The analysis and study of the 77 Chinese firms by Zhenhu (2009) which employed restructuring is a comprehensive case that can help in gaining understanding of the transformational impact of restructuring. In late 1990s after Chinese entry into the World Trade Organization that opened the door wider for imported foreign goods and services, Chinese traditional industries such as textile, chemical and machine building experienced increasing foreign competition and declining domestic demand, this lead to poor financial results or/and disappearing markets.
In a move to secure their business, about 192 listed companies went through restructuring between 1998 and 1999 (Zhenhu, 2009). The resultant restructuring took place in three different ways: merger and acquisition; building new production facilities; and purchase of large block of shares in an existing company. Importantly, these firms that went through restructuring withdrew from traditional industries such as textile, machinery, steel and chemical because they exhibited excess capacity or/and severe competition. Instead, the firms ventured into industries such as telecommunications, network, computer hardware or software and biotechnology.