It is too soon to say for sure because the enterprise was formed only at the end of 1995, but results so far, he says, have been encouraging. For SOEs that have not been paired off with foreign suitors, diversification is sometimes the best option. Ye Xinghu is assistant general manager of the Shanghai Foreign Service Co., a state enterprise that used to be the sole official provider of Chinese employees to foreign representative offices in the city. He says the firm needed to expand to survive after losing its monopoly in 1994. AT Kearney found other strategies.
Some SOEs encourage early retirement.
Han says Qingdao s Double Star Industrial Group used to produce only rubber boots for the People s Liberation Army. After the plant started faltering in the 1980s, it diversified into athletic shoes and regained profitability. At the same time, the government has made it easier for SOE managers, especially lower-level ones, to transfer to the private sector. But now, it is much easier to go private. SOEs now offer higher salaries, but while they ve become more competitive with foreign companies, a gap remains.