China is pushing ahead with plans to upgrade its lumbering state-owned enterprises, directing its leading technology firms to increase investment in underperforming state-owned enterprises.
“It is hoped that the cooperation between both sides will continue, and further improve company management and achieve mutually beneficial results.” The investments by Alibaba and Tencent in SOEs are seen as a testing ground of China’s so called-mixed-ownership reform to improve the services and earnings of state firms, according to analysts.
Foreign companies in China as well as Chinese private firms have long complained of a playing field tilted in favour of big SOEs, which often receive preferential regulatory treatment and generous state subsidies. We still haven’t seen any breakthroughs at SOEs from the investments of tech firms. Maybe they need to re-think how much these leading technology firms can bring to the table for these traditional SOEsStanley Chan, research director at Emperor Securities, said the involvement of leading tech companies in SOEs was a new model that was still being tested and so far there had not been any successful cases of SOEs benefiting from the investment.