China's state enterprises

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A look to China's state enterprises

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China's state enterprises

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

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