Tuesday, March 15, 2016

Privatization in China

While reading some of the articles on Generating Capitalism, I would continuously read articles that made little to no sense to me at all. The authors would drone on using text that could only be understood by individuals fluent in "economics." However, I finally read an article that I could easily understand, and one that interested me a lot. This article discussed the differences between a company being private and public in China.

When we think of privatization in the United States, we think of companies that have no ties to the government and are not ran by the government. They are completely ran by individuals that are out for their own interests, or are supposed to be seeking the interests of their clients. This is not so in China, and purportedly in other cultures throughout the world. In China, the privatization of a company does not mean that they are completely independent of the government. In fact, they still have close ties to the government and have bureaus or departments that oversee the company. Yet the owners of these companies don't seem to mind this as much as we would here in the US. This shows a major difference between our cultures and our economies because US business owners don't want government oversight but Chinese business owners don't find it bothersome.

Another point that drove home to me was the fact that individuals who buy stock in the company, don't really have a say in the running of the company. In effect, they only own part of the company on the side, but don't have voting rights for the way that the company acts. This is different in the way American stocks are sometimes used. If an individual owns a large portion of a company's stock, they would have voting rights and a say in how the company is ran because the company fears losing money (the stock) if they upset a stockholder. The use of stock in the US as a way of keeping people happy contrasts greatly to the Chinese stock, but it seems that both cultures are relatively happy with their arrangements.

Overall, this article did teach me to not think that all economic terms used in the US are universal. It is easy to see that these terms can be used in a variety of ways depending on the cultural implications for each individual country.

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