China’s mixed-ownership reforms of state-owned enterprises are on track to further expand at the group level, as well as conduct further trials of employee shareholding schemes.
Mixed-ownership reforms lie at the core of China’s efforts to overhaul the state-owned enterprise (SOE) sector, with policymakers hoping that they will improve corporate governance and make companies more market-oriented while also injecting fresh capital.
Official data indicates that as of the end of 2017 a total of 50 SOE’s were participating in mixed-ownership reforms, in sectors including power, oil, natural gas, civil aviation, telecommunications and the military.
Over two-thirds of central SOE’s and their subsidiaries have already implemented mixed-ownership reforms, introducing 338.6 billion yuan in fresh capital in 2017.
Economic Information Daily reports that the success of SOE mixed-ownership reforms has prompted Beijing to expand trials to the “group-level” as well as introduce employee stock ownership plans.
“The results of cooperation with private enterprise have been much better than expected, in terms of both core operations as well as rapidly expanding operations,” said Rui Xiaowu (芮晓武), chair of China Electronics Technology Group.
“Mixed-ownership plays an extremely large role – for example the best technology in the areas of network technology and digitisation have come as a result of mixed-ownership.”
“At present mixed-ownership is still being actively advanced, and what society is focusing on more is the promotion of group-level mixed-ownership, as chiefly represented by China Unicom,” said Xu Fushun (徐福顺), vice-chair of the State-owned Assets Supervision and Administration Commission (SASAC).
“We are currently more focused on studying certain business mechanisms of private companies from the perspective of supplementing shortcomings via supply-side structural reforms.”
As of the end of 2017 a total of three central SOE’s have launched group-level mixed-ownership reforms, including China Unicom, Nokia Shanghai Bell and China Hualu Group.
Liu Shaoyong, chairman of China Eastern Airlines, has revealed that the group has already submitted a mixed-ownership application report to SASAC, while China Baowu Steel Group’s chairman Hu Wangming said that the company will explore mixed-ownership reforms at the group level.
Employee shareholding schemes are also emerging as a key part of mixed-ownership reforms, following the release of the “Opinions Concerning State-owned Share-controlled Mixed-ownership Enterprises Undertaking Employee Shareholding Trials” (关于国有控股混合所有制企业开展员工持股试点的意见 ) in August 2016, and the launch of trials at 10 SOE’s in November 2016.
China Huaneng Group said to Economic Information Daily that trials are currently being conducted at the group’s second-tier subsidiaries, while China Electronics Technology Group has also widely deployed share incentive mechanisms for senior executives at its subsidiaries.
“At present a total of 60 companies are participating in employee shareholding trials,” said Rui Xiaowu. “This year we have already applied for employee shareholding trials at two military enterprises.”
Local SOE’s around China are also advancing or conducting trials of employee shareholding schemes, in provinces and cities including Guangdong, Hunan, Jiangxi, Liaoning, Shandong and Shanghai.