How red is your capitalism?

摘要

"There are no genuinely private companies in China," declares a veteran adviserto multinational companies. In one sense heis right. The state and the party are omnipresent and their role is enshrined in the law. Moreover, as Kent Kedlof Control Risks, an investigative firm, explains, "you don't become successful in China as a purely private entity, you need a powerful connection. But this can provean asset or a liability." Cronies of Bo Xilai, a once-powerful Communist Party boss who is now in jail, know this only too well. To find out whether a given local firm is likely to behave like a state champion or a market-minded entity, you need to ask three questions. First, how strategic is its industry? Peter Williamson of Cambridge University's Judge Business Schoolargues that the government willalways meddle with firms in industries it sees as strategic, even if they are multinationals. Butthe opposite is true, too. State firms that operate in sectors of little concern to the government can behave like private ones. Gree Electric, which makes appliances, is state-owned, but Dong Mingzhu, its fiercely independent boss, has transformed it into a highly competitive firm.