The Ultimate Prize Fight State vs. The Corporation

Last summer I saw noted author and international business/political consultant Ian Bremmer give a talk at the Asia Society about the rise of the State Owned Enterprise (in particular Chinese SOEs) and the threat they pose to private corporations around the world.

Bremmers basic precept is that in the future SOEs will challenge public and private companies for market domination, and will win.

Today an article ran on Reuters about the rise of Chinese SOEs and the concern it is causing among American business leaders.

And I quote: Given Chinas rapid economic growth and its push for Chinese enterprises to go global, former Deputy Treasury Secretary Robert Kimmitt said it is certain the number of big Chinese companies will continue to rise.

But what American business finds disturbing is that most of the Chinese companies are state-owned, including the three in Fortunes Top Ten China Petroleum and Chemical Corp (also known as Sinopec) (600028.SS), China National Petroleum (CNPET.UL) and State Grid (STGRD.UL), which says it supplies energy to over 1 billion Chinese consumers.

A new dynamic in the world economy threatens the competitiveness of American companies and workers in world markets and undermines our countrys core belief in market-based economy, the U.S. Chamber of Commerce and the Coalition of Services Industries said in a joint report.

Strong stuff from some important corners.

We believe this concern is legitimate. As the idea of a Beijing Consensus grows as a model for developing countries, and as the Amer/Anglo/Euro model of capitalism and free markets are suffering grievously from greed, shortsightedness and self-destructiveness,the SOEs of China and others have risen to the challenge of competing on the world stage.

We advise companies around the world who are doing business in/with China or who are competing with Chinese companies abroad to be sure to have a complete understanding of these State players, how they operate, how they compete and ! what the ir plans are for the China and overseas markets. Because, despite pleas of unfairness and how it undermines our countrys core belief in market-based economy in the short term this dynamic is not going away. Its long-term sustainability is another discussion altogether.

What are you seeing out there?

http://latestchina.com/news/?RID=43940