Central and local funds seek expansion, employee shareholding reform to boom
Huiyan satellite travels in the space. C919 flies in the sky. The quantum computer was successfully developed. The first home-made aircraft carrier was launched. The Hong Kong-Zhuhai-Macau Bridge completed construction. All these world-leading innovation results show that Chinese enterprises represented by state-owned enterprises (SOEs) are actively leading the world. More and more “Made-in-China”, “Chinese standards” and “Chinese brands” have moved to the central stage of the world.
Innovation will continue to boost development. It is learnt that the -State-owned Assets Supervision and Administration Commission (SASAC) proposed to promote innovation-driven development, strengthen independent innovation, improve systems and mechanisms, enhance coordinated innovation and play a key role in building an innovation-based country. It is noteworthy that central and local funds are seeking expansion. With the advancing of the mixed ownership reform, the employee shareholding reform will boom again.
Based on the statistics provided by SASAC Deputy Director Xu Fushun, central enterprises have established 970 platforms for entrepreneurship and innovation in recent years, including 121 Internet-based platforms for entrepreneurship and innovation, 187 real incubator, 84 technology and industrial parks and 578 innovation and entrepreneurship activities. They have established over 200 funds on innovation and development and own 13 national demonstration bases for entrepreneurship and innovation. Through the entrepreneurship and innovation, it has created over 6 million employment opportunities and promoted the development of small and medium enterprises.
Four “coordinated innovation” funds with a first-phase size of over 150 billion yuan and a total size of 430 billion yuan, which symbolizes the top design on the innovation and development of central enterprises, have been established in the first half of 2017, covering all key industries in national economy. “The funded contributed by the SASAC and led by central enterprises will attract more social capitals, which will benefit the adjustment of the industrial structure,” indicated Li Jin, chief researcher with China Enterprise Research Institute.
Various industrial funds on innovation have been launched by local authorities and enterprises. China Aerospace Science and Industry Corporation has established an independent innovation fund to support the study on technologies with unique innovation concept. The Quantum Science Industrial Development Fund with a planned total size of 10 billion yuan established by Anhui Provincial Investment group officially initiated operation in December 2017. It will invest in enterprises in quantum communication, quantum computing and quantum measurement industries and other enterprises with cutting-edge technologies.
Xu disclosed that it will build a system of funds on the innovation and development of central enterprises to enhance the integration of technology and capitals. The SASAC is cooperating with the Ministry of Science and Technology of China to establish funds on the commercialization of research findings of central enterprises. It is also mulling policies on entrepreneurship and investment with the National Development and Reform Commission to promote the development of venture funds for emerging industries.
The burst of innovative power of SOEs depends on a series of reforms in incentive mechanisms, including the mixed ownership reform and the exploration in employee stock ownership program. "Our employees now hold as many as 20 percent of our company’s shares,” Yin Ruihu, deputy general manager of Xi'an Ruite 3D Technology Co., Ltd. told the Economic Information Daily reporter that as a high-tech enterprise, the company implemented a mixed ownership system by exploring the market-oriented allocation of resources and innovation-driven development model to cultivate industrial platform.
In non-tech enterprises, employee stock ownership plan is also used as an important measure to promote the innovation of institutional mechanisms and the efficiency. In 2017, Eastern Air Logistics (EAL) owned by China Eastern Airlines was the first company to carry out the mixed ownership reform. What particular is that EAL will provide 10 percent of the registered capital after its capital increase for employee stock ownership. This is the first time that a SOE spares such a high proportion of shares for employee shareholding.
"As EAL has a share capital of 4.1 billion yuan, a single employee can only hold a maximum of 1 percent equities, equivalent to more than 41 million yuan. For the 125 employees with shareholding, all are required to have real money,” Li Jiupeng, general manager of EAL told the Economic Information Daily.
Data show that 68.9 percent of central SOEs have carried out the mixed ownership reform. 10 subsidiaries of central SOEs that have piloted the employee stock ownership program have completed their share capital contribution and business registrations. 126 enterprises in 21 provinces carried out the trial employee stock ownership program.
Xiao Yaqing, director of the State Council SASAC, pointed out that institutional innovation is the key to achieving innovation and development. The next step, China has to continue to improve the institutional measures which are favorable for innovation, increase medium-and long-term incentive, stimulate the endogenous power for enterprise innovation as well as the innovation vitality of scientific research personnel.
In the year of 2018, the SOEs reform will enter into a construction period. The mixed ownership reform will speed up further. Particularly, local enterprises will take big steps, with exploring the employee stock ownership program as a key work. Hu Chi, a researcher at SASAC Research Center, said that the employee stock ownership program will be a highlight of the SOEs reform. From a policy perspective, local governments even take more efforts in employee stock ownership than the central government and the SASAC."
It is reported that China Unicom will launch the employee stock ownership program soon, and is now screening employees for shareholding. Shanxi Coking Coal Group Co., Ltd., also started the implementation opinions on promoting the mixed ownership reform. It also guides its secondary companies for the mixed ownership reform, actively encourage those below secondary enterprises to promote the mixed ownership reform in an orderly manner, including exploring the employee stock ownership program.
Translated by Star Zhang
Latest comments