Betting on the Wrong Horse

Mao Jiatai's disposable cups ought to runneth over. In 2002, says the entrepreneur from western China's Sichuan province, his private company raked in $2.5 million in sales by manufacturing paper containers for food and beverages. He has four production lines making paper cups in hangar-like buildings, and 20 young women from the countryside toil in the yard beside them, pasting labels featuring words such as "White Family Potato Noodles" onto single-serving bowls. Business has never been better. Yet Mao, like so many other owners of private companies in China, can't seem to catch a break in his efforts to take his...