Business / Economy

Feelings are mixed over mixed-ownership model

By Meng Jing (China Daily) Updated: 2014-03-13 08:27

The two types of companies have "completely different" management styles and business philosophies, he said.

"Not to mention the huge difference between the sizes of SOEs and private companies. SOEs are like elephants, and in comparison private companies are like carp," said Pan.

He also pointed out that SOEs are mostly at the upper end of the industrial supply chain, engaged in businesses connected to resources and energy, while private companies are mostly at the lower end of the chain, where they focus on consumers.

Feelings are mixed over mixed-ownership model
Feelings are mixed over mixed-ownership model
"Many private companies are worried that their investments in SOEs will only serve as capital boosts. How to achieve a sustainable influence on a mixed-ownership company in the long run is uncertain," Pan said.

He Bangxi, chairman of the board of Beijing Xima Bowling Equipment Co Ltd, said: "I'd definitely invest in SOEs if there is a good project for me.

"But I'd hope that the share distribution of such a mixed-ownership company will be transparent and that as a shareholder, I can be involved in the decision-making process," he said.

Many national political advisers said that China's SOEs are obsessed with maintaining control of joint ventures, so it would be difficult for minority investors to be involved in making decisions.

Feng said developing a mixed-ownership economy requires building trust between SOEs and the holders of private capital.

Feng's company, which has a 50-50 joint venture with China Petrochemical Corp (Sinopec), said that he's seen some great progress made by SOEs.

"Since last year, when the development of a mixed-ownership economy was raised by the central government, some SOEs we've dealt with have agreed to not become the largest shareholder of joint venture projects.

"That's a major step forward. When we formed the joint venture with Sinopec in 2005, we had to split the shares half and half because neither side trusted the other to have a majority share," he said.

Detailed regulations will help build trust in such situations, he said.

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