China's exports, subsidies to state-owned enterprises and the WTO

Eckaus, Richard S.

doi:10.1016/j.chieco.2005.04.003

Cited by 42 publications

(22 citation statements)

References 3 publications

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“…The principal‐principal problem arises because the government may want to pursue aims that may not be in the best interests of the minority shareholders (Y. Chen & Young, ; J. T. Li & Qian, ; Zou & Adams, ). Being connected to the government can give a firm an advantage in doing business, particularly in the domestic market of an emerging economy, and prior studies have documented that SOEs receive more support from governments than other types of firms in terms of access to external capital (Brandt & Li, ; Luo et al, ; Song, Storesletten, & Zilibotti, ), protection of property rights (Che & Qian, ), and even through direct subsidies (Eckaus, ). The results of this study also suggest that opaqueness—an important but largely ignored difference between SOEs and other firms—may also be very important in understanding the strategy and performance of SOEs' globalization efforts.…”

Section: Introductionmentioning

confidence: 99%

The liability of opaqueness: State ownership and the likelihood of deal completion in international acquisitions by Chinese firms

Wang

2018

Strategic Management Journal

129

157

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Research Summary State‐owned enterprises (SOEs) are often more opaque than other types of firms. This opaqueness tends to generate resistance when SOEs undertake cross‐border acquisitions. Opaqueness can also aggravate concerns about an SOE's semipolitical nature and its susceptibility to agency problems, making gaining legitimacy harder. Data on attempted foreign acquisitions by Chinese firms were analyzed to compare the likelihood of deal completion between SOEs and firms with other forms of ownership. The SOEs' completion rate was 14% lower than that of other firms. Their disadvantage was shown to be alleviated when they could provide credible signals by being publicly listed (though only on an exchange in a well‐developed economy or by hiring reputable auditors). We also find that the disadvantage of SOEs was partially mediated by their opaqueness. Managerial Summary Opaqueness, or lack of transparency, is critical in many business transactions. In this article, we argue that the concept of opaqueness can help us understand why SOEs tend to have a lower likelihood of deal completion in cross‐border acquisitions. Our evidence suggests that opaqueness influences the relationship between state ownership and deal completion, and firms can improve their chance of success in cross‐border acquisitions by providing credible information, such as by listing on an exchange in a developed market or hiring a reputable auditor. These help mitigate the hazard of opaqueness.

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Section: Introductionmentioning

confidence: 99%

The liability of opaqueness: State ownership and the likelihood of deal completion in international acquisitions by Chinese firms

Wang

2018

Strategic Management Journal

129

157

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“…A large proportion of the SOBs' lending to the SOEs was designed to promote exports. In fact, the share of SOEs' exports in China's total exports reached 48-67 percent during 1995-2000 (People's China Publishing House, Almanac of China's Finance and Banking, various years; Peoples' Bank of China, China Financial Outlook, 2000;Laurenceson and Chai, 2003: 9-10;Eckhaus, 2006).…”

Section: Tax and Financial Measures Of Export Promotion (1) Exports Bmentioning

confidence: 97%

Export Promotion Policies and Economic Development of China

Mah

2007

International Area Review

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The government of China has tried to promote exports by various means including the establishment of Special Economic Zones, tax and financial benefits, duty drawback, export insurances, and exchange rate management. Of particular interest is that exports by foreign invested enterprises have increased substantially since the 1990s and have significantly contributed to the rapid economic growth. As China became a Member of the WTO, China has recently tried to make its export promotion policies consistent with the WTO regulations. The export promotion measures permitted in the WTO system such as the duty drawback and export insurance schemes may show resource allocational inefficiencies. It would be necessary for the Chinese government to maintain efficiently run export-promoting systems.

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“…SOE revenue totaling 300–500 million Yuan annually is now reported in categories that were not recorded five years ago, thus, creating uncertainty regarding the true level of dependence (China, National Bureau of Statistics 2004). Although there is compelling evidence that China continues to subsidize some money‐losing SOEs for strategic reasons, such as export promotion, the aggregate numbers also suggest that the SOE sector remains an important source of revenue (Eckhaus 2006).…”

Section: Differentiating Chinese and American Soesmentioning

confidence: 99%

Political Control for China's State‐Owned Enterprises: Lessons from America's Experience with Hybrid Organizations

Koppell

2007

Governance

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China's reform of state‐owned enterprises (SOEs) is intended to liberate the companies from bureaucratic control that hinders their management. Discussions of SOE reform, however, downplay the policy consequences. Can SOEs be “free” to succeed economically while some political control is maintained? Surprisingly, American experience with hybrid organizations—government‐created companies that straddle the line between public and private—offers some precedent for managing the balance between political control and enterprise independence. Three strategies are derived for China. First, welfare functions must be stripped from SOEs and replaced by policy objectives compatible with commercial purposes. Second, reducing financial dependence on SOEs will remove a barrier to rational control. Third, and most importantly, a robust regulatory framework for control must be developed as a substitute for the weakened administrative linkages. The emerging control infrastructure rooted in state asset commissions is likely to prove ineffective for its blurring of ownership, administration, and regulation.

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China's exports, subsidies to state-owned enterprises and the WTO

Abstract: ABSTRACT

Cited by 42 publications

References 3 publications

The liability of opaqueness: State ownership and the likelihood of deal completion in international acquisitions by Chinese firms

The liability of opaqueness: State ownership and the likelihood of deal completion in international acquisitions by Chinese firms

Export Promotion Policies and Economic Development of China

Political Control for China's State‐Owned Enterprises: Lessons from America's Experience with Hybrid Organizations

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