The Formation, Restructuring, and Performance of Chinese Enterprise Groups: The Case of Liaoning Province

This study examines in detail the role of the government in the process of top-down formation of China's enterprise groups and the subsequent restructuring and performance of these groups, based on sets of data from Liaoning province. The authors find that the groups were fairly successful in separating supplementary units from the principal, but less so in ownership diversification and organizational restructuring, and that, contrary to the hope of the government, the enterprise groups as a whole had a declined profit performance despite growing larger in assets, value added, and sales revenues. The factors that may have contributed to the profit decline are analyzed.