Ongoing mixed-ownership reform in China aims to improve the nation's industry chain by encouraging State-owned enterprises (SOEs) to find complementary resources, which shouldn't be interpreted as SOE "property marriages," said a senior advisor to the supervisory body of State-owned assets.
By introducing strategic investors or exploring various approaches to achieve mixed ownership, SOEs in some industries such as electricity and oil and gas have already taken substantial measures in this reform drive, Zhang Chunxiao, director of the consulting department of the research center of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), told the Global Times on Sunday.
"The reform is not only about corporate restructuring. It also involves the improvement of upstream and downstream businesses in certain industries, and the latter is more important," he said.
Since last year, China's major oil and gas SOE, China National Petroleum Corp (CNPC), has been diversifying methods of purchasing fuel stations, which is part of the company's downstream sales business, a sales manager in a CNPC affiliate in Central China's Hubei Province who preferred not to be identified told the Global Times on Sunday.
"Buyouts used to be a major method, but now, we have introduced stake purchase agreements so some private owners can become shareholders in our sales business," she said, noting that Wuhan, the capital of the province, launched reforms earlier than other local cities.
More and more private-owned gas stations in other cities are taking part in this reform, as land costs keep rising and the gasoline price gap drives up their profit margins, the sale manager added. "Private players have little motivation to sell their business as a package as they still see their profits grow, but they may seek cooperation with us in different ways," she said.
Accelerating SOE reform through enhanced corporate competitiveness and reallocating resources have been highlighted among the central government's major targets, according to the government work report delivered by Premier Li Keqiang in early March.
The government also urged SOEs to achieve corporate restructuring and deepen mixed-ownership reform in sectors such as electricity, oil and gas, railways, airlines, telecommunications and the defense sector. Particularly, competitive services in electricity and oil should be further opened up.
In January and February, revenue for SOEs overall was up 17.8 percent year-on-year to 7.24 trillion yuan ($1.015 trillion), according to a post on the website of SASAC on March31.
Total profits rose 40.3 percent to 301.9 billion yuan, and SOEs in the oil and gas and coal and steel sectors, which had recorded losses during the same period in 2016, all made profits, the post showed.
China Petrochemical Corp (Sinopec Group), the counterpart of CNPC, also vowed to deepen mixed-ownership reform by re-alignment of its business and improvement of corporate management, according to a statement the company sent to the Global Times on Sunday. Sinopec is focusing on market-driven reform planning, including its governance structure and a market-oriented talent mechanism, and more efforts have been focusing on the sales department, the statement noted.
Other SOEs like telecommunications operator China Unicom have also taken action in the reform. Its shares halted trading on the Hong Kong stock market for one day on Wednesday as the company was pursuing matters related to mixed-ownership reform, the company said in a filing published Thursday. The reform may potentially involve a change in the shareholding structure of the company.
"The company needs to introduce new investors to become more competitive, which can't be considered as a merger to expand scale," Zhang said, noting that SOE "property marriages" would raise operating costs.
