China’s SOEs focus on reducing non- core businesses
Reforms of China’s State- owned enterprises ( SOEs) are underway, with the current work focusing on eliminating business areas and functions that are not critical to the operation of the SOEs, senior company executives said on Wednesday at a seminar at the annual Summer Davos in Dalian, Northeast China’s Liaoning Province.
“We are planning to hand over [ the operation rights for our] kindergartens, schools and hospitals, as well as the supply of water, electricity and natural gas,” Ma Guoqiang, chairman of State- owned China Baowu Steel Group Corporation, said at the seminar, noting that the company would then concentrate on its main business steel manufacturing.
In December 2016, Shanghai Baosteel Group Corp and Wuhan Iron& Steel Group merged into Baowu Steel Group.
Ma’s words were echoed by Xu Jinghong, chairman of State- owned Tsinghua Holding Co.
But Xu stressed at the seminar that SOEs should not apply a “onesize-fits- all” approach in reducing business lines. “The sectors that can generate synergistic benefits should remain.”
Xu also recognized that there is a gap between SOEs and private enterprises in operational efficiency, partly due to SEOs’ huge burden and the lack of an effective operation mechanism.
Part of the current reforms includes plans to improve the structure to make SOEs more competitive, said Xu.
The focus is on incorporating incentives such as employee reward systems, rather than introducing shareholders, he said.
Liu Fengming, the vice president of US- based General Electric ( GE), also talked about his company’s experience in setting up a joint venture with State- owned Commercial Aircraft Corporation of China at the seminar.
The joint venture has been selected to provide a number of parts such as displays for the China- developed C919 jet.
“There is no difference between the structures of the joint venture and GE… from supervision and talent management to law protection,” Liu said, noting that the joint venture is operating effectively.