code-m, overall I found your post very informative. But in regards to the above portion, doesn’t the fact that most Chinese companies are either government owned or heavily financed/subsidized by the Chinese government play a factor in this. China is still a communist country after all.
From what I gather, the primary function of businesses in China is to keep as many people employed as possible so they don’t starve or worse start a revolution. Making a profit is an afterthought.
I’m not saying there is any thing no wrong with that model. Considering where China was say 50 years ago it seems to be working.
Many countries government support companies that may hold promise as it provides economic growth for employment and general well-being of a Nation. I am not dismissing the way certain Nations are run (i.e. communism, etc). Government on every level owns a share of certain services and corporations, this is the reason when there is a takeover/merger/acquisition of corporations either local or foreign the various government bodies are involved, due in part for security purposes or economic well-being. The government in China backs these companies with public funded money for growth of the country for personal and public wealth, other countries do this as well. However the extent of involvement and investment varies.
I concur with your second statement as it applies to all Nations. Profit equals sustainability, in China its twofold.
1. Profits are low due to government involvement;
2. Profits are used for the company growth and sustainability;
3. Losses can be overcome by government involvement to an extent; and
4. Losses on a mass scale allows the Chinese people and government to learn from and not make the same folly.
China views profit differently than USA, since the shareholder gains or looses. USA companies are primarily run by private or public investment and interests. China shares some of this however the ratio of interest is geared towards the government to act as a public investor on behalf of the people (many poor or lack education). Is there abuse and corruption, sure there is. It exists in every government, the extent is another matter.
China’s flaw is human rights, the communism system is a more liberal version from the past as there have been revolt and revolution that keeps governments in check. It all depends on the people, if they see the government is working for the whole then no mass action. If not, there will be riots. Propaganda is another can of worms that I prefer not opening.
