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The major problem is political: appointments to the upper ranks of SOEs is a good way to reward officials (either directly by appointing them or indirectly by appointing relatives) and a way to build political power. As these companies have become more successful by leeching off the private economy, the influence of people who use the patronage system inherent in the SOEs grows, keeping them from being privatized and accountable.
Of course, CM is being silly again. India, for example, has several private companies which have no risk of being bought out by foreign concerns. What's more, we should be asking why "developing nation" status matters here. China is a developing nation but also a large one and can easily create large businesses which use their local knowledge of the Chinese market to have distinct advantages over foreign concerns and high enough market capitalization to make buyouts unlikely. We should be asking why smaller states like Finnland, Sweden, Germany, Britain, France, Italy, Greece, etc. even have industries since, by CM's logic, they should have been bought out long ago by predatory CEOs from the US.
[ Last edited by interesting at 2008-7-24 02:09 AM ]