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China aims to strengthen reform in state-owned companies


03-04-2017 14:41 BJT

Full coverage: 2017 NPC & CPPCC Sessions

(Source: CGTN)

China's state-owned enterprises -- or SOEs -- were key to the rapid development of the country's market economy. The central government has also identified the sector as integral to future policy-making. But there's a widely held view that many SOEs are inefficient and unable to meet their targets. So, there will be debates at this year's Two Sessions about how to reverse the decline of the enterprises.

Established in 1956, Guangzhou Pearl River Piano is one of the oldest piano makers in China. But as a traditional state-owned enterprise, its business model had been inefficient for many years. So it had to reform itself. Yang Weihua, the secretary of its board, said the company diversified its structure and looked for new areas of growth.

"Through SOE reform, the shareholding structure has changed. With more private capital, state-owned assets decreased from 100 to 81 percent. We also expanded our businesses to digital musical instruments and music education through online platforms," Yang said.

The changes gave the company a new lease on life. Today it's gone international. Last year, it purchased the world-renowned German piano maker, Schimmel. The company said its reforms have not only enabled it to become the world's largest piano maker, but also allowed it to operate off a more diversified business plan.

China has about 150 thousand SOEs. In his 2016 government work report, Premier Li Keqiang emphasized SOE development in the coming years... to ensure their success and improve their performance. National People's Congress Deputy Xiang Xiaomei said more efforts are needed to deepen reforms in the sector.

"On the one hand, the central government is suggesting giving the companies more space, while creating a more flexible business environment. But on the other, these SOEs need to keep innovating and improving their efficiency levels," Xiang said.

China is promoting a "mixed ownership” model -- where the private sector can invest in SOEs -- as part of reforms. Policymakers plan to introduce this in sectors like electricity, oil, military, and civil aviation as early as this year. So maybe sooner, rather than later, many of China's SOEs can play on the same pitch as Guangzhou Pearl River Piano.

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