Can Chinese companies compete globally?
The problem with competing globally is that our companies are too small and too diversified. They are small because of our underdeveloped financial markets. So it is very hard for them to grow up. They could grow very fast by issuing stock or bonds, not just on the domestic market. On the other hand, they overdiversify. Why? From the company point of view, they still believe in the idea of shared risk. They think in terms of the early Japanese or Korean model, although less than they did before the Asian financial crisis. Also, Chinese companies want self-sufficiency. They want real estate and financial businesses. These companies should merge. But many are run by first-generation businessmen. Everyone wants to be the head of big companies. Q: How would you characterize China’s privatization strategy? A: We are first going to the stock market. State companies start with the government owning 100%. At the beginning stage, this goes down to maybe 60%, then maybe 40%. Then, the idea is fo
