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| Author: | Yu, Lequn |
| Title: | Worries concerning the expansion of scales (original in Chinese) |
| Journal: | China Reform (c)
1998 : 6, p.21 |
| Index terms: | MERGERS CONGLOMERATE MERGERS ECONOMIES OF SCALE MANAGEMENT CHINA |
| Language: | chn |
| Abstract: | The motives of the merger and expansion of Chinese state-owned enterprises stem mainly from authorized government departments' need to "wipe out" enterprises in losses. Consequently, a large batch of conglomerates which are large in scale but actually uneconomical. Some enterprises not only carry out a large number of acquisitions in their own industry, but also get involved in industries which they have no industrial relations at all. They think the operation risks can be scattered in this way. This inclination of excessive pursuit for diversified operation is not proper at all. Two points are to be focused on in the expansion of modern enterprises: one is whether the transaction costs are lowered or saved in the expansion process of enterprises; the other is whether the benefits resulting from scales are increased. |
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