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红帽子企业 (hongmaozi qiye)

Red Cap Enterprise

A term used to describe private enterprises attached to a government department and doing business in the name of State- or collectively run enterprises shortly after adoption of the reform and opening-up policy. China's enterprises were all State- or collectively run before the 1978 watershed. Since then, private enterprises have been allowed in some fields. However, private funds were still kept away from certain fields out of consideration of political risks. As a result, many privately funded Red Cap Enterprises were set up under or in the name of State- and collectively run enterprises.