Comprehensive Reform of State-Owned Assets and SOEs

State-owned assets and SOE Reform entering the deep water area

The Third Plenary Session of the Eighteenth Central Committee pointed out that it is necessary to comprehensively deepen the SOE Reform, while the Guiding Opinions on Deepening the Reform of SOE Reform by the Central Committee of the Communist Party of China and the State Council (China issued [2015] 22) clarifies the focus and direction of the state-owned assets and SOE Reform, mainly including the classification of SOE, improving the state-owned assets system, reorganizing and establishing state-owned capital investment and operation companies, promoting the mixed ownership reform and implementing the board of directors' responsibilities. Moreover, the reform of state-owned assets and SOE has clarified the focus and direction from the "1 + N" central level. And the reform has actually entered the policy implementation, program formulation and pragmatic advancement.

The economic development and corporate reform in the past 40 years of reform and opening up have greatly improved the scale and profitability of SOE. By May 2019, the total assets of SOEs nationwide amounted to 192 trillion yuan, the operating income was about 24 trillion yuan from January to May, and the total profit reached 1.39 trillion yuan. The SOE competitiveness has also improved significantly.

From the development perspectives of the macroeconomics, international economy, basic industries and factors, China's economy has entered a new normal at a higher level. The state-owned assets and SOE Reform have also entered the deep-water area, which can be reflected in: (1) The gradual decreased macroeconomic growth rate can transmit the development pressure to state-owned assets and SOEs; (2) Various industries have developed to a higher level, and difficult to sustain the original extensive development; (3) In view of the fiercer market competition, an increasing number of companies require to rely on the strategic vision, business innovation, operating efficiency, resource integration, technology upgrading and organizational vitality to survive and develop in the competition; (4) Facing the huge number of Chinese SOEs and state-owned assets, the original historical and international experience can no longer satisfy the current times demands, and it is very urgent to rely on the government, state-owned assets supervision agencies, state-owned assets investment and operation companies and enterprises to jointly explore the development direction and path.

Although the top-level policies of state-owned assets and SOEs have had many innovative initiatives and implemented several pilots since the Third Plenary Session of the Eighteenth Central Committee, it is difficult to rely on the individual reform to obtain the effectiveness due to its complex systematic project.

For example, the reorganization and establishment of the state-owned asset investment and operation company involve the functional positioning, relationship with the state-owned asset supervision agencies and the invested enterprises, the role in the adjustment of the state-owned capital layout and structure, as well as its own operation model, development strategy, management and control system, headquarters functions, organizational structure, strategic performance management, risk management and post-investment management. On this basis, it is very necessary to constantly advance the adjustments to the state-owned asset layout structure, optimization of capital allocation and operating efficiency, transformation of state-owned assets supervision methods, and promotion of mixed ownership reform, as well as the deepening of the corporate market mechanism and many other reforms.

Moreover, the optimization of the state-owned asset supervision system by focusing on capital management also involves the responsibilities of investors, changing the mode of supervision, the strengthened construction of the board of directors and implemented powers. In addition, it also involves the classified reform and supervision, the functional positioning of state-owned asset investment and operation companies, their powers and responsibilities, the construction of the board of directors and the corresponding evaluation. Thus, it also requires the systematic consideration and overall promotion of state-owned assets supervision agencies, state-owned assets investment and operation companies.

In the new period, the comprehensive reform of state-owned assets and SOEs should focus on the original goal and "realizing the value of state-owned capital, giving full play to the functions and enhancing the vitality of SOEs,"as well as comprehensively promoting the reorganization, restructuring and listing, corporate governance, market-oriented operating mechanisms, incentive and restraint mechanisms.

Methodology and consultancy services of the King Parallel

The comprehensive consultancy methodology for state-owned assets and SOEs in the King Parallel includes the specific processes, promotion methods and thinking models. Through communication and discussion with customers, we can better clarify key issues and needs, and adopt our methodology to provide customers with boutique consulting on issues related to the layout of state-owned assets, SOE Reform / governance, and the related strategies.

The King Parallel’s views: (1) The layout optimization of the state-owned capital requires to introduce the strategic perspective and conduct the forward-looking planning based on the insights into the changes in industrial structure and the laws of regional economic development, and through combining with the goals of state-owned assets, the functional positioning of SOEs, and also according to the distribution of corporate competitiveness; (2) State-owned assets investment and operation companies require to be strategically coordinated with state-owned capital layout planning and have a deep insight into the laws of industry and market evolution, in order to fully reflect the strong allocation efficiency orientation, mating effect and risk management characteristics; (3) Reforms involving property rights, such as mixed ownership reforms, and mergers and reorganizations, actually require to be coordinated with corporate development strategies, pay attention to introducing incremental external resources, as well as meet the national and local SOE Reform policy requirements and trends, in order to fully reflect the principle of reasonable compliance.

How does the King Parallel represent its uniqueness in the field of state-owned assets and SOEs

Professional team

In response to the issues raised by customers, the King Parallel formed a consultancy team composed of competent partners, senior consultants and the general consultants. The partners are well-known experts with strong practical abilities, while the senior consultants and consultants are the returned overseas elites who own the strong problem solving abilities. The team composition can fully ensure the forward-looking insight and practical value of the consultancy services.

Customer's core interests being the first principle

The King Parallel always puts the core interests of customers first. During the consulting services, we treat customers as both clients and partners to build a good atmosphere for full communication and joint problem solving. We are convinced that this atmosphere can help customers achieve core benefits.

Integrity

The King Parallel team always upholds the principles of integrity, mutual respect and honesty with customers within the team, reflecting in the separation of consultancy from itself and always keeping the open-minded, in order to better establish a good working relationship with customers. Adhering to the concept of boutique consulting and perfect quality pursuit, the King Parallel has provided a good amount of consulting results for customers, and also achieved the wider applications.

Rich consultancy experience in the comprehensive reform of state-owned assets and SOEs

The King Parallel has extensive experience in the comprehensive consultancy reform of state-owned assets and SOEs. In this round of reform process, it has deeply intervened in the top-level policy design, and carried out a number of multi-theme research and consultation on the reform of state-owned assets and SOEs for the SASAC of the State Council, local SASAC, central enterprises, local enterprises and listed companies, thus accumulating rich experience and forming the comprehensive ability with the policy altitude, mechanism design and management plan formulation.

The classified research results have laid the basic framework for the reform of local and central SOEs. Among the classified reform policies being applied to Shanghai, Beijing and central enterprises, the achievements in the state-owned capital investment and operation companies, classification plans of board of directors, layout and structure adjustment of the central enterprises, SOE supervision mechanism and the loss of state-owned assets have been applied with a higher proportion in the reform of state-owned assets and SOEs at the central and local levels. A number of the King Parallel’s research achievements have been highly praised by the senior government leaders of Ma Kai, being the Vice Premier of the State Council at that time, Wang Yong and Xiao Yaqing, being the Director of the SASAC of the State Council. The strategic consulting, organization management and control consulting, performance management, and human resource management provided by the King Parallel for central enterprises, local enterprises, and listed companies have achieved the wider application and remarkable results.The clients of the King Parallel include the SASAC of the State Council, the SASAC of Beijing, the SASAC of the Tibet Autonomous Region, the Tibet Autonomous Region Federation of Industry and Commerce, China Poly Group, China Chengtong Group Corporation, the China Reform Holdings Corporation, China Light Industry Group, China Communications Corporation, China International Intellectech Company, Tibet Tourism Investment Group, Tibet Gaozheng Shares, Sichuan Furun Investment Group Corporation, Tianjin Lingang Investment Fund, Shenghua Company, and Chengtong Human Resources Group.

君百略合伙人国资国企改革、公司治理、战略咨询、管理咨询、企业投资并购等领域的顶级专家组成，拥有丰硕研究咨询成果。咨询顾问团队由海归精英组成，10多位外部知名专家担任君百略的顾问委员会委员和特邀研究员。 创始合伙人兼CEO张政军博士曾任国务院发展研究中心研究员、经合组织（OECD）亚洲国企治理网络核心小组成员、国际公司治理网络（ICGN）股东责任委员会委员，目前仍兼任中国房地产业协会经济组专家、中国企业改革与发展研究会高级研究员、Morrow Sodali顾问委员。

君百略非常注重数据资料的积累、咨询模型开发、科学研究，储备了大量案例、拥有大量数据库资源，以创新思维、全球宏观视野为客户提供高水准咨询。通过君百略咨询服务，客户能够得到：（1）领域顶尖专家指导；（2）战略视野导入；（3）全面改革方案能力；（4）管理咨询能力增强了方案可落地性；（5）落地辅导和持续服务；（6）资本+企业模式，对接优质资本，为企业改革和发展注入新动能。