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In the Bulletin
From the Chairman
Legco Report
From the Director
Cover Story
Economic recovery around
the corner
Government, business toiling to ensure HKSAR's future
Competition to speed up reform of Mainland's SOEs
SAR is a global player, not merely a
China middleman
WTO heaven, or WTO hell?
SAR to suffer short, sharp recession, but will recover in mid-2002
Q&A with the Business Summit Panel
WTO challenges to boost Hong Kong SAR's edge
Special Feature
SMEs uptake of IT slows
i-Perkin
HKSAR's economy feels the
effects of world events
Face to Face
With
David Ting
Business
China-Hong
Kong Free Trade Agreement
Dutch celebrate China trade excellence
WTO Corner
Member Profile
Chamber Programmes
China's WTO membership no threat
to Hong Kong
Study Mission returns from Guangxi
and Yunnan
I found my roots
| COVER STORY
January 2002 Issue
Competition to speed up reform of Mainland's SOEs  China
Merchants Holdings president expects foreign investors will prod Mainland's state-owned
enterprises into profitability
China's economic reforms over the last 15 years have created a more open economy than is generally acknowledged, China Merchants Holdings Co Ltd President Dr Fu Yuning said. These reforms have not only helped it prosper, but also laid the foundations for its future development. They have also made China the second largest recipient of foreign direct investment (FDI) in the world, second only to the U.S., and fuelled its export machine. In 1985, foreign investments contributed about 1 per cent to China 's total exports. In the '90s, that figure rose to about 10 per cent. Today, despite accounting for about one-tenth of total manufacturing output, foreign investors account for almost 50 per cent of China's total exports, Dr Fu said.With China now in the WTO, this figure is expected to rise further once its WTO commitments start to kick in, and China 's state-owned enterprises (SOEs) will have little choice but to sharpen their skills to be able to compete with foreign firms.Reform of China 's state-owned enterprises in the 1980s and early '90s was limited mostly to downsizing. In 1997, the Central Government launched an aggressive campaign to turn around its SOEs and get them operating in the black. "However, due to various restraints and a slow timetable, change has been too slow," Dr Fu said. "Outside pressure will speed up our SOE reforms to ensure we not only survive, but also grow stronger under the WTO timetable."China 's SOEs will have no choice but to run with the competition. Dr Fu said China Merchant Group is just one example of a state-owned enterprise that is not planning to merely survive in a post-WTO era, it is aiming to be a force to be reckoned with.Over the past few years, the company has exited loss-making sectors, relocated parts of its service industries, improved corporate governance, and strategically enhanced its core competencies. "China Merchant Group used to invest in 16 industries. This exhausted our resources and capital. Recently, we disposed of HK$5 billion in non-performing assets. Now, we focus on infrastructure, property, financial services and logistics," he said.This mammoth undertaking involves more than 100 subsidiaries and about HK$20 billion in assets, he added. The group will be seeking to list its China Merchant Bank and China Communications Security Company Limited on the stock market early next year, which will give the company three listed entities. Mr Fu expects the move will improve the group 's corporate governance, and enhance its efficiency and management.In addition to having to compete with leaner SOEs, Dr Fu said Hong Kong companies will still have to take on growing numbers of foreign enterprises. Along with new competition, there will also be new opportunities for Hong Kong SMEs to grasp. Moreover, under the WTO framework, the China market will offer greater
predictability, allowing companies to better plan their investment strategies. He also
expects foreign firms will find it easier to secure a foothold in once closed economies,
through joint ventures with a Mainland partner. |
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