Special Economic Zone (SEZ) is a fruitful strategy for promoting trade, employment and economic growth in a county. According to International Labour Organisation (ILO) (2010), a tremendous growth in SEZs is observed in last 3 decades. For instance, in 1986, there were 176 SEZs in 47 countries; which reached to 3500 in 130 countries in 2006 [Farole (2010)]. The objective of this study is to highlight the potential of SEZs for Pakistan Economy. In particular, we want to find the major causes of failure of the existing SEZs and industrial Estates from the context of organisational inefficiency and governance. There are some industrial estates which were established in Pakistan at provincial level to resolve the problem of sick industry; however, we did not experience much success in that case [Nawaz, et al. (2015)]. There are various models of SEZs across the globe like those of India, Bangladesh, Russia and China. China is one of the success stories as far as the functioning of SEZs is concerned. In this study, we want to have a comparative analysis of Pakistan and China in terms of SEZs and, in this way, we want to discuss how rent-seeking, political influence, information and incentives problems, and other governance issues can lead to the failure of SEZs. Alternatively, in the light of CPEC, we would focus on giving policy options for Pakistan by overcoming these issues.