/value -The paper's findings offer insights from a major longitudinal field study of two of the main programmes of China's reform period.

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This paper outlines the economic reform process being undertaken in China and the subsequent partial closure and radical down-sizing of the state-owned enterprise sector. Redundancies arising out the restructuring process have eroded the state-worker contract of the iron rice-bowl. This has resulted in growing and sometimes violent labour unrest. The planned workforce projections until the end of the year 2000 suggest that the numbers of redundancies has increased, adding to China's 'surplus labour' problem. A critical issue is thus whether the Chinese government, together with state-enterprise management, can contain potential future labour and civil unrest using its present methods.