From abroad, China's state-owned enterprises appear to be either menacing agents of a foreign government or muscle-bound goons--heavy on brawn, light on brain. But as China's economic and business environment evolves and grows, such simplistic views are less and less helpful. Public- and private-sector companies in China are not as easily differentiated by their management styles or by the challenges they face.
A more informed assessment of China's companies--especially those competing outside the domestic market--would focus on the extent of their openness: whether their operations are transparent, their top managers willing to bring in new ideas and outside talent, and their organizations capable of adapting to change. Such an assessment allows multinationals to make reasoned rather than reactionary judgments about state-owned enterprises as potential partners and competitors on global markets.
Source: McKinsey Quarterly, http://www.mckinseyquarterly.com