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Traditional Industrial Base Succeeds in SOE Reform
Liaoning Province, a traditional industrial base in northeast China, announced Thursday, December 21, that it has basically achieved the goal set for the reform of its State-owned enterprises (SOE).
The province has extricated most of its loss-making SOEs from difficulty and placed them on the road toward profitability by the end of this century, a goal set for the country's SOE reform by the central government.
The announcement made Thursday by Zhang Guoguang, governor of the province at a provincial conference on economic affairs, gave strong support to the remarks made earlier by senior officials from the central government.
Liaoning, home to one tenth of China's large and medium-sized SOEs, was seen as pivotal to the reform drive. It has closed, suspended or merged a number of SOEs during the past three years.
The management of SOEs in this old industrial base has made profound changes. Most key SOEs have set up a modern enterprise system. Less than 30 percent of the SOEs are still losing money.
A good sign came in October 1999 when SOEs and state-controlled companies in the province stopped losing money. The SOEs have made nearly 10 billion yuan (US$1.2 billion) of profit during the January-November period this year.
Liang Shengyu, director of the provincial economic and trade commission, said that the 12 principal industries of the province will be extricated from the predicament by the end of this year.
Currently nearly two thirds, or 272 large and medium-sized SOEs in the province, have adopted a corporate system. Another 28 SOEs tried a new income distribution method of stock options for managers.
Meanwhile several new industries, such as electronics, information, automobiles, and new building materials, have emerged as new growth areas in the economy.
The province has invested 80 billion yuan in technical renovation to help old enterprises become competitive again in the market.
Over 90 percent of large and medium-sized SOEs have cooperated with colleges, universities and scientific research organizations, including setting up joint research and development institutions.
The latest survey showed that 90 percent of SOE general managers devoted most of their energy to market exploration.
Before the reform drive, many of the general managers complained that their time had been occupied by mounting debt, increased over-staffing, or heavy social responsibilities.
SOEs in the province have added over 5,000 sales outlets at home and abroad.
Wen Shizhen, secretary of the provincial committee of the Chinese Communist Party, believes that the successful SOE reform will not only lay a foundation for the future economic development of the province, but will also provide a sound climate under which the province can try out reform of the social security system as required by the central government.
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