China Emerging_ 1978-2008 - Xiao-bo , Wu [52]
Winning the bid for the Olympics gave China a chance to prove itself to the world but even more importantly, brought a tremendous boost to the economy.
The WTO talks achieved a breakthrough in 2001 at Doha, Qatar. On the right is China’s Minister of Foreign Trade and Economic Cooperation, Shi Guang-sheng.
held a ministerial-level meeting in Dakar, where it reviewed and passed the motion to allow China to join the WTO.
The economic significance of China’s joining the WTO had become apparent several years earlier and had been factored into the Chinese strategic policy. This began in 1998 with the “State out, People in” policy. The reorganization and the ensuing activities of the state-owned capital groups were, without exception, choreographed to coincide with the WTO timetable for opening up the markets. As a result, large state-owned enterprises began to exhibit their highest profit levels since the 1990s.
Blood transfusions into the large state-owned enterprises and their general resuscitation were manifested in three distinct ways. First was the way in which Chinese companies were listed on overseas exchanges. For example, the successful listing either in Hong Kong or in New York of China Telecom, China Unicom, China Petroleum, and so on. That the conservative state-owned organizations were now “charging overseas” was not only for the purpose of obtaining financing but also a gesture of their tremendous determination to undertake transformational change. Second was the intensifying competition in many fields and the divesture and reorganization of former huge monopolies. China Telecom was divided into five parts; Sino Petroleum and Sinopec were separated from each other; Air China was reorganized; China National Nonferrous Metals was dispersed in various regions; and China’s five large military-industrial groups were divided into ten. In effect, all the old-brand, state-owned enterprises underwent some kind of dismembering. Third, certain entrepreneurs of Chinese companies
The 9th APEC leader’s conference was held in Shanghai. The leaders don the Tang-style clothes for this group photograph.
Foreign banks clustered in the Lujiazui finance zone of Pudong, Shanghai.
began to show their merits and started being recognized as real agents of changes. People who had been low-key but successful were now pushed to the top of the wave, and their potential as world-class entrepreneurs was unleashed.
Multinational companies that had been entrenched in China for many years were now quick to modify their own strategies in the post-WTO business environment. Companies that previously had no alternative but to form joint ventures now began to divest themselves of their Chinese partners and to set up solely invested companies.
For many years, any foreign-invested factory in China was required to have a local partner with whom it formed a joint venture. For example, in each region in which Coca-Cola or PepsiCo had a bottling factory, the companies had to form a joint venture with the state-run cereals, oils, and food product companies. P&G was similarly told that its partners would be the personal-care chemical plants. However, after China entered the WTO, such restrictions were eliminated. Multinationals that already had joint ventures in China undertook all kinds of measures to disengage from the Chinese investors and become solely invested entities. Matsushita, for example, declared to the media, “All of the fifty joint venture companies that Matsushita has in China are going to be turned into solely invested ones.” Motorola, which manufactured cell phones in China, took the same decision. Its board of directors decided that within the next five years, it would increase its investment in China to US$10 billion, and determined that “becoming solely invested entities was a natural decision given China’s entry into the World Trade Organization.” After the carbonated beverages market was opened, Coca-Cola and PepsiCo, the two giants, began to