State-owned enterprises can be divided into public welfare state-owned enterprises in and competitive state-owned enterprises according to different functions. In the new round of state-owned enterprise reform with mixed ownership as the core, classified reform should be conducted. Preferred stock, as an equity instrument that enjoys property rights priority and limits decision-making voting rights, can solve the series of major problems in the mixed ownership reform of competitive state-owned enterprises. However, preferred stock should be implemented gradually. Through the improvement of such mechanisms as the recovery of the voting right of the state-owned preferred stock, the establishment of the system of state-owned preferred stock shareholders conference, and the guarantee of state-owned preferred share-holders' right to know, the rights and interests of competitive state-owned enterprises and the state-owned preferred shareholders can be protected to the utmost.