Merger Log Introduction 2

The Past, Present and Tomorrow of State-Owned Enterprises

1. The historical evolution of state-owned enterprises

Enterprises are the lowest economic cells. Since the emergence of the commodity economy, www.biquge.info has produced enterprises. According to the nature of the enterprise, most of it used to be personal, also called individual business. Of course, compared with individual investment enterprises, enterprises invested by the government or local governments need state-owned enterprises. State-owned enterprises have existed historically, for example, in the ancient Near East, where many iron-smelting workshops were controlled by the government. In the thirties of the 20th century, when the global crisis broke out, especially in World War II and after the war, the government's penetration into the economy began to deepen, and there were many well-known state-owned enterprises at that time.

2. Why establish a state-owned enterprise?

The establishment of state-owned enterprises is mainly to use the monopoly position of the government to concentrate resources and rights to solve the problem of market failure, including natural monopolies and externalities of production, such as environmental pollution. Until Margaret Thatcher came to power in 1979, discussions in Western countries led to the idea that the government should control telecommunications, postal services, electricity, gas, aviation, and railways. Some politicians have also advocated that the government should control key manufacturing industries, including steel and defense. In developing countries, many governments set up banks directly. The starting point is to control capital to promote economic development.

The "successes" of the USSR in the 40s and 50s of the last world set a "glorious" example for many developing countries.

3. The establishment of state-owned enterprises in China

China's large-scale establishment of state-owned enterprises began with the founding of the People's Republic of China in 1949, through direct government investment, taking over enemy special and counterfeit products, and modeled on the Soviet model, the establishment of large-scale state-owned enterprises, and later the implementation of public-private partnerships, a large number of small and medium-sized state-owned enterprises were generally established. The state implements a unified plan for state-owned enterprises, unified repayment of funds, unified allocation of materials, unified collection and sale of products, and overall employment management, and the state is responsible for profits and losses, and state-owned enterprises have no operational autonomy. However, at that time, China was a highly planned system, with a lot of waste waiting to be rebuilt, commodity consumption was in the growth period, and the life of state-owned enterprises was very good.

4. Chinese state-owned enterprises entering the commodity market period

From the end of the seventies, enterprises first entered the commodity market period (the early stage of the market with Chinese characteristics), and the commodity market is an inevitable stage of market development. During this period, all enterprises, including state-owned enterprises, and even the entire national economy underwent some substantial changes, and the kind of enterprises that completely relied on the state for food and livelihood were rare.

In the commodity market, the first to enter is the consumer goods market. By the late 80s and early 90s, the prices of most investment products were liberalized. Affected by the international and domestic economic situation, state-owned enterprises are in trouble on a large scale. China's state-owned enterprises (SOEs) have endured the baptism of competition in the commodity market, which has produced a series of consequences: the negative characteristics of poor performance of SOEs have been fully exposed; First, decision-making is slow, decision-making errors are many, and decision-making cannot keep up with the rhythm of the commodity market; Second, there are many redundant personnel, and the big pot of rice has become a fetter for the internal management of state-owned enterprises; Third, the historical burden is heavy, and there are many retired personnel, which has become a serious burden; Fourth, there is a shortage of credit and the prevalence of local protectionism, resulting in triangular debt becoming a huge noose around the neck of enterprises; Fifth, people began to pursue profits, and internal and external collusion took advantage of the loopholes in the management of state-owned enterprises to encroach on the interests of state-owned enterprises.

Today, China has developed and formed a number of large state-owned companies and groups with relatively strong competitiveness, opened up and invigorated a number of small and medium-sized state-owned enterprises, further enhanced the overall quality and competitiveness of the state-owned economy, maintained and increased the value of state-owned assets, and achieved noticeable economic returns, thus making important contributions to the sustained, rapid, and healthy development of the national economy.

5. The reform process of China's state-owned enterprises

Before the reform and opening up, the Third Plenary Session of the 11 th Central Committee of the Communist Party of China proposed to allow enterprises to have more autonomy in operation and management. In accordance with the direction of reform put forward by the Third Plenary Session of the 11 th CPC Central Committee, the state-owned enterprises have successively promoted the pilot projects of expanding the autonomy of enterprise management, contracting out with increasing profits, and contracting the responsibility system for contract operation, adjusted the relationship between the responsibilities and rights of the state and enterprises, further clarified the status of enterprises as the main body of interests, mobilized the enthusiasm of enterprises in production and operation, enhanced the vitality of enterprises, and laid a preliminary foundation for enterprises to enter the market. The Third Plenary Session of the 14 th CPC Central Committee made it clear that the direction of the reform of state-owned enterprises is to establish a modern enterprise system with "clear property rights, clear rights and responsibilities, separation of government and enterprises, and scientific management". The party's ****** report put forward the major task of deepening the reform of the state-owned asset management system, and clearly required the state to formulate laws and regulations, and establish a state-owned asset management system in which the central government and local governments respectively perform the duties of investors on behalf of the state, enjoy the unity of owners' rights, rights, obligations and responsibilities, and combine the management of assets with the management of people and affairs. The report of the 17th National Congress of the Communist Party of China further proposed to deepen the reform of the shareholding system of state-owned enterprises, improve the modern enterprise system, optimize the layout and structure of the state-owned economy, and enhance the vitality, control and influence of the state-owned economy.

Deepen the reform of monopoly industries, introduce a competition mechanism, and strengthen government supervision and social supervision. Speed up the construction of the state-owned capital operating budget system. Improve all kinds of state-owned asset management systems and systems.

With the deepening of reforms, the layout and structural adjustment of the state-owned economy have been intensified, the majority of state-owned enterprises have carried out the reform of the company system, the restructuring of enterprises and the transfer of property rights have been gradually standardized, the orderly withdrawal of state-owned capital has been accelerated, and profound changes have taken place in the management system and operating mechanism of state-owned enterprises. The reform of state-owned enterprises has brought earth-shaking changes to China's economic and social development and even the development of humanistic thought.

6. Experience in the reform of state-owned enterprises

To deepen the reform of state-owned enterprises, it is necessary to blaze new trails and draw good experiences and good practices from the reform and development of state-owned enterprises in the past.

An experience: The process of reform and development of state-owned enterprises is itself a process of practical innovation, theoretical innovation, and active exploration.

After the Third Plenary Session of the 11 th CPC Central Committee, the central authorities began to readjust the relationship between the responsibilities and rights of the state and enterprises, and adopted various methods, such as expanding power and granting profits, contracting operations, and gradually liberalizing markets and prices, thus arousing the enthusiasm of enterprises and workers. Beginning in the 80s of the 20 th century, the development of individual and private economies and the trial establishment of special economic zones to all-round opening up to the outside world have formed effective competition among economies of various forms of ownership, so that state-owned enterprises can see the gaps and stimulate a sense of urgency and mission in reform and development. The 15 th CPC National Congress proposed to focus on doing a good job in the state-owned economy as a whole, to do a good job in the big ones and to invigorate the small ones, and to carry out the strategic readjustment of the state-owned economy of "advancing and retreating." This is a major strategic change in the reform of state-owned enterprises, which has gradually formed a competitive mechanism for the survival of the fittest and provided an institutional foundation for the sustained and rapid development of state-owned enterprises. As a result of a series of positive explorations, such as reforming and extricating oneself from difficulties, structural adjustment, technological transformation, strengthening management, and improving the state-owned asset management system, state-owned capital has been further concentrated in important industries and key areas that have a bearing on national security and the lifeline of the national economy, and the state-owned economy has shown relatively strong vitality, control, and influence, and its dominant position and leading role in the national economy have been further strengthened.

Another experience is that looking back at the process of reforming state-owned enterprises, in essence, it is a process of adapting to the requirements of socialization and the socialist market economy and finding an effective way to integrate public ownership with the market economy.

Over the past 30 years or so, state-owned enterprises have gradually developed from being subordinate to government administrative organs to commodity producers and operators who operate independently, assume responsibility for their own profits and losses, develop themselves, and exercise self-restraint, and have developed and grown in the fierce competition in the domestic and international markets, showing strong vitality and competitiveness. In the course of market-oriented reform, through the establishment of a modern enterprise system and the improvement of the corporate governance structure, the status of state-owned enterprises as the main players in the market has been strengthened in terms of system and mechanism, and their adaptability and consciousness in market-oriented operation have been enhanced.

Another experience: The reform and development of state-owned enterprises is of great significance to the establishment of a socialist market economic system, the promotion of sustained, rapid, and healthy economic development, the improvement of the people's living standards, the maintenance of a stable and united political situation, and the consolidation of the socialist system.

The reform of state-owned enterprises is the central link in the reform of the entire economic structure. To establish and improve the socialist market system and effectively integrate public ownership with the market economy, the most important thing is to enable state-owned enterprises to form a management system and operating mechanism that meet the requirements of the market economy.

7. The future reform and development direction of state-owned enterprises

First, adhere to the pillar status of state-owned enterprises, rationally carry out strategic layout, strengthen the status and role of large enterprises in the national economy and people's livelihood, orderly withdraw from general competitive industries, and realize the strategic development of state-owned enterprises.

Second, the core of promoting the rationalization of enterprise organizations is the growth of large enterprises and the formation of a new division of labor and cooperation system. The polarization of products and companies that has emerged in recent years will lead to two important outcomes.

One result is the growth of large enterprises, especially the gradual formation of a number of large enterprises measured by international standards. The victory of competition in the commodity market has laid a preliminary foundation for enterprises to "grow up" in production, technology, sales, management, and branding, but without the support of the capital market, the speed of enterprise expansion will be relatively slow, and some enterprises may stagnate at the existing level. Most of the internationally renowned large enterprises have a good financial support system, for example, almost all of them are listed companies.

Another consequence is that the enterprises that account for the majority of the total number of enterprises and have failed or at least do not have an advantage in the competition will have a process of reorganizing the relationship of division of labor and cooperation with the large enterprises.

The new division of labor and cooperation relationships include horizontal linkages (e.g., becoming the final product producer in the production system of large enterprises), vertical linkages (such as raw materials, suppliers of other components, product promoters), and hybrid linkages (such as cross-industry integration into the diversified business structure of large enterprises). There is a noteworthy tendency towards small and medium-sized enterprises (SMEs) as having no advantage in scale and therefore no competitiveness and development prospects. In fact, in a rational economic system, large and medium-sized enterprises have an appropriate proportion relationship, and most enterprises are still small and medium-sized enterprises.

Our problems in the past were not mainly the existence of a large number of small and medium-sized enterprises, but the lack of efficient linkages between small and medium-sized enterprises and large enterprises, such as the production of final products in an industry. In such a situation, the only way out is to rebuild the division of labor and cooperation between large and medium-sized enterprises through acquisitions, mergers, bankruptcy, trusteeship, etc. In this process, the capital market is not only indispensable, but also the most advantageous.

Third, promote the innovation and reform of state-owned enterprises. Deeply solve a series of basic problems in the internal property rights governance and internal governance structure of state-owned enterprises. In the process of achieving this goal, people tend to pay attention to the changes in the organizational structure and pursue the similarity between the organizational form and the international experience, such as the formation of a corporate governance structure composed of shareholders' meetings, a board of directors, and senior managers, and the establishment of a shareholding institution with state-owned share capital, while it is easy to ignore the role of the capital market as its foundation.

If it is said that the development of the product market over the past 10 years or so has made breakthroughs in the economic reform of state-owned enterprises and promoted the establishment of the goal of socialist market economic reform, the resolution of many contradictions analyzed above along with the cultivation and development of the capital market will bring about a qualitative progress in the transformation of China's state-owned enterprise system, and from a certain point of view, it will mean the basic establishment of the framework of China's socialist market economy.

8. The purpose of this book

The purpose of this book is to accumulate the experience of the revitalization and development of state-owned enterprises through the practice of state-owned enterprise merger and reform, reveal the inside story and extension of state-owned enterprise merger and reform, seek successful ways and methods of enterprise management, contribute spiritual strength to the revitalization of the old industrial base in Northeast China in the future, contribute to the reform and development of state-owned enterprises, and contribute to the realization of the two centenary goals!

The world's scientific progress is changing with each passing day, when the wheel of history has come to the end of the 20th century, the tide of globalization has been unstoppable, especially the comprehensive popularization of electronic products represented by informatization--- wireless communication and the Internet, so that the door of the region has been completely opened, the process of regional integration is gradually accelerating, the economic sense of globalization has extended to all countries and regions, and the baton of planned economy is becoming more and more out of order! You can't be closed anymore, you can't be alone anymore! From the mid-90s of the 20th century, the production and operation model of state-owned enterprises has entered a dead end under the condition of losing the guidance of the planned economy, and the state-owned enterprises have begun to undergo major changes from the central to the local government. In particular, the triangular debt between state-owned enterprises has become the last straw that crushes small and medium-sized enterprises: it has led to the rupture of the capital flow of millions of small and medium-sized enterprises, arrears of wages and debts, enterprises are crumbling, society is hustle and bustle, and the huge social and economic crisis in China will shake the mountains if it is not resolved------

At this time, the Chinese central government issued the "Opinions on the Revitalization of the Old Industrial Base in Northeast China", the main idea is to alleviate triangular debts, carry out mergers and acquisitions of state-owned enterprises and small and medium-sized enterprises, and divert the laid-off employees of state-owned enterprises, and implement the "three-three system" for the cost of laid-off diversion. Whoever doesn't do it is a fool!

In December 1996, the Jinjiang Municipal Government opened a new round of reform of state-owned enterprises with the special symptom of reducing personnel and diverting people, and as one of the old state-owned industrial bases in Northeast China, hundreds of county-owned small and medium-sized enterprises have been in a state of loss. So I took advantage of this opportunity of the state's policy to invigorate state-owned enterprises in Northeast China, and implemented Lalang matching, allowing large state-owned enterprises to merge with county-affiliated small state-owned enterprises, selling 117 small and medium-sized state-owned enterprises overnight, and giving each household a loan of 4 million --- 5 million. Jinjiang City is unburdened, after the merger and takeover, many enterprises have a large number of serious problems such as indigestion, etc., Tetra Company is the general merger and takeover of Jinjiang City Porter Factory. However, the heavens did not fulfill people's wishes, after the takeover, the new project could not reach the standard and production, the new enterprise and the new team were very fierce internal and external struggle, and they lost money for two consecutive years, and the merged transport company fell into a new crisis. In particular, the emergence of a large number of after-effects of the merger has brought huge political and economic pressure to Tetra. How to solve this tricky mess of the merger has become a top priority for Tetra's leadership. Who exactly will Tetra send to the Movers company to deal with the big mess after the merger? It was a very difficult decision.

This is exactly what it is: smart but mistaken by smart, picking cheap and risky in a thousand ways, who wants to wade into this troubled water?!