Source Of Profits Of State-owned Industrial Enterprises

The profit of State-Owned Enterprises(SOEs)had always been low before 1999. Academic circles attributed it to the obscurity of property rights, heavy social burden and policy burden, and the weakness of management and supervise. Despite their arguments were different, they had one common conclusion. It is that efficiency of SOEs will be low under the condition of a competitive market without administrative protection. However, the profit of SOEs has greatly increased since 1999. Despite the light improvement of the above problems could explain the phenomena partly, these problems have not been solved completely till today. So the light improvement of these problems should not be the reason. It is necessary to analyze the reason of the phenomena in the term of industry analysis.In the term of industry analysis, the new profit of SOEs mostly comes from industries of Coal Mining and Dressing, Petroleum and Natural Gas Extraction, Tobacco Processing, Smelting and Pressing of Ferrous Metals, Smelting and Pressing of Nonferrous Metals, Production and Supply of Electric Power, Steam and Hot Water. This paper analyzes the reasons of the fast increasing profit of the six industries from views of monopolistic power, sales, management and technology,and so on. It shows that monopolistic power and sales are main factors to promote the profit of the six industries. During the same period, the profit of Foreign Funded Enterprises has got the same increase, but its profit mainly comes from 15 industries. Unlike SOEs, the profit of Foreign Funded Enterprises is derived from sales, not from monopolistic power. Comparing with Foreign Funded Enterprises, the increase of profit for SOEs is not a balanced development, and monopoly is also a key impetus. Because monopoly will hinder technology progress and upgrading of an industrial structure and so on, so it is necessary to break the monopoly of SOEs, which will benefit manufacturing of our country.