This chapter focuses on Shanghai’s rubber processing industry in order to illustrate the change in industrial organization, which had originally been decentralized, before and after 1949, especially through examining the process of the socialist transformation. Shanghai’s rubber processing industry prior to 1949 was characterized by a few large companies capable of producing automobile tires coexisting alongside countless small and medium-sized enterprises with simple facilities and small capital scales due to the comparatively low technical barriers to entry for products such as rubber shoes and other miscellaneous goods. Even after the reorganization following the Second World War and the Chinese Communist Party takeover in 1949, private enterprises continued to make up the core of the rubber processing industry, and there was no significant expansion of state-owned or public-private jointly-owned enterprises in this area. The chapter sheds light on how Shanghai’s rubber processing industry was reorganized by changes in the international environment in the early 1950s, at precisely the same time that the socialist system was being established.