SOEs speed up reform while embracing B&R Initiative
By Gong Jie
Reforms being undertaken by China's State-owned enterprises (SOEs) are accelerating as they prepare to tap the opportunities offered by internationalization and the Belt and Road Initiative, representatives from two of the country's major SOEs said at the 2017 Dalian Summer Davos.
Both Ma Guoqiang, the chairman and Party secretary of China Baowu Steel Group Corp., and Xu Jinghong, the chairman of Tsinghua Holdings, said they faced relatively few restrictions in the reform process in terms of restructuring their business and shareholding reforms, and in recruiting and retaining new talent.
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Young global leaders -- Xu Jinghong (2nd L), the chairman of Tsinghua Holdings, Ma Guoqiang (3rd L), the chairman and Party secretary of China Baowu Steel Group Corp., Carol Liao (3rd R), the president of BCG Greater China at the Boston Consulting Group, Liu Fengming (2nd R), the vice-president of General Electric, and Lin Xuchu (1st R), the chairman of CF Capital -- discuss "The Future of Big China" at the World Economic Forum - Annual Meeting of the New Champions in Dalian, China, June 28, 2017. [Photo by World Economic Forum] |
Mixed ownership including the introduction of foreign capital is allowed, and joint ventures with private Chinese companies and multinationals are encouraged. In addition, the management is free to introduce best international practices in corporate governance and in offering incentives to employees.
Speaking during a panel discussion on "The Future of Big China," Ma said, "We want to accelerate SOE reforms ... as the Belt and Road Initiative presents many opportunities."
Ma disclosed that Baowu Steel has long been exploring opportunities that might arise from the Belt and Road Initiative, including projects in countries like Pakistan spanning the land-based Silk Route.
Ma said that under the present round of SOE reforms, Baowu Group, formed by a merger of Baosteel and Wuhan Steel, is focused on spinning off companies that are not considered core elements in its steel operations, such as its food business.
Xu noted that an important reform issue involves asset ownership, and that determination of whether the country or management controls the assets, as well as devolution of decision-making, is critical as SOEs position themselves for the future.
Still, there are issues concerning "complicated oversight systems" to be addressed while the country tries to unshackle SOEs so that they can thrive in a competitive environment, he stressed.
"The core of the issue is whether we can stimulate vitality in the SOEs," said Xu.
In this regard, Liu Fengming, the vice-president of General Electric, agreed that the challenge facing SOEs was no different from other companies. "We are all facing the same problem -- how to make our companies bigger and stronger," he said.