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Thursday, November 18, 2004Siliconbeat writes, now and then, Beijing goes to its cupboard, pulls out its big red communist flag, and waves it to remind people it can do anything it pleases. A few days ago, it did it again: It reshuffled the bosses of its three big state-owned telecom companies, all publicly traded: China Telecom, China Mobile and China Unicom. They're only the second, fourth and seventh largest Chinese companies in terms of market value -- a trifling $100 billion at stake. They're traded as New York ADRs. Economist Donald Straszheim has been following China closely recently. He summarizes ( Siliconbeat says -note, we think his word "retired" should be in quotation marks):
- The #1 person at China Telecom retired.
- The #1 at Mobile went to become #1 at Telecom.
- The #1 at Unicom (the worst performing) went to #1 at Mobile (the best
performing). The #2 at Unicom became #1 at Unicom.
No official explanation is yet available. No such action has ever occurred since China’s SOEs have been traded as ADRs. Such bureaucratic shuffles still occur in the government, but the SOE carve-outs are supposed to be different.
The lesson: Investing in State-Owned-Enterprises ain't worth it. "We are not interested in these SOEs at this time," Straszheim tells his clients. Nor should the world be.
I agree with the gist of the comments posted on this topic – quite telling and a study in contrast :
In contrast, indian enteprises like Infosys, Bharti Teleocm and Reliance Infocomm were created by entrepreneurs and grew with almost zero governemnt support .The indian counterparts of chinese SOE’s continue to operate without any undue influence/help from Indian governement. Huawei, however, has strong ties to the Chinese military/governemnt, and apparently is run by an ex-military individual. Not to forget the government's control on China Telecom, Netcom and Unicom, the subject of the original blog post.Behind the 'politicians' are the Éminence Grises, often in military uniform. Anything can happen and may of the possibilities are frightful. Taiwan, Tibet, plague, natural disaster, democracy... who knows?. Without doubt,Indian entrepreneurism, capital markets, regulatory environments, legal frameworks, free press, repatriation mechanisms all make India a much much better place to invest compared to china. |
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