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China's state enterprises

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A look to China's state enterprises

A look to China's state enterprises


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  • 1. China
    Asian Business Studies/Hogeschool Inholland
    1
    Asian Business Studies
    Ozan Can Koseley
  • 2. China
    Reforming managerial mechanisms of Chinese state enterprises
    Asian Business Studies/Hogeschool Inholland
    2
  • 3. Structural and managerial problems of the CSEs
    Asian Business Studies/Hogeschool Inholland
    3
  • 4. Managerial Development in CSEs4 STAGES
    Nationalization – Soviet model 1949
    - One director management system
    - Made contribution to the heavy industry
    - A poor fit with Chinese communist aspirations
    - China had very few technically trained managers
    Reforms 1956-1961
    - Participation of party comittees and workers
    Cultural revulation 1965
    - Managers are discredited, revulationary workers were given the power
    Current reforms 1980s
    Asian Business Studies/Hogeschool Inholland
    4
  • 5. The line-function system of management
    People in functional departments
    Directors ideollagacilly loyal to the party
    Independent system for each factory
    Asian Business Studies/Hogeschool Inholland
    5
  • 6. Problems within party structure
    Resbonsibilities of enterprise leaders
    An ideological control over enterprise
    Power distribution
    Inefficient structure
    Asian Business Studies/Hogeschool Inholland
    6
  • 7. Asian Business Studies/Hogeschool Inholland
    7
  • 8. 2 additional systems to manage
    Life-support system
    - Support workers off-work activites
    Sociapolitical support system
    - ACTFU
    -ACWF
    - Communist youth league
    - Militia
    Asian Business Studies/Hogeschool Inholland
    8
  • 9. Personnel management
    Iron ruling chairs
    No rights to hire or fire
    Iron rice bowl
    Political in doctrination
    Asian Business Studies/Hogeschool Inholland
    9
  • 10. Financial Management
    State financial control
    Restricted funds
    Delivering income
    Focus on product quantity and value
    Lack of using funds
    Asian Business Studies/Hogeschool Inholland
    10
  • 11. Major reform measures and existing problems of the CSEs
    Asian Business Studies/Hogeschool Inholland
    11
  • 12. Reforms after 1979
    The experimentalapproach
    1984 China’s Economic Structure Reform
    Industry responsibility system
    Profit and loss contract
    Enterprise director leads
    Reduced influence of the party
    Increased financial responsibility
    Western management techniques
    Asian Business Studies/Hogeschool Inholland
    12
  • 13. But there still remains a series of major problems
    The supply and demand balance has shifted to bigger supply  More competition
    Many CSEs still operate at a loss and depend upon state subsidies
    The “Triangular debt” cycle
    Asian Business Studies/Hogeschool Inholland
    13
  • 14. Why these major problems?
    CSEs had not yet obtained true autonomy
    Many related policies in finance, pricing, and taxation lagged behind
    Many CSEs had not established good sales mechanisms
    Most of the CSEs still held on the old straight-line functional model
    The CSEs still had to carry heavy social burdens by maintaining their life support systems
    The “three irons” problems had remained very serious
    Asian Business Studies/Hogeschool Inholland
    14
  • 15. Govermental measures of reforming the CSEs and their likely impacts
    15
    Asian Business Studies/Hogeschool Inholland
  • 16. The regulations for transforming Managerial Mechanism of the State Owned Enterprises
    Production management power
    Power to price service and products
    Power to sell their products
    Import and export power
    Power to make investment desicions
    Power to dispose of their properties
    Power to merge
    16
    Asian Business Studies/Hogeschool Inholland
  • 17. The regulations for transforming Managerial Mechanism of the State Owned Enterprises
    Power to determine workforce
    Personal managementpower
    Power to setup various sub-organizations
    Power to wage
    Power to refuse govermental apportionment
    17
    Asian Business Studies/Hogeschool Inholland
  • 18. Power to manage production
    Scope of production and business
    Power to demand contracts
    Readjustment of supply
    18
    Asian Business Studies/Hogeschool Inholland
  • 19. Power to make investment desicions
    Use reserve capital to invest on productive projects
    International investment
    Developing enterprises overseas
    19
    Asian Business Studies/Hogeschool Inholland
  • 20. Power to price products and services
    CSEs freely set prices
    20
    Asian Business Studies/Hogeschool Inholland
  • 21. Power to import and export
    Choosing any foreign trade institution
    Power to participate in negotiations
    Determine their own currency
    21
    Asian Business Studies/Hogeschool Inholland
  • 22. Power to manage human resorces
    Deciding aspects for hiring employees
    Hiring from abroad
    Power to allocate wages and bonuses
    22
    Asian Business Studies/Hogeschool Inholland
  • 23. Regulations to intensify responsibilities
    Link between total income and economic benefits
    Responsibility of the directors
    Responsibility of the CSEs
    Corporate taxes leveled for all players
    23
    Asian Business Studies/Hogeschool Inholland
  • 24. The role of government in four main areas
    Establishing a macro-control management
    Promoting the role of market system
    Social security system
    Developing public facilities and welfare institutions
    24
    Asian Business Studies/Hogeschool Inholland
  • 25. Still problems to solve
    Failing management
    Uncertain ownership
    Enterprise leadership
    SOEs lag behind
    Competition
    25
    Asian Business Studies/Hogeschool Inholland
  • 26. The guide for CSEs
    The ownership issue
    A shareholding system
    Joint-stock companies
    Cooperation with foreign partners
    Relationship CEO and Party
    Focusing comparative advantage
    Tackle corruption
    Strategic alliances with other enterprises
    26
    Asian Business Studies/Hogeschool Inholland
  • 27. Comparative Chinese managerial system
    Asian Business Studies/Hogeschool Inholland
    27
  • 28. Organisational structure
    Asian Business Studies/Hogeschool Inholland
    28
  • 29. CFBs and CSEs organisational structure
    29
    Asian Business Studies/Hogeschool Inholland
  • 30. Management process
    30
    Asian Business Studies/Hogeschool Inholland
  • 31. Comparison of CFBs and CSEs
    The management process
    The control process
    Guanxi and Xinyong
    31
    Asian Business Studies/Hogeschool Inholland
  • 32. Management process
    Didactic style of leadership
    Power distance
    32
    Asian Business Studies/Hogeschool Inholland
  • 33. Process control
    Lack of measuring employee performance
    Loyalty is important
    33
    Asian Business Studies/Hogeschool Inholland
  • 34. Guanxi and Xinyong
    External relationships
    Business ties
    34
    Asian Business Studies/Hogeschool Inholland
  • 35. Competitive Strategies and tactics
    35
    Asian Business Studies/Hogeschool Inholland
  • 36. Competitive strategies and tactics of the overseas Chinese in Southeast Asia
    Low margin/high turnover
    Economy of scope
    Political sensitivity and high degree of sophistication in forming alliances of convenience
    Flexibility
    36
    Asian Business Studies/Hogeschool Inholland
  • 37. CSEs in mainland China
    They have not been able to develop competitive business strategies until only recently
    Why?
    The CSEs were dominated and overprotected by the state in terms of industrial material input, market share, and financial support
    They still have to develop their competitive strategies to be able to expand or even maintain their traditional market shares.
    37
    Asian Business Studies/HogeschoolInholland