This Documentary Depicts the Human Cost of China’s Reforms on State-Owned Enterprises

When a company dies, what happens to its people? While a seemingly obvious solution may be to just up and leave, the employees of a state-owned enterprise (SOE) in China prove that reality isn’t quite as simple.

When the 1970s heralded a wave of economic reforms in China, large and inefficient SOEs that were once directly controlled by the Chinese government were seen as obstacles to the country’s economic liberalization efforts. Thus, economic transformation meant letting go of underperforming SOEs labelled “zombies.” Over the decades, many of these SOEs were gradually privatized to enhance their competitiveness and reduce their reliance on the state. The reforms continue to this day. 

In 2011, CNNC HUA YUAN Titanium Dioxide, a “zombie” SOE in Northwest China, was forced to undergo bankruptcy reorganization — a process where finances, operations, and management are reorganized in the hopes of saving the company from the brink of collapse.

The documentary A Harsh Transition sheds light on this painful process, capturing the conflicts of interest among various parties involved, including SOE employees, shareholders, trustees, creditors, and individual investors. Through interviews and re-enactments, it shows how the long and winding journey of corporate reorganization is also one that is filled with heated conflict, emotional turmoil, and extreme desperation. 

In one scene, a company trustee caught in the middle of shareholders and employees, recounts how he collapsed during a heated discussion with a shareholder about how to settle the company’s debt. “Blood shot out of his eyes and nose,” a witness recalled. The trustee was rushed to the hospital and treated for high blood pressure, a result of extreme stress.

The film explores the messy intersections of interests among different stakeholders — employees who have dedicated their entire lives to SOEs, shareholders who are concerned with the loss of public assets, creditors who are relentless in their demands, and unyielding managers driven to despair.

While the “letting go” of SOEs is widely seen as beneficial to Chinese economic growth, the tragic human costs of these cut and dried economic decisions are seldom acknowledged in the public eye, and A Harsh Transition tries to uncover this. 

It’s difficult to care about the decline of a company. But in seeing its effects on the lives of unsuspecting employees, the story of a failing enterprise becomes a compelling testament to the human spirit against a rapidly changing society.

A Harsh Transition has been screened at the Guangzhou International Documentary Film Festival in Guangzhou, China, the 7th Chinesisches Filmfest München in Munich, Germany , and the L’entrepôt Theatre in Paris, France. 

In partnership with Real Image Media Collection.