China To Halt Large-scale State-owned Enterprises To Implement Mbo Reform

How to reform State Owned Enterprises (SOEs) to market-oriented companies has always been the focus of Academics, Enterprises Managers and Governments. And by what methods and ways to do the reformation attracts broad attention, or even heat debates among those groups. Management buyout (MBO) has become one of the popular approaches recently. But the views from different groups diverge greatly from its birth in China. As an institutionally financial innovation, MBO is very active in international capital market and has created huge value by allocating resources more efficiently. But it never made its breakthrough in China. Regulator's policy to it worsened from 'not against' to 'not for' and to the deadly 'not allow'. Dealing with why the MBO of major SOEs is forbidden by the central government, this dissertation provides substantial background information and insightful analysis.The first part is a snapshot of the development of MBO in China, outlining the twists and turns in different stages and how MBO was dissimilated in each stage. Comparison is made between the international mainstream MBO and the practice under Chinese special economic conditions. The risks and latent hazards in the MBO execution of Chinese SOEs are revealed through the comparison.The second part elaborates why the MBO of major SOEs was called off. Two direct causes are presented and diagnosed. The first one is the immature and flawed legal framework and market economy system in China. The Chinese legal framework and market economy system is still in their primitive forms and help to breed the second cause, managers' motivation dissimilation, which diverts the MBO ship to the wrong direction. Specifically, those flaws of Chinese legal framework and market economy system are:1. Big governments. Usually central or local governments are deeply involved in the buyout process. On one hand, they are sellers of MBO. On the other hand, they name those managers of the enterprises. Hardly can fair prices emerge from this kind of arrangement. At the same time, the original push comes from the government sponsor,...