This paper is a case study based on the privatization of Guoguang Ceramics.It is found that,contrary to the thoughts of some scholars, corporation performance actually deteriorated,rather than improved under privatization.We analyze ownership arrangements before and after privatization and find that private ownership arrangements still have deficiencies and are not necessarily better than state ownership arrangements.The existence of private benefits of control is the essential reason why performance had been deteriorating.Private benefits of control under state ownership come from the government's multiple objectives of corporation control,whereas the benefits with private ownership lie on resources transferred from the corporation.Ta succeed in privatizing SOEs,it is essential that legal systems be strengthened to effectively oversee private benefits of control. This paper is a case study based on the privatization of Guoguang Ceramics. It is found that, contrary to the thoughts of some scholars, corporation performance actually deteriorated, rather than improved under privatization. We analyze ownership arrangements before and after privatization and find that private ownership arrangements still have deficiencies and are not necessarily better than state ownership arrangements. The existence of private benefits of control is the essential reason why performance had been deteriorating. Private benefits of control under state ownership come from the government's multiple objectives of corporation control, while the benefits with private ownership lie on resources transferred from the corporation.Ta succeed in privatizing SOEs, it is essential that legal systems be strengthened to effectively oversee private benefits of control.