C10: China´s National Oil Companies Flashcards
National Oil Companies case short
Case is about state-owned companies in China. The potential reasons for state-owned companies and private companies. The advantages and disadvantageds arising from that.
How can partial privatization improve corporate governance of companies that used to be 100% state-owned?
Losses/ profits borne by government/private individuals
- economic growth comes from entrepreneurs risking their own money
- ->private ownership is better than state-owned regarding the performance of the company
partial privatization allows the state to retain control and vote in critical decisions - less profitable but more stable
–>depends on investor - stability or profitability
Why a state- controlled company can be attractive target for private investors ? (Advantages state-owned)
- Government can control certain strategic sectors of economy –>Water, energy, supply
- essential service at cheaper and affordable rates
Why investing in a company controlled by the Chinsese state may be riskier decision than investing in a similar Chinese company but without any state ownership ? (Disadvantages state-owned)
- Political and state interference can harm productivity
- negative work attitude as company is not their own
- possible high rate of corruption
Which goals motivate Chinese NOCs to acquire companies and assets abroad?
- Access to foreign markets
- access to natural resources abroad
- increased diplomatic influence in other countries
- getting access to technologies
