Background
The SOEs have experienced undergone tremendous changes in the past 40 years of reform and opening up. And their overall scale has increased significantly although the number proportion decreased, for example, the number of state-owned and state-controlled enterprises in the industrial sector accounts for only a single digit. By May 2019, the total assets of SOEs in the whole country have reached about 192 trillion yuan, the total liabilities reached 124 trillion yuan and the owner's equity was about 68 trillion yuan. From January to May, the operating income of SOEs was about 24 trillion yuan, with the total profit of 139 million yuan.
The individual scale and competitiveness of SOEs have also improved significantly. According to the Fortune Global 500 companies list, the top 10 in 2018 were SOEs and led by three major industries of petrochemical and natural gas, infrastructure construction and bank insurance. Regarding the two industries with fewer than 4%, the 18 companies in the insurance industry and the oil, gas and petrochemical industries have accounted for nearly 20% of the revenues of the top 500 companies.
However, the SOEs still lack the layout optimization, the strong development potential and vitality, as well as the market orientation. Many enterprises still own the single property rights structure, including the state ownership, the wholly state-owned and absolute state-controlled, imperfect governance structure, the lower decision-making efficiency and the inflexible internal institutional mechanism , leading to the board of directors failing to give full to their roles. Many large-scale state-owned enterprises rely mainly on the scarce resources and monopolized management rights, instead of the results of market competition. Thus, under the environment of deepened marketing development, opening up to the outside world and the rapid technological progress in the future, it will be difficult to simply rely on scarce resources and monopolize management rights to achieve the further development.
On this basis, the 19th CPC National Congress proposed to deepen the reform of state-owned enterprises, develop the mixed ownership economy and cultivate world-class enterprises with global competitiveness. In addition to fulfilling the public service guarantee, social and ecological protection responsibilities, SOEs should accelerate the globalization and international operations, further enhance the corporate vitality and management levels, as well as accelerate organizational innovation, institutional innovation and technological innovation, in order to further enhance the strategic forward-looking. This means that the SOE and state-owned assets reform should be carried out based on their fundamental purposes.
Our understanding of the state-owned assets and SOE Reform
■ The ultimate goal of the reform of state-owned assets and SOEs is to realize the value of state-owned capital, give play to the functions of SOEs and further enhance their vitality.
■ Based on the changes in industrial structure and the laws of regional economic development, and through combining with the goals of state-owned capital and the functional positioning of SOEs, the layout optimization of the state-owned capital requires to introduce the strategic planning, and make the forward-looking planning according to the distributions of corporate competitiveness.
■ State-owned capital investment operating company is not only the starting point for optimizing the layout of state-owned capital, but the main body of professional and market-oriented capital investment and operation. On the one hand, it is necessary to strategically coordinate with state-owned capital layout planning and have a deep insight of the industry and market evolution laws. On the other hand, the strong allocation efficiency orientation, parenting effect and risk management characteristics should be fully reflected in the operation, organization and management.
■ As the double hundred actions of SOE, mixed ownership reform, and mergers and acquisitions involve the property rights, they require to be compatible with the development strategy of the enterprises, focus on introducing incremental external resources to comply with national and local SOE Reform policy requirements and trends, and further reflect the principles of fairness and reasonable compliance.
■ As the market-oriented operation of SOEs, professional managerial system, employee shareholding, as well as incentive and restraint mechanism reforms involve enterprise vitality mechanisms, it is essential to be integrated with the corporate strategy and core competitiveness in the formulation of plans, in order to reflect the business, resource, talent and geographical characteristics, and better comply with the principles of fairness and reasonable compliance.
Our advantage
We own the policy orientation, mechanism design and management plan formulation abilities. In the past years, we have deeply intervened in the top-level policy design of this round of SOE Reform, carried out many consultations in the field of state-owned assets and SOEs for SASAC (State-owned Assets Supervision and Administration Commission) of State Council, the regional SASAC,central and local enterprises, and also accumulated rich experience. Moreover, the research results and programs have been recognized by the national leaders, the SASAC of State Council, the regional SASAC and many central enterprises.
What can our clients get
■ Guidance from top experts in the field: communicating with the top policy designers to obtain guidance.
■ Strategic vision introduction: the combination of the reform plan with the strategic vision.
■ Comprehensive program reform abilities to assist companies to grasp reform opportunities: improving the corporate vitality in the short-term period, while promoting the leapfrog development of enterprises through the resource integration and mechanism innovation in the mid- and long-term period.
■ Management consulting capacity can enhance the plan implementation: the combination of the reform plan and the management formulation ability can enhance the implementation.
■ Implementation of counseling and continuous service: providing the company with plans to provide guidance for the whole process and promote the plan implementation, and further make the company focus on production and operation activities.
■ Capital + enterprise: assist enterprises to connect with high-quality capital to fully inject new momentum into the corporate reform and development.
