Monday, June 11, 2018

Killing zombie companies discussed in China

Nowadays, capitalism is overwhelming the most regions of the world. Companies gathering money are successful while others are to perish.

But there are several exemptions. Many big companies and banks are deemed too big to be crashed. In general, bad companies should be bankrupted for maintaining the appropriate economic tide. But, after the case of corruption of Lehman Brothers, we noticed that crashing a big company will be accompanied with intolerable pain. As a result, national funds tend to rescue these companies even if it seems to be unfair.

The situation is similar in China, no matter than Japan. Recently, researchers say China needs a company-killer for purifying the market.

South China Morning Post: China needs independent bankruptcy courts to kill off ‘zombie’ firms, legal expert says

Zombie companies exploit the productivity of the industry itself for its inefficient process of survival. They get rid of the potential of smaller companies some of which will become innovative. Therefore, bad companies should be killed.

On the other hand, any bad companies have some employees. For them, the company is the only safeguard. Especially in a nation in which fluidity of employment is not guaranteed, such as Japan, bankrupt of the employer may suggest the ruin of many employees.

Also in this sense, diversity is essential for sustainability. Hesitating to change can be critical for a person and company, as well as nations.

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