Big business with Chinese characteristics: two paths to growth of the firmin China under reform

This paper presents a case study of two large firms which emerged from amon g the ranks of traditional state-owned enterprises and new entrants: Shouga ng (steel) and Sanjiu (pharmaceuticals). Rather than being irreconcilable w ith the market economy, the experience of these two firms suggests that the Chinese Communist Party and the People's Liberation Army possessed a rich legacy of organisational and motivational skills. Moreover, Shougang and Sa njiu both grew rapidly through mergers and acquisitions in the absence of p rivatisation and a developed stock market. Furthermore, the main reason for Shougang and Sanjiu's success is not special help from the government or t he army, but rather the fact that its leadership used their autonomy to con struct a highly effective business organisation.