In the last two decades, China's transition from a planned to a market economy achieved remarkable success through a gradual approach. Such transition was accompanied by the transformation of public enterprises, which were made to play a key role in cushioning social instability during the reforms. The methods of this paper are embodied in a triangulation strategy, including a structured questionnaire, in-depth semi-structured interviews, literature research, and analysis of government documents and other relevant data sources. It justifies the use of the case study approach as the major method. Particular attention is paid to the weaknesses and strengths of the research methods used. Drawing on data comparing 18 Chinese case companies, this study found that a broad concept of competition, ownership, management and labour (COML) framework could be essential in guiding a smooth transformation of public enterprises as well as economic transition from planing to market. In this study, the transformation of public enterprises has been more likely to be successful when achieved through a gradual approach, as ownership change has constraints and preconditions such as supporting institutions, which takes time to establish and function in an emerging new market environment. Moreover, labour interacts with the transformation of public enterprises, especially in the situation where the public enterprises play a key role in the provision of employment. Where there is a lack of a well -established social security, the consequences for labour from the transformation of public enterprises can be considerably.