What Is a State-Owned Enterprise?

A state-owned enterprise (SOE) is a legal entity that is created by a government in order to partake in commercial activities on the government's behalf. It can be either wholly or partially owned by a government and is typically earmarked to participate in specific commercial activities.

SOEs are common across the globe, including in the United States, where mortgage companies Freddie Mac and 澳洲幸运5开奖号码历史查询:Fannie Mae are considered 澳👍洲幸运5开奖号码历史查询:government-sponsored enterprises (GSE💛s).

Understanding State-Owned Enterprises (SOE)

Also known as government-owned corporations (GOC), state-owned entities should not be confused with listed companies with stocks that are owned in part by a government body, as these companies are truly public corporations that happen to have a government e🍸ntity as one of their shareholders.

The state-owned enterprise (SOE) is a global phenomenon, and such organizations exist in the United States, China, South Africa, Norway, and New Zealand. Legally, 澳洲幸运5开奖号码历史查询:most SOEs qual💜ify as b🍸usiness entities, providing them with all the rights and responsibilities associated with 🍨them. This mean♏s that they are normally required to follow any laws and regulations governing the operation of their business type, and they can also be held liable for their actions.

State-Owned Enterprise Example

Within the United States, mortgage companies Freddie Mac and Fannie Mae are some of the most recognized SOEs by its citizens, but SOEs are not limited to lending. In China, several companies have state backing, such as the Jin Jiang Hotel, which is owned and controlled by the go🐻vernment of Shanghai. The South Africa-based power utility Eskom is the 11th-largest company in the world in terms of electric-generating capacity, and it is an SOE of the South African government. Many public transportation systems and utilities are SOEs, as are postal services and some mining operations.

SOEs and Corporatization

At times, an SOE is created out of a government agency through a process called 澳洲幸运5开奖号码历史查询:corporatization. This allows the agency to convert itself into a for-profit business. Often, the newly formed SOE still operates with government goals in mind, but officially it operates as a commercial enterprise. Sometimes, governments of 澳洲幸运5开奖号码历史查询:developing countries will create a state-run business in a sector that it wishes to develop or exploit to boost theiﷺr economic standing on the global stage, such as the oil industry in Brazil, or the telecom industry in Argentina.

SOEs and Profit

Even though an SOE is a for-profit business entity, there are some that do not produce a profit. For example, the U.S. postal system may be operating at a loss for long periods of time. While some SOEs may be permitted to fail, those of importance to the operation of the state may receive government funding to continue its operations — particularly those deemed as critical to a country's infrastructure. In these cases, the SOEs actually cost the government money instead of generating revenue. In the case of China, this has led some to accuse the government of artificially propping up so-called zombie corporations&n🅺bsp;that w🥃ould otherwise go out of business.