Understanding working with Chinese state-owned enterprises

By Ping Wang

Gaining an understanding of the differences between, and working for and with, Chinese state-owned and private enterprises is important for Chinese as well as many foreigners. Over time, some of the differences between these two enterprise types have disappeared because there are many business best practices in China today that all successful Chinese companies use regardless whether they are state-owned or privately-owned.

However, remaining today are still some distinct differences between the two types of companies.

Hiring and the workforce

Chinese state-owned companies typically hire fresh student graduates and seldom hire experienced professionals from other companies. There might be some exceptions with senior management-level recruitment.

Whereas most privately-owned Chinese companies that are driven by process or workforce talents are used prefer to recruit experience professionals who can come on board easily and deliver business results quickly.

Understanding an organization and its company culture while also being able to navigate interpersonal relationships plays an important role in succeeding in state-owned companies. Conversely, private companies tend to focus more understanding on processes. (See: Managing China manufacturing supply chains)

Therefore, it is easy to understand why fresh graduates in China always must decide which type of company they want to work for before they graduate because shifting from foreign-owned or privately-owned companies to Chinese state-owned companies is difficult and nearly impossible.

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State-owned company employees learn company policy and ways of doing things immediately after graduation and learn to perform consistently. Relationship bonds between employees are usually strong which is necessary for work to be done, but roles and responsibilities are not always clearly defined in state-owned companies. In order to get one’s work done smoothly, cooperation with others is key. Maintaining good relationships with managers, colleagues and subordinates definitely helps.

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The employee turnover rate in state-owned companies is much lower than in privately-owned companies.

Once you setup relationships with state-owned enterprises these relationships can last quite long. Compensation and benefits policy for state-owned companies are also both more focused on on-the-job benefits and overall personal and family gains.

Traditionally, Chinese state-owned companies have employee dormitories, kindergarten, bath halls… facilities built on the company campus.

Employees work and live on the campus with their families are also taken care of by the company.

In the past, state-owned companies have also taken care of employees’ marriage opportunities. Today, most of these arrangements are no longer available. However, the concept still pervasive in state-owned companies is that the employee not only works for the company but he or she is also part of a bigger family.

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