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Wrzlprmft
Wrzlprmft
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How does the Chinese government having minority stakes and board seats gives itgive the Chinese government effective control over themcompanies?

From the New York Times:

All of that changed over the past few years as Beijing went after some of the country’s biggest tech companies and its highest-profile tech entrepreneurs. The aim was to ensure no institution or individual could wield influence on the Chinese society comparable to the Communist Party. The government took minority stakes and board seats in some of those companies, giving it effective control.

https://www.nytimes.com/2023/02/17/business/china-chatgpt-microsoft-openai.html

I was reading this and it didn't This doesn’t make any sense to me since you need the majority of shares in order to control a company. Of course, the Chinese government could interfere at will, but having a minority stake doesn'tdoesn’t really change anything as the previous board members knew the government would interfere if it didn't please the Chinese government,about that. (The same could be said about the U.S. government, except the U.S. government is less likely to go against the private sector unless there's some public outrage.)

Can someone explain to me how the above makes sense? I don't see evidence that companies are less innovative than before, because Chinese tech companies are some of the most innovative still. It's like when they used to say that non-democratic countries cannot be innovative in science and tech in the 90s, which turned out to be completely false.

How does the Chinese government having minority stakes and board seats gives it effective control over them?

All of that changed over the past few years as Beijing went after some of the country’s biggest tech companies and its highest-profile tech entrepreneurs. The aim was to ensure no institution or individual could wield influence on the Chinese society comparable to the Communist Party. The government took minority stakes and board seats in some of those companies, giving it effective control.

https://www.nytimes.com/2023/02/17/business/china-chatgpt-microsoft-openai.html

I was reading this and it didn't make any sense to me since you need the majority of shares in order to control a company, having a minority stake doesn't really change anything as the previous board members knew the government would interfere if it didn't please the Chinese government, same could be said about the U.S. government except the U.S. government is less likely to go against the private sector unless there's some public outrage. Can someone explain to me how the above makes sense? I don't see evidence that companies are less innovative than before, because Chinese tech companies are some of the most innovative still. It's like when they used to say that non-democratic countries cannot be innovative in science and tech in the 90s, which turned out to be completely false.

How does having minority stakes and board seats give the Chinese government effective control over companies?

From the New York Times:

All of that changed over the past few years as Beijing went after some of the country’s biggest tech companies and its highest-profile tech entrepreneurs. The aim was to ensure no institution or individual could wield influence on the Chinese society comparable to the Communist Party. The government took minority stakes and board seats in some of those companies, giving it effective control.

This doesn’t make any sense to me since you need the majority of shares in order to control a company. Of course, the Chinese government could interfere at will, but having a minority stake doesn’t really change anything about that. (The same could be said about the U.S. government, except the U.S. government is less likely to go against the private sector.)

Can someone explain the above?

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Sayaman
Sayaman
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How does the Chinese government having minority stakes and board seats gives it effective control over them?

All of that changed over the past few years as Beijing went after some of the country’s biggest tech companies and its highest-profile tech entrepreneurs. The aim was to ensure no institution or individual could wield influence on the Chinese society comparable to the Communist Party. The government took minority stakes and board seats in some of those companies, giving it effective control.

https://www.nytimes.com/2023/02/17/business/china-chatgpt-microsoft-openai.html

I was reading this and it didn't make any sense to me since you need the majority of shares in order to control a company, having a minority stake doesn't really change anything as the previous board members knew the government would interfere if it didn't please the Chinese government, same could be said about the U.S. government except the U.S. government is less likely to go against the private sector unless there's some public outrage. Can someone explain to me how the above makes sense? I don't see evidence that companies are less innovative than before, because Chinese tech companies are some of the most innovative still. It's like when they used to say that non-democratic countries cannot be innovative in science and tech in the 90s, which turned out to be completely false.