| 00:00:01 |
00:00:03 |
Thank you all very much
for joining us today. |
| 00:00:03 |
00:00:07 |
This is a very important topic because
I think we are in an era when we are |
| 00:00:07 |
00:00:13 |
seeing more government-controlled
industries around the world |
| 00:00:13 |
00:00:16 |
than we have for quite some time. |
| 00:00:16 |
00:00:19 |
Western countries… for the
financial crisis have gotten involved |
| 00:00:20 |
00:00:23 |
in banks and car industries
where they weren’t before. |
| 00:00:23 |
00:00:29 |
China’s state-owned enterprises are in
an unprecedented period of prosperity. |
| 00:00:30 |
00:00:36 |
…here, who has just stepped down from his
role in China’s state-owned enterprises. |
| 00:00:37 |
00:00:41 |
The topic of state-owned enterprises
is one that’s worth exploring. |
| 00:00:43 |
00:00:47 |
…state-owned enterprises
and private enterprises co-exist… |
| 00:00:49 |
00:00:54 |
that they need to
to keep the economy going… |
| 00:00:58 |
00:01:03 |
out private enterprises
that could possibly do it better. |
| 00:01:03 |
00:01:16 |
How can governments win…
vision of citizen or state-owned enterprises |
| 00:01:16 |
00:01:21 |
in terms of protecting jobs or the
ways their own enterprises actually… |
| 00:01:25 |
00:01:30 |
realistic expectation of this social role
of the state-owned enterprises? |
| 00:01:30 |
00:01:34 |
We have a great panel here today
to discuss these and other questions. |
| 00:01:35 |
00:01:36 |
It was discussed a bit amongst… |
| 00:01:38 |
00:01:42 |
to the audience to hear your views
and to ask your questions. |
| 00:01:42 |
00:01:46 |
But first, I would like to turn
to Chairman Li, Li Rongrong, |
| 00:01:46 |
00:01:48 |
who has just stepped down
as chairman of the State-owned |
| 00:01:49 |
00:01:52 |
Assets Supervision and Administration
Commission of the State Council. |
| 00:01:53 |
00:01:56 |
During his tenure, the state-owned
enterprises have become |
| 00:01:56 |
00:02:08 |
from lumbering giants of China
into much more successful… percent |
| 00:02:08 |
00:02:14 |
and state-owned enterprises contribute
about a fifth of the tax revenue of China. |
| 00:02:15 |
00:02:19 |
So it... legacy
that Chairman Li has. |
| 00:02:20 |
00:02:25 |
But looking towards the future,
I think it’s important to ask… |
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00:02:36 |
major role that they’ve always had
and how do they co-exist… |
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00:03:36 |
Mr. Chairman Li,
let me turn to you first. |
| 00:03:36 |
00:03:40 |
Looking both backward
at your tenure as chairman |
| 00:03:40 |
00:03:45 |
and then looking forward into the coming
years for state-owned enterprises in China, |
| 00:03:45 |
00:03:51 |
are they going to continue to have the
role that they had or will the position |
| 00:03:51 |
00:03:54 |
of state-owned enterprises vis-à-vis
the privately owned enterprises, |
| 00:03:55 |
00:03:56 |
will that change significantly? |
| 00:04:28 |
00:04:32 |
While I do not prefer to discuss
how to make enterprise better, |
| 00:04:32 |
00:04:39 |
from my perspective, the reasons to do
a good job in enterprise are the same, |
| 00:04:42 |
00:04:48 |
the shareholders,
and they are mostly good governance |
| 00:04:49 |
00:04:55 |
and other shareholders or other contributors,
and from my personal views, |
| 00:04:56 |
00:05:01 |
they have the same factors doing
a good job in enterprise development, |
| 00:05:01 |
00:05:07 |
one of my personal experiences,
that’s my most important experience, |
| 00:05:07 |
00:05:11 |
my feelings, the key
to a good enterprise development. |
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00:05:22 |
They should do things according to
the enterprise law, the laws of enterprises. |
| 00:05:23 |
00:05:33 |
Enron and including the fall
of the Lehman Brothers, |
| 00:05:34 |
00:05:41 |
for those countries where corporate laws
are de-established, the enterprises fall |
| 00:05:41 |
00:05:44 |
and therefore,
what can we learn from them? |
| 00:05:47 |
00:05:52 |
The key point of the discussion
is how to develop enterprise better. |
| 00:05:54 |
00:05:57 |
And what is the role
of state-owned enterprises? |
| 00:05:57 |
00:06:00 |
I believe in the future years, |
| 00:06:01 |
00:06:05 |
the state enterprise should play
a more important role. |
| 00:06:06 |
00:06:10 |
We have three decades of opening
outside world and before, |
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00:06:12 |
we have come through two crises. |
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00:06:15 |
One is Asian financial crisis |
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00:06:23 |
and the other is financial crisis originated
from U.S. subprime mortgage. |
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00:06:28 |
And our state-owned enterprises
performed …these two financial crises. |
| 00:06:29 |
00:06:32 |
In Asian financial crisis,
China’s state-owned enterprises |
| 00:06:32 |
00:06:37 |
had a fatal shock where it –
that’s our most difficult time. |
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00:06:43 |
So some people in Hong Kong said
that at that time, |
| 00:06:43 |
00:06:47 |
the enterprises in Hong Kong
almost all fell victim |
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00:06:52 |
and they all need
to be rescued by the government. |
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00:06:56 |
But the crisis originating from U.S., |
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00:07:02 |
your enterprises in Hong Kong
performed very satisfactorily. |
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00:07:04 |
They are the pillars. |
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00:07:07 |
They are important factors
of stabilization economy. |
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00:07:13 |
So what roles should they play? |
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00:07:18 |
Our role should be to promote steady
stable growth of economy, |
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00:07:22 |
which we are not only the beneficiary
through China’s economy. |
| 00:07:30 |
00:07:33 |
What is the future of the
state-owned enterprises in the future? |
| 00:07:34 |
00:07:36 |
In the future,
we will play a more proactive role, |
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00:07:43 |
and that is to enable a more stable growth
of economy. Thank you. |
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00:07:48 |
Thank you.
I’ll try to follow on one thing. |
| 00:07:48 |
00:07:51 |
You said, Chairman Li,
that state-owned enterprises |
| 00:07:52 |
00:07:53 |
and private enterprises are the same. |
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00:07:57 |
One difference is that private enterprises
can fail and do fail. |
| 00:07:57 |
00:08:01 |
Are state-owned enterprises,
particularly in a place like China, |
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00:08:04 |
too big and too important,
to your last detail, |
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00:08:06 |
to fail if they have problems? |
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00:08:20 |
Well, what I said is whatever form of
enterprises, they are successful or losers. |
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00:08:25 |
And there are quite a few state-owned
enterprises which were started |
| 00:08:25 |
00:08:28 |
from the reform of the outside world. |
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00:08:32 |
There are a lot of enterprises bankrupt. |
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00:08:37 |
Starting from 2002 to end of last year,
each year, |
| 00:08:37 |
00:08:42 |
the number of enterprises fell by 5,000. |
| 00:08:43 |
00:08:45 |
Now,
they are scattered around the country. |
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00:08:47 |
You cannot see them. |
| 00:08:47 |
00:08:50 |
And also, the central
state-owned enterprises also fail. |
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00:08:57 |
Whether or not they are going to fail
or fall does not depend on the size. |
| 00:08:57 |
00:08:59 |
If they are not run well,
even if they are big, they fail. |
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00:09:02 |
It’s not so that they
are too huge to fall. |
| 00:09:03 |
00:09:11 |
They all have to follow the market rules
because the jungle rules prevail |
| 00:09:11 |
00:09:15 |
and those who are good,
they can go ahead and proceed, |
| 00:09:15 |
00:09:17 |
and those not so good, they fail. |
| 00:09:17 |
00:09:25 |
If they are not… for those… companies
and there will be bad consequences. |
| 00:09:25 |
00:09:27 |
We have such lessons in China. |
| 00:09:27 |
00:09:32 |
And the most difficult time in our reform,
that is 1998 to 2000. |
| 00:09:33 |
00:09:37 |
But prior to 1998,
we do not have that concept. |
| 00:09:37 |
00:09:40 |
There is a -- state enterprises
can be bankrupt. |
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00:09:47 |
A lot of enterprises cannot –
they are deeply indebted |
| 00:09:47 |
00:09:49 |
and they are not allowed to be bankrupt. |
| 00:09:50 |
00:09:55 |
And the lessons or the cost of repair
are huge and tremendous |
| 00:09:55 |
00:09:56 |
and that should not be repeated. |
| 00:09:58 |
00:10:02 |
Those who can follow the market rules
can go ahead and develop. |
| 00:10:03 |
00:10:06 |
If they cannot,
they should withdraw. |
| 00:10:06 |
00:10:09 |
And even if they withdraw,
they should withdraw earlier stage, |
| 00:10:09 |
00:10:14 |
not until they fail because
that will be too high a price to pay, |
| 00:10:15 |
00:10:19 |
and this applies to whatever country.
I said Lehman Brothers. |
| 00:10:20 |
00:10:24 |
If we can find early,
if they can adopt measures earlier, |
| 00:10:25 |
00:10:30 |
probably we will face different
story today and therefore, |
| 00:10:30 |
00:10:36 |
the fall or rise of enterprises,
I believe, the key to that, |
| 00:10:36 |
00:10:46 |
the common key is to understand the
rules of the development enterprises. |
| 00:10:47 |
00:10:51 |
Whatever enterprises which run against
these rules, they will fail. |
| 00:10:52 |
00:10:55 |
That’s my view.
-Thank you very much. |
| 00:10:55 |
00:10:58 |
Let’s turn now to David Michael,
who is a senior partner |
| 00:10:58 |
00:11:00 |
and managing director
of the Global Advantage Practice |
| 00:11:00 |
00:11:02 |
at the Boston Consulting Group. |
| 00:11:02 |
00:11:05 |
David, you’ve worked a lot
with state enterprises here |
| 00:11:05 |
00:11:07 |
and you advise companies. |
| 00:11:07 |
00:11:10 |
Can you talk a little bit
about the issue of innovation, |
| 00:11:11 |
00:11:13 |
how state-owned enterprises
can actually innovate |
| 00:11:14 |
00:11:17 |
and how their innovations compare
to innovation in the private sector? |
| 00:11:17 |
00:11:21 |
Thanks, David.
Firstly, I would just make one correction |
| 00:11:21 |
00:11:24 |
to a comment that you made earlier,
which is that at the beginning |
| 00:11:24 |
00:11:29 |
of the reform era in China, that the
companies here were lumbering giants. |
| 00:11:29 |
00:11:33 |
In fact, I think at the beginning
of the reform era, |
| 00:11:33 |
00:11:37 |
many of what we see as the state-owned
enterprises in China today weren’t |
| 00:11:37 |
00:11:41 |
even enterprises but were parts
of government departments |
| 00:11:41 |
00:11:45 |
were highly fragmented
and were not efficient. |
| 00:11:45 |
00:11:50 |
So the transformation,
which Chairman Li and SASAC have, |
| 00:11:50 |
00:11:53 |
together with all governments,
have orchestrated, |
| 00:11:53 |
00:12:00 |
has now led to the creation
of companies that tare large that, |
| 00:12:00 |
00:12:03 |
by and large, operate in an environment
of transparency with respect |
| 00:12:04 |
00:12:08 |
to their ownership and governance
and that are in markets that are now, |
| 00:12:09 |
00:12:12 |
in general, competitive not only domestic
but abroad, |
| 00:12:13 |
00:12:16 |
and as you’ve highlighted,
operated high levels of efficiency. |
| 00:12:16 |
00:12:21 |
But we also now face this new era
of challenge where innovation |
| 00:12:21 |
00:12:25 |
is increasingly required
to deliver growth. |
| 00:12:26 |
00:12:31 |
I think that there are excellent examples
of large state-owned enterprises |
| 00:12:31 |
00:12:35 |
in a variety of different countries around
the world that are innovative |
| 00:12:35 |
00:12:39 |
as long as the right kind
of prerequisites are put into place, |
| 00:12:40 |
00:12:42 |
where market forces
are allowed to prevail, |
| 00:12:42 |
00:12:49 |
where there is a flexibility in terms
of hiring and developing talent, |
| 00:12:49 |
00:12:55 |
because of course, enterprises are only
innovative if you have innovative people |
| 00:12:55 |
00:12:59 |
who have been attracted
to join those enterprises |
| 00:12:59 |
00:13:04 |
and who have the flexibility
or the permission to experiment |
| 00:13:04 |
00:13:09 |
with new business models
and new technologies |
| 00:13:09 |
00:13:11 |
and even new industry boundaries. |
| 00:13:12 |
00:13:17 |
So one of the challenges with respect
to promoting innovation is to ensure |
| 00:13:17 |
00:13:22 |
that those conditions exist
and that level of flexibility exists. |
| 00:13:22 |
00:13:27 |
But there is also a separate challenge,
which is the challenge |
| 00:13:27 |
00:13:33 |
for policymakers overall about where
they want the innovation to take place |
| 00:13:33 |
00:13:38 |
and the balance between
the state-owned sector |
| 00:13:38 |
00:13:41 |
and the private sector
with respect to innovation. |
| 00:13:42 |
00:13:47 |
So for example, we have seen that there
are some consortia |
| 00:13:47 |
00:13:52 |
of state-owned companies
in various countries that are working |
| 00:13:52 |
00:13:56 |
together to develop a certain kind
of technology. |
| 00:13:57 |
00:14:01 |
We’ve seen that happen recently
in clean vehicles, for example. |
| 00:14:02 |
00:14:04 |
Now,
if you’re a private sector investor |
| 00:14:05 |
00:14:10 |
and you’re thinking about taking a risk
and investing in clean vehicle technology, |
| 00:14:10 |
00:14:15 |
you also have to ask yourself, well,
if I make that investment now, |
| 00:14:15 |
00:14:20 |
will a state-owned consortium enter
that same area |
| 00:14:20 |
00:14:23 |
and compete on different rules later? |
| 00:14:23 |
00:14:27 |
This is a question in general
for policymakers around the world. |
| 00:14:27 |
00:14:31 |
And what it means really is that, well,
if you are taking a decision |
| 00:14:32 |
00:14:38 |
to have state companies work
together to really try to innovate, |
| 00:14:38 |
00:14:41 |
then they have to deliver. |
| 00:14:41 |
00:14:44 |
The pressure needs to be on those
companies because otherwise, |
| 00:14:45 |
00:14:50 |
there is a risk of them taking the
space away from the private sector. |
| 00:14:51 |
00:14:52 |
So I think going forward, |
| 00:14:52 |
00:14:56 |
this is going to be a challenge for
policymakers around the world. |
| 00:14:56 |
00:15:03 |
I think the good news in China is that
the reform so far has created companies |
| 00:15:03 |
00:15:08 |
that exist in a very transparent
market-oriented environment governed |
| 00:15:08 |
00:15:11 |
by the kinds of rules
that Chairman Li described for us. |
| 00:15:11 |
00:15:16 |
And now, we are in this new era where
there is even more pressure for innovation. |
| 00:15:17 |
00:15:20 |
Thanks very much.
You talked about policymakers |
| 00:15:20 |
00:15:25 |
so let’s turn now to Heizo Takenaka,
who is currently director |
| 00:15:25 |
00:15:29 |
of the Global Security Research Institute
at Keio University but has long experience |
| 00:15:30 |
00:15:33 |
as a Japanese government official,
including time as Minister |
| 00:15:34 |
00:15:37 |
for Internal Affairs and Communications
and the privatization of the Postal Service. |
| 00:15:38 |
00:15:42 |
Could you speak to that experience
as a policymaker involved in privatization |
| 00:15:43 |
00:15:51 |
and the lessons you learned from that?
-Thank you for this opportunity. |
| 00:15:51 |
00:15:58 |
First of all, I really appreciate the very
good election performance of Chairman Li. |
| 00:15:58 |
00:16:01 |
I really appreciate state-owned company. |
| 00:16:01 |
00:16:05 |
In China, I’ve been working very well,
very efficiently, I agree. |
| 00:16:05 |
00:16:08 |
The role of state-owned enterprise, |
| 00:16:08 |
00:16:12 |
this is completely dependent on the
stage of economic development. |
| 00:16:12 |
00:16:15 |
And also, this is dependent
on the economic situation. |
| 00:16:16 |
00:16:20 |
For example, in the case of a crisis, the
role of the governments is very important. |
| 00:16:20 |
00:16:26 |
It is needless to say. In this regard,
Chairman Li’s role was very important. |
| 00:16:26 |
00:16:31 |
At the same time, we have very much
complicated history |
| 00:16:32 |
00:16:34 |
in the state-owned enterprises. |
| 00:16:34 |
00:16:41 |
Five years ago, I was nominated as
a minister for postal privatization in Japan. |
| 00:16:41 |
00:16:45 |
Japan Postal was the largest
state-owned enterprise in Japan, |
| 00:16:46 |
00:16:49 |
and the Prime Minister Koizumi
at that time decided to privatize that. |
| 00:16:49 |
00:16:50 |
He quite often said, |
| 00:16:51 |
00:16:56 |
“What can be done in private sector
should be done in the private sector.” |
| 00:16:56 |
00:17:01 |
What can be done in the private sector
should be done in the private sector. |
| 00:17:01 |
00:17:07 |
Well, this is indicating the -- well,
as far as the… efficiency |
| 00:17:07 |
00:17:10 |
or the power of innovation
is not the concern. |
| 00:17:10 |
00:17:13 |
The role of private companies,
that is very important. |
| 00:17:14 |
00:17:19 |
It is true also in the process
of postal privatization. |
| 00:17:19 |
00:17:21 |
There is a very strong obstacle. |
| 00:17:21 |
00:17:24 |
There is a very serious
political side there. |
| 00:17:24 |
00:17:28 |
Why is there such a strong obstacle,
objections? |
| 00:17:28 |
00:17:30 |
The reason is quite simple. |
| 00:17:30 |
00:17:33 |
State-owned companies have
a very strong… power, |
| 00:17:34 |
00:17:38 |
including labor union,
and in the case of Japan Post, |
| 00:17:38 |
00:17:46 |
the union of headmasters of the Post Office,
they have very strong political power. |
| 00:17:47 |
00:17:51 |
In that sense, well, obviously,
it depended on the stage |
| 00:17:51 |
00:17:55 |
of economic development
and the role of enterprise, |
| 00:17:55 |
00:17:56 |
state-owned enterprises
is very important |
| 00:17:57 |
00:18:00 |
even in the case of Japan
and Korea, et cetera, et cetera. |
| 00:18:00 |
00:18:05 |
But in the long run, it is very important
to find out the timing of privatization, |
| 00:18:06 |
00:18:09 |
especially in some areas,
for example in finance, |
| 00:18:09 |
00:18:13 |
this privatization idea
is very important. |
| 00:18:13 |
00:18:17 |
…bank aid in the state-owned company. |
| 00:18:17 |
00:18:22 |
That body is 100 percent
guaranteed… basically. |
| 00:18:22 |
00:18:29 |
So this, compared to the private company,
cannot compare these companies. |
| 00:18:29 |
00:18:36 |
So concerning this fairness in the market,
well, it is very important for |
| 00:18:36 |
00:18:40 |
the government to seek for the chance
to minimize the size |
| 00:18:40 |
00:18:43 |
of the state-owned enterprises. |
| 00:18:43 |
00:18:50 |
But still, I’d like to say the role of
a state-owned enterprise is very important. |
| 00:18:50 |
00:18:53 |
So China is now
in the very important stage. |
| 00:18:53 |
00:18:57 |
Now, you have been modernizing
the management and from now on, |
| 00:18:58 |
00:19:01 |
I very hope that China will seek
for another challenge |
| 00:19:01 |
00:19:07 |
for further efficient management
and the market economy. |
| 00:19:08 |
00:19:10 |
Thank you very much for that. |
| 00:19:10 |
00:19:14 |
All three of the people who have spoken
first have mentioned the role of management, |
| 00:19:14 |
00:19:17 |
and so let’s turn now to someone who is
in management of a state-owned enterprise. |
| 00:19:18 |
00:19:22 |
Federico Restrepo Posada is CEO
of the Empresas Publicas de Medellin, |
| 00:19:23 |
00:19:27 |
which supplies water, power,
sewage to the area of Medellin, |
| 00:19:27 |
00:19:30 |
a state-owned enterprise.
What are your feelings as a CEO? |
| 00:19:30 |
00:19:34 |
Is it the same as being a CEO of a private
company or are there significant |
| 00:19:35 |
00:19:38 |
differences being the CEO
of a state-owned enterprise? |
| 00:19:39 |
00:19:44 |
Thank you. I think the…
|
| 00:19:57 |
00:20:02 |
That is the nature of the owner. |
| 00:20:02 |
00:20:08 |
What is the nature of the owner,
being a state owner or a private? |
| 00:20:09 |
00:20:15 |
The difference is made on the model, |
| 00:20:15 |
00:20:20 |
management model he chooses
to be sustainable and one of the points. |
| 00:20:20 |
00:20:28 |
In our case, for example, the owner
is a city, the city of Medellin. |
| 00:20:29 |
00:20:32 |
It’s not the national government
or the national state. |
| 00:20:33 |
00:20:40 |
So there is, I think, a condition, of course,
of you have to have the same rules, |
| 00:20:40 |
00:20:48 |
both as a private and as a state,
in order to be competitive, |
| 00:20:48 |
00:20:49 |
in order to be sustainable. |
| 00:20:50 |
00:20:56 |
But there is a condition, at least
in our case, is that the owner, |
| 00:20:56 |
00:21:03 |
the owner itself has also to be
sustainable, and it is very hard to be |
| 00:21:03 |
00:21:09 |
sustainable as a company while the
owner has not been sustainable. |
| 00:21:09 |
00:21:14 |
And the world situation is…
the financial… |
| 00:21:14 |
00:21:23 |
where are the financial resources
coming to absorb the growth? |
| 00:21:24 |
00:21:29 |
In our case, for example,
we don’t have money directly |
| 00:21:29 |
00:21:35 |
as a shareholder into the stock market
and having money from there. |
| 00:21:36 |
00:21:40 |
But rather, our owner,
the municipality of Medellin, |
| 00:21:41 |
00:21:49 |
gives up in having a large amount
of money from the net profits. |
| 00:21:49 |
00:21:55 |
I mean only 30 percent of net profits
every year is going to the owner; |
| 00:21:56 |
00:21:59 |
70 percent is used to absorb the growth. |
| 00:22:00 |
00:22:06 |
And that is the way we are doing
for the last 20 years |
| 00:22:07 |
00:22:13 |
and that is why this company
is not only having the market share |
| 00:22:13 |
00:22:16 |
in the region but also in the country. |
| 00:22:17 |
00:22:22 |
And now, we are adjusting the top
and we are not allowed to have |
| 00:22:22 |
00:22:28 |
more than 25 percent of the market share
in electricity or in telecommunications. |
| 00:22:28 |
00:22:35 |
So that is why we are going to need to be
kind of global or I mean to look |
| 00:22:35 |
00:22:39 |
for some more markets
in the neighboring countries. |
| 00:22:40 |
00:22:44 |
That is our experience.
-Thank you very much. |
| 00:22:44 |
00:22:48 |
There has been a theme across,
what may be…, |
| 00:22:48 |
00:22:50 |
was this issue
of this social responsibility |
| 00:22:50 |
00:22:53 |
and the social role
of state-owned enterprises. |
| 00:22:53 |
00:22:57 |
So perhaps, Chairman Li,
could you talk about how you saw that |
| 00:22:57 |
00:23:00 |
and how you managed issues with workers |
| 00:23:01 |
00:23:03 |
and the responsibility
of the enterprises towards society? |
| 00:23:12 |
00:23:20 |
In China, the SOEs show there
is a special social responsibility. |
| 00:23:20 |
00:23:28 |
We can say that in every huge disaster,
the central enterprises take the lead. |
| 00:23:29 |
00:23:35 |
However, we don’t want to report
those extensively because |
| 00:23:35 |
00:23:42 |
to implement the social responsibility,
sincerity is very important, |
| 00:23:42 |
00:23:45 |
whereas,
generosity comes as the second. |
| 00:23:45 |
00:23:52 |
I firmly believe in this
and that is how I do my business. |
| 00:23:52 |
00:23:56 |
During the Sichuan-Wenchuan earthquake,
still, |
| 00:23:56 |
00:23:59 |
we haven’t collected some
of the relief money. |
| 00:24:00 |
00:24:06 |
We have transported a lot of relief
goods to the disaster-hit area. |
| 00:24:06 |
00:24:18 |
We try our best to serve society.
This is an obligation for the SOEs. |
| 00:24:18 |
00:24:26 |
For the central enterprises, I constantly
ask them to keep those in mind. |
| 00:24:27 |
00:24:37 |
They feel companies pay more attention to
their employees than the central enterprises. |
| 00:24:38 |
00:24:44 |
When I worked in the factories,
yearly, |
| 00:24:45 |
00:24:47 |
I am the first to come to the workshop. |
| 00:24:48 |
00:24:52 |
I will check whether my staff members
are healthy. |
| 00:24:52 |
00:24:57 |
If he doesn’t look good, I’ll ask him,
“Did you have enough rest?” |
| 00:24:57 |
00:25:06 |
because I believe every
employee is a family member. |
| 00:25:07 |
00:25:12 |
If the family member goes to work
and he doesn’t come back from work, |
| 00:25:13 |
00:25:16 |
this is a disaster for the family. |
| 00:25:21 |
00:25:26 |
So we are not only concerned
with the eight hours on duty; |
| 00:25:26 |
00:25:31 |
we care about our employees 24 hours. |
| 00:25:31 |
00:25:35 |
Even if there are some family
conflicts between the couples, |
| 00:25:35 |
00:25:40 |
we also lend a hand, we also help to
resolve their family problems because |
| 00:25:41 |
00:25:46 |
it is important for the employees
to be in a good mental condition, |
| 00:25:46 |
00:25:51 |
to be in a pleasant status. |
| 00:25:51 |
00:25:57 |
So the SOE hasn’t changed its perspectives. |
| 00:25:57 |
00:26:02 |
We respect our employees
and we put that into action. |
| 00:26:04 |
00:26:09 |
And that is reflected in big
and small matters. |
| 00:26:11 |
00:26:15 |
And words matter,
but actions are even louder. |
| 00:26:17 |
00:26:22 |
So in all the China’s,
the difficult time for China, |
| 00:26:22 |
00:26:27 |
the SOEs has made great contributions. |
| 00:26:27 |
00:26:31 |
They serve as the pillar
in those difficult times. |
| 00:26:31 |
00:26:38 |
Of course, as we improve our capabilities,
there will be more and more that we can do. |
| 00:26:38 |
00:26:47 |
And in Guangxi Province,
there is a Hope Village. |
| 00:26:47 |
00:26:50 |
I think this is a very successful example. |
| 00:26:51 |
00:26:59 |
The SOEs help the locals to live
to liberate them from poverty |
| 00:26:59 |
00:27:04 |
and to help them how to survive,
how to be a good person, |
| 00:27:05 |
00:27:07 |
and where my future is. |
| 00:27:07 |
00:27:16 |
So this is our responsibility
and we are very sincere to our people. |
| 00:27:19 |
00:27:22 |
As to the social responsibility
of the SOEs, |
| 00:27:22 |
00:27:30 |
I will sum up with one sentence: we serve
our society with our full sincerity. |
| 00:27:32 |
00:27:36 |
Mr. Takenaka, you mentioned the
difficulty of dealing with the unions. |
| 00:27:37 |
00:27:39 |
Now looking back, how would you
evaluate the question |
| 00:27:39 |
00:27:43 |
of social responsibility during a period
of privatization |
| 00:27:43 |
00:27:45 |
or for a state-owned enterprise
in general? |
| 00:27:46 |
00:27:51 |
Well, either time, social responsibility,
this is the important keyword |
| 00:27:52 |
00:27:56 |
to discuss the role
of state-owned enterprises. |
| 00:27:56 |
00:28:03 |
In… consider the case
of the electric power company. |
| 00:28:03 |
00:28:06 |
Is it a public company
or a private company? |
| 00:28:06 |
00:28:10 |
Is it a state-owned company,
should be state-owned company or not? |
| 00:28:10 |
00:28:14 |
Postal service, it should be
state-owned company or not? |
| 00:28:14 |
00:28:17 |
My point is it depends,
actually. |
| 00:28:17 |
00:28:24 |
For example, electric power company
has very great social responsibility. |
| 00:28:24 |
00:28:28 |
But in the case of the United States
and Japan, most countries, |
| 00:28:28 |
00:28:32 |
these are private companies, but this
is a special type of private company. |
| 00:28:33 |
00:28:35 |
So my point is this is not dichotomy.
Not dichotomy. |
| 00:28:35 |
00:28:39 |
All the… type of discussion
should be avoided. |
| 00:28:39 |
00:28:43 |
Please consider the case of,
for example, NTT of Japan. |
| 00:28:43 |
00:28:48 |
This used to be the state-owned company
National Telephone Telegram Corporation. |
| 00:28:49 |
00:28:54 |
This is a completely government organization.
It’s not privatized 25 years ago. |
| 00:28:54 |
00:29:00 |
But still 30 percent of share
is held by the government. |
| 00:29:00 |
00:29:08 |
This is a private company but some part
is kept by the government. |
| 00:29:08 |
00:29:13 |
This is because this entity
can play some social role. |
| 00:29:14 |
00:29:16 |
So it depends anyway. |
| 00:29:16 |
00:29:21 |
Nations really,
we now see very interesting cases, |
| 00:29:21 |
00:29:24 |
most of them in Korea
and some – Australia and so on. |
| 00:29:25 |
00:29:28 |
We consider the case of a highway,
speedway, highway. |
| 00:29:28 |
00:29:30 |
This is a very important infrastructure |
| 00:29:30 |
00:29:33 |
and this is the mostly owned
by the government in your case. |
| 00:29:33 |
00:29:39 |
Yet, in the case of Australia and Korea,
this is owned by the government. |
| 00:29:39 |
00:29:42 |
However, management is completely
done by the private company. |
| 00:29:42 |
00:29:47 |
And the right to charge the toll, |
| 00:29:47 |
00:29:53 |
including this right is completely
sold to the private company. |
| 00:29:53 |
00:29:57 |
So this kind of a new management,
new era management should be |
| 00:29:57 |
00:29:59 |
considered in case we discuss
the state-owned companies. |
| 00:29:59 |
00:30:02 |
This is not a dichotomy
organizing problem. |
| 00:30:02 |
00:30:06 |
But anyway, in this regard also, you
mentioned also our state-owned company |
| 00:30:06 |
00:30:10 |
gradually had
a very strong political power. |
| 00:30:10 |
00:30:15 |
And now, Chairman Li’s power was very
strong maybe I guess so you can manage. |
| 00:30:15 |
00:30:19 |
But gradually,
there a lot of difficulties coming out. |
| 00:30:20 |
00:30:24 |
We saw in the case of so-called
British disease in the 1970’s. |
| 00:30:24 |
00:30:27 |
This is the reason why markets
are such privatized, |
| 00:30:27 |
00:30:28 |
many state-owned companies. |
| 00:30:29 |
00:30:33 |
So this is what we observed
in the process of privatization. |
| 00:30:33 |
00:30:37 |
Thank you. David, would you,
as a consultant, how do you see this, |
| 00:30:37 |
00:30:41 |
this new paradigm emerging
that Mr. Takenaka mentioned? |
| 00:30:42 |
00:30:49 |
So I think the new paradigm really is
about the new model of competition. |
| 00:30:49 |
00:30:55 |
I think for example, in China, we see
that enterprises now have become very big. |
| 00:30:55 |
00:31:00 |
China’s state-owned enterprises are among
the largest companies in the world. |
| 00:31:00 |
00:31:05 |
This is a totally different situation
than, say, a decade ago. |
| 00:31:05 |
00:31:09 |
These are companies that are now needing
to compete in global markets. |
| 00:31:09 |
00:31:12 |
They’re needing to get talent
from around the world |
| 00:31:12 |
00:31:16 |
and attract that talent
in order to compete. |
| 00:31:16 |
00:31:22 |
Also, the regulators need to think about
the fact that many companies |
| 00:31:22 |
00:31:27 |
that historically operated
in very clearly defined industries |
| 00:31:27 |
00:31:32 |
are now operating in industries where
the boundaries are not nearly so clear. |
| 00:31:33 |
00:31:38 |
So this, the new paradigm of competition
is going to involve state-owned |
| 00:31:38 |
00:31:44 |
and state-sponsored companies but
which are competing in global markets, |
| 00:31:44 |
00:31:48 |
where the market is for consumers who
have a choice but also a market |
| 00:31:48 |
00:31:53 |
for talents that has a choice about
what type of employer to work for. |
| 00:31:54 |
00:31:57 |
And so indeed,
regardless of ownership, |
| 00:31:57 |
00:32:02 |
companies are going to need
to find their way in this reality. |
| 00:32:02 |
00:32:07 |
That may lead the states also in different
countries to make decisions |
| 00:32:07 |
00:32:11 |
about whether they retain majority control
of state-owned enterprises |
| 00:32:11 |
00:32:16 |
or whether over time they follow a model,
such as Mr. Takenaka described, |
| 00:32:16 |
00:32:19 |
where the state sells down its ownership. |
| 00:32:19 |
00:32:23 |
And I think that will be a very interesting
question to see in the decade ahead, |
| 00:32:23 |
00:32:28 |
which governments choose what
level of ownership of the state sector. |
| 00:32:29 |
00:32:30 |
Great. Thank you. |
| 00:32:30 |
00:32:33 |
I’d like to now turn to the audience
for your views and questions. |
| 00:32:34 |
00:32:37 |
Please identify yourself.
Yes, please, there in the middle. |
| 00:32:45 |
00:32:48 |
Hello, my name is Mark Zavadsky…
from Russian business magazine Expert. |
| 00:32:49 |
00:32:52 |
I’d like to ask Mr. Li Rongrong. |
| 00:32:52 |
00:32:56 |
He made a comment that
for state-owned enterprises, |
| 00:32:56 |
00:33:05 |
the kind of social assistance to the country
is not a free will; it’s an obligation. |
| 00:33:05 |
00:33:11 |
So in this case, do you think it’s,
in theory, possible to speak about |
| 00:33:11 |
00:33:18 |
the equal playing field for state-run
and private enterprises? |
| 00:33:18 |
00:33:23 |
Because by making it
as an obligation of the enterprises, |
| 00:33:24 |
00:33:27 |
you make their cost higher,
right? |
| 00:33:27 |
00:33:30 |
You make the business
less effective in private business. |
| 00:33:30 |
00:33:33 |
So if they compete with private
businesses in the same field, |
| 00:33:34 |
00:33:36 |
that will make them
less effective in a way. |
| 00:33:36 |
00:33:40 |
So can we see this preferential treatment
to state-run enterprises |
| 00:33:40 |
00:33:45 |
as a compensation
for the cost they incur |
| 00:33:45 |
00:33:49 |
while fulfilling their obligations
to the society? Thank you. |
| 00:33:58 |
00:34:04 |
I think the functions of the government
should be to create a fair, |
| 00:34:04 |
00:34:06 |
what they call the fair ground,
playing field. |
| 00:34:07 |
00:34:10 |
Government of China
is trying hard to do this. |
| 00:34:10 |
00:34:16 |
If the enterprises, state-owned
enterprises didn’t do well yesterday, |
| 00:34:17 |
00:34:20 |
I don’t think the responsibility
does not lie in the state |
| 00:34:20 |
00:34:21 |
enterprise but the government. |
| 00:34:22 |
00:34:24 |
Because I’ve been working
for 18 years |
| 00:34:24 |
00:34:28 |
in the state-owned enterprises,
I was a victim of that. |
| 00:34:29 |
00:34:35 |
The reason is that the regulators do not
have any responsibility or obligations. |
| 00:34:37 |
00:34:45 |
If the enterprise is without obligations,
no matter public or private, it will fail. |
| 00:34:46 |
00:34:51 |
So since I’ve become the chairman
of the administration, |
| 00:34:51 |
00:34:55 |
and I would make it clear that the
responsibility should be defined |
| 00:34:55 |
00:34:59 |
and to each person. |
| 00:34:59 |
00:35:02 |
If, say, we have made
progress of this year, |
| 00:35:03 |
00:35:11 |
the goal of the enterprises is to catch up
most of the advanced enterprises globally. |
| 00:35:11 |
00:35:15 |
That’s their goal and that’s
what I judge their performance by. |
| 00:35:16 |
00:35:21 |
If the leaders of enterprises have
such a sense of responsibility, |
| 00:35:21 |
00:35:25 |
then I believe they will be
successful in everything, |
| 00:35:26 |
00:35:30 |
and our practice or performance
in the past certified this. |
| 00:35:30 |
00:35:33 |
The key to a good enterprise
is not ownership. |
| 00:35:35 |
00:35:41 |
Otherwise, they will blame
the ownership for their bad performance. |
| 00:35:41 |
00:35:47 |
If Enron or Lehman Brothers fail,
then who we should blame? |
| 00:35:47 |
00:35:54 |
So my strong aspiration
is to do our own job earnestly. |
| 00:35:55 |
00:35:59 |
The government do its own job,
enterprises do their own jobs, |
| 00:35:59 |
00:36:03 |
I believe the enterprise
will be successful. |
| 00:36:04 |
00:36:08 |
As for what you mentioned,
the fairness or playing ground, |
| 00:36:11 |
00:36:16 |
I will say up to now, there
is no absolute fairness in the world. |
| 00:36:16 |
00:36:18 |
Different ownership coexists. |
| 00:36:22 |
00:36:26 |
Even today, you will say you have
an unfair competition with me |
| 00:36:26 |
00:36:29 |
because we have different perspectives. |
| 00:36:29 |
00:36:34 |
A lot of enterprises say the state-owned
enterprises can easily obtain loans. |
| 00:36:36 |
00:36:39 |
But then you forget the fact
that state-owned enterprises |
| 00:36:39 |
00:36:42 |
have a good credit riskiness. |
| 00:36:42 |
00:36:53 |
We still have a -- we can still borrow
from the banks but we do not borrow |
| 00:36:53 |
00:36:56 |
that much because we want
to improve our efficiency. |
| 00:36:56 |
00:36:59 |
Some private enterprises,
“Oh, we cannot obtain loans from the bank.” |
| 00:37:00 |
00:37:02 |
Then I said,
“What records do you have in the bank?” |
| 00:37:02 |
00:37:07 |
If you are the governor of a bank,
then who should you provide your loans to? |
| 00:37:07 |
00:37:12 |
You would provide loans to those
with credibility of credit riskiness. |
| 00:37:12 |
00:37:16 |
You do not see the burdens
of state-owned enterprises. |
| 00:37:17 |
00:37:20 |
The employment that we have, |
| 00:37:20 |
00:37:26 |
we use more labor at least twice
that much of the private. |
| 00:37:27 |
00:37:29 |
Then could you say we are fair? |
| 00:37:30 |
00:37:33 |
Can we just lay them,
dismiss them, fire them? |
| 00:37:33 |
00:37:35 |
I cannot do that. |
| 00:37:35 |
00:37:41 |
So, the only way out
for me is to be strong and big |
| 00:37:41 |
00:37:49 |
and provide more job opportunities
for them so that they have higher wages |
| 00:37:49 |
00:37:52 |
or rather than simply firing the. |
| 00:37:53 |
00:38:00 |
And therefore, to do a good job in
enterprises, you should look at yourself. |
| 00:38:00 |
00:38:07 |
You should compare
the good ones in every aspect. |
| 00:38:07 |
00:38:12 |
If you do, if you are earnest
and hardworking, you will do a good job. |
| 00:38:13 |
00:38:15 |
If you complain
about the bad environment, |
| 00:38:16 |
00:38:22 |
then you are not an excellent entrepreneur
because you blame others |
| 00:38:23 |
00:38:28 |
for whatever you fail,
and I am not going to use such a person, |
| 00:38:29 |
00:38:32 |
and I don’t think any boss will use
a person like this because |
| 00:38:32 |
00:38:38 |
they always blame others for their failures
and they are not excellent talents. |
| 00:38:38 |
00:38:43 |
I do not deny that there is unfairness
in the competition. |
| 00:38:43 |
00:38:50 |
I once said enterprises cannot,
are not able to change their extremities. |
| 00:38:51 |
00:38:54 |
They should understand
and utilize the environment. |
| 00:38:55 |
00:38:58 |
Some people say investment environment
in China is not good, but then, |
| 00:38:58 |
00:39:01 |
there are so many coming
to China to make investments. |
| 00:39:01 |
00:39:05 |
And we have a lot of Chinese
enterprises going abroad. |
| 00:39:05 |
00:39:07 |
Some people say you should not go out. |
| 00:39:07 |
00:39:11 |
And then we still go out
and get successful. |
| 00:39:12 |
00:39:15 |
And of course,
there are also lessons. |
| 00:39:16 |
00:39:20 |
And I think the important thing is you
should understand the environment |
| 00:39:20 |
00:39:22 |
you should adapt to. |
| 00:39:22 |
00:39:27 |
I have one saying: if you understand
well the risk, |
| 00:39:27 |
00:39:29 |
then it becomes opportunity. |
| 00:39:31 |
00:39:35 |
If otherwise that risk
or that opportunity becomes a risk. |
| 00:39:36 |
00:39:41 |
So investors have a common point, and
that is they are all hardworking, diligent. |
| 00:39:42 |
00:39:46 |
They seek fairly their
own responsibility, obligations. |
| 00:39:51 |
00:39:54 |
We might be doing fine up to now, |
| 00:39:54 |
00:39:57 |
but we should compare ourselves
with the better ones, |
| 00:39:57 |
00:40:01 |
the better enterprises,
and then we can see who’d do better. |
| 00:40:03 |
00:40:06 |
Some questions on the floor.
Let’s do a batch three. |
| 00:40:06 |
00:40:09 |
First, the gentleman on the front,
then the gentleman there, |
| 00:40:09 |
00:40:10 |
and then finally,
the gentleman in the back. |
| 00:40:10 |
00:40:12 |
First three.
We’ll get three issues in the floor… |
| 00:40:25 |
00:40:31 |
I have no questions, only a couple
of observations regarding the SOEs. |
| 00:40:32 |
00:40:36 |
We are from WTO Society of China.
|
| 00:40:43 |
00:40:49 |
The state-owned enterprises issue, when
we have the negotiations for access to WTO, |
| 00:40:50 |
00:40:54 |
according to the clause
and terms of the GATT…, |
| 00:40:54 |
00:40:56 |
I have something about this question. |
| 00:40:57 |
00:41:01 |
China’s state-owned enterprises
is a special product on a special time. |
| 00:41:01 |
00:41:04 |
It’s not universal. |
| 00:41:08 |
00:41:12 |
It is not the same or cannot be comparable
as the Western state-owned enterprises. |
| 00:41:14 |
00:41:19 |
These enterprises occurred during
the traditional period, |
| 00:41:20 |
00:41:24 |
during a reform period,
transformation period, and therefore, |
| 00:41:24 |
00:41:29 |
it is a special historical
product and therefore, |
| 00:41:31 |
00:41:34 |
it cannot be taken as a long,
long time. |
| 00:41:34 |
00:41:38 |
And the second is that China’s
enterprises or state-owned enterprises, |
| 00:41:38 |
00:41:52 |
based on my analysis I made just now,
have its own corporate governance. |
| 00:41:54 |
00:41:58 |
Although we are pursuing
the corporate governance, |
| 00:41:58 |
00:42:01 |
still,
we still have some issues. |
| 00:42:08 |
00:42:12 |
But observation means,
I wills say, |
| 00:42:12 |
00:42:18 |
how do you the…
to see the future of China’s SOEs? |
| 00:42:19 |
00:42:21 |
This is a question or observation. |
| 00:42:23 |
00:42:26 |
Let’s have some other questions
on the floor first |
| 00:42:26 |
00:42:29 |
and then perhaps the issues
will come through. |
| 00:42:29 |
00:42:31 |
This gentleman here had a question.
-Yes. |
| 00:42:31 |
00:42:36 |
The discussion about
the ownership of an enterprise, |
| 00:42:36 |
00:42:42 |
whether it’s state or private,
as was indicated in the presentations, |
| 00:42:42 |
00:42:47 |
is linked to this concern about fairness
in competition both |
| 00:42:47 |
00:42:50 |
in the domestic context
and across national boundaries. |
| 00:42:51 |
00:42:55 |
But I do have a question for all the
panelists, especially you, Mr. Schlesinger. |
| 00:42:55 |
00:43:02 |
What do we do about these phenomenon
of this extremely high level concentration, |
| 00:43:02 |
00:43:06 |
if not monopoly regardless
of private ownership? |
| 00:43:07 |
00:43:12 |
I am most specifically referring
to the global monopoly |
| 00:43:12 |
00:43:18 |
of the resource extraction industry,
iron or what else, those Big 3. |
| 00:43:18 |
00:43:24 |
So are we really -- what kind
of rabbit are we shooting at? |
| 00:43:24 |
00:43:33 |
Is it state ownership versus private
ownership or is it the how open |
| 00:43:33 |
00:43:37 |
is the door to serious competition,
especially across national boundaries? |
| 00:43:38 |
00:43:42 |
Okay. Let’s deal with that,
the issue of competition across boundaries |
| 00:43:42 |
00:43:47 |
and whether this concentration, particularly
in the resource sector, is an issue. |
| 00:43:47 |
00:43:49 |
David,
do you want to start on that? |
| 00:43:50 |
00:43:55 |
Well, I would highlight that the
concentration in resources |
| 00:43:55 |
00:43:59 |
is somewhat a function of how
the planet developed, right? |
| 00:43:59 |
00:44:01 |
There is iron ore in
a certain number of locations. |
| 00:44:01 |
00:44:04 |
There is oil on
a certain number of locations. |
| 00:44:04 |
00:44:07 |
And so there is a question,
in terms of economic development, |
| 00:44:07 |
00:44:10 |
of whether countries choose
development models |
| 00:44:10 |
00:44:15 |
that are dependent upon those
concentrated sources of resource. |
| 00:44:15 |
00:44:19 |
And we see that now as well when we
face the challenge of climate change. |
| 00:44:19 |
00:44:23 |
So I would simply say that I would draw
a distinction between kind |
| 00:44:23 |
00:44:29 |
of monopolies that arise because of the
way the planet’s geology developed |
| 00:44:29 |
00:44:36 |
versus monopolies that are promoted or
orchestrated by governments and regulation. |
| 00:44:37 |
00:44:39 |
I think in general, given technology
and innovation, |
| 00:44:40 |
00:44:44 |
we see the decline
of monopolies generally. |
| 00:44:44 |
00:44:49 |
And in China, we see that
the state sector is characterized |
| 00:44:49 |
00:44:54 |
by competition among its companies,
not by monopoly. |
| 00:44:55 |
00:45:00 |
But I think the planet certainly faces
a much larger challenge about |
| 00:45:00 |
00:45:02 |
its development model
and its dependence either |
| 00:45:02 |
00:45:05 |
on concentrated resources
or polluting resources. |
| 00:45:05 |
00:45:09 |
Federico, you mentioned that
your market share was limited by law |
| 00:45:09 |
00:45:13 |
and you are involved
in resources of water as well. |
| 00:45:13 |
00:45:16 |
What’s the rationale
of limiting your market share? |
| 00:45:16 |
00:45:18 |
Is it to deal with this question? |
| 00:45:18 |
00:45:24 |
Well, the limits by law on the market
share is because precisely |
| 00:45:25 |
00:45:29 |
the question that the gentleman was
naming, is to avoid the monopoly, |
| 00:45:29 |
00:45:33 |
at least in our country I mean. |
| 00:45:33 |
00:45:40 |
But once you get into another
country in providing services |
| 00:45:40 |
00:45:44 |
and utilities like electricity, |
| 00:45:45 |
00:45:49 |
it depends on the rules
that happen in those countries. |
| 00:45:49 |
00:45:57 |
So sometimes, it may be,
it may produce some kind of monopoly |
| 00:45:57 |
00:45:59 |
or control of the resources there. |
| 00:46:00 |
00:46:02 |
Sometimes,
it’s not allowed in the country. |
| 00:46:02 |
00:46:06 |
So it depends in what is the country
where you are going to pay the services |
| 00:46:06 |
00:46:12 |
and it’s a matter of, again,
of the management model, |
| 00:46:12 |
00:46:17 |
on what are your perspective…
projections ongoing? |
| 00:46:18 |
00:46:20 |
You wanted to comment on this?
-Oh yes. |
| 00:46:20 |
00:46:22 |
So the basics of economics starts
a very important issue. |
| 00:46:23 |
00:46:29 |
For example, in some fields which can be
so-called national monopoly, |
| 00:46:29 |
00:46:32 |
economy of scale,
economy of network is great. |
| 00:46:32 |
00:46:34 |
In this case,
only one company should dominate that. |
| 00:46:35 |
00:46:36 |
This is most efficient. |
| 00:46:36 |
00:46:39 |
Especially with the origin of state-owned
company, this is true for national railway |
| 00:46:39 |
00:46:41 |
and the postal services,
et cetera, et cetera. |
| 00:46:42 |
00:46:43 |
But however,
as I’ve mentioned already, |
| 00:46:44 |
00:46:47 |
now, a new type
of competition is emerging. |
| 00:46:47 |
00:46:48 |
In the case of mail service, |
| 00:46:48 |
00:46:50 |
they are now competing
with the Internet. |
| 00:46:51 |
00:46:55 |
So in that sense, this kind of old-fashioned
idea is now just being destroyed. |
| 00:46:55 |
00:46:59 |
And also, even in the case this kind
of national monopoly exists, |
| 00:46:59 |
00:47:03 |
while I will mention this
should be owned by one company, |
| 00:47:03 |
00:47:05 |
but management should be done
by the private company. |
| 00:47:05 |
00:47:09 |
This kind of idea is -- this is not
only the ownership problem. |
| 00:47:09 |
00:47:13 |
This is a very complicated,
much more dynamic problem. |
| 00:47:13 |
00:47:17 |
This is what we are observing now.
-Thank you. In the back. |
| 00:47:20 |
00:47:24 |
Excuse me,
I have to ask my question in Chinese. |
| 00:47:24 |
00:47:31 |
SOEs are your very rich companies
in most countries, and in some countries, |
| 00:47:31 |
00:47:39 |
the SOEs use their resources
and monopolize in various industries. |
| 00:47:39 |
00:47:45 |
Is this unfair?
And also, under such circumstances, |
| 00:47:45 |
00:47:56 |
do we need to adopt some executive measures
to limit the operation of such big SOEs? |
| 00:47:58 |
00:48:00 |
The last questions.
Let’s go to another issue on the floor. |
| 00:48:00 |
00:48:02 |
The one in the front person please. |
| 00:48:07 |
00:48:10 |
Okay, so we dealt with that
kind of with the issue of monopoly. |
| 00:48:11 |
00:48:18 |
Let’s get to another issue. Please.
-My question is more detailed. |
| 00:48:18 |
00:48:26 |
Now, many SOEs entered into the emerging
sectors, for example, the emerging energies. |
| 00:48:26 |
00:48:33 |
Some SOEs with a lot of funds
will undoubtedly raise |
| 00:48:33 |
00:48:36 |
the threshold of entering such industries. |
| 00:48:36 |
00:48:38 |
So my question is to Chairman Li, |
| 00:48:39 |
00:48:43 |
so how do you look into this unfairness
at the very beginning? |
| 00:48:45 |
00:48:48 |
We have a lot of questions about fairness
and fairness so I think maybe Chairman Li, |
| 00:48:48 |
00:48:50 |
you can deal with that because people
are very concerned |
| 00:48:50 |
00:49:05 |
about the whole issue of the domination.
-I agree with the other speakers. |
| 00:49:06 |
00:49:16 |
Countries in different development stages
have different levels of privatization. |
| 00:49:19 |
00:49:22 |
China is still in initial phase. |
| 00:49:23 |
00:49:28 |
I like to give you two examples
which you may have known. |
| 00:49:28 |
00:49:30 |
One example is about oil. |
| 00:49:32 |
00:49:37 |
The three biggest oil
companies account for the 90 percent |
| 00:49:37 |
00:49:39 |
of the market share in China. |
| 00:49:39 |
00:49:43 |
Of course, export is another issue –
import is another issue. |
| 00:49:45 |
00:49:49 |
Without these three companies,
the Chinese economy |
| 00:49:49 |
00:49:56 |
will be not as steady as it is now because
in 2008, the oil price skyrocketed. |
| 00:49:57 |
00:50:04 |
Back then, we controlled the oil price
because the price was fixed by the country, |
| 00:50:04 |
00:50:11 |
by the government instead of the
companies, the China Oil and China – |
| 00:50:11 |
00:50:20 |
the two biggest oil companies
lose 186 billion yuan. |
| 00:50:22 |
00:50:30 |
If the price of oil in China rose with
the international price of the crude oil, |
| 00:50:30 |
00:50:36 |
that can hardly afford it by the Chinese
public, for example, the taxi drivers. |
| 00:50:36 |
00:50:42 |
In Hong Kong, the fishery industry
is dying because of the high oil price. |
| 00:50:44 |
00:50:55 |
However, we can’t do the same because
we haven’t fully reformed the oil price. |
| 00:50:56 |
00:50:58 |
Another example is the coal industry. |
| 00:51:03 |
00:51:08 |
There are many coal miners
but the efficiency is low. |
| 00:51:11 |
00:51:15 |
The mining industry
in the market is chaotic, |
| 00:51:16 |
00:51:20 |
so the price can hardly reflect
the real demand of the market. |
| 00:51:21 |
00:51:28 |
So I agree with you on that
in different phases |
| 00:51:28 |
00:51:32 |
and in different countries,
we need to adopt different measures. |
| 00:51:33 |
00:51:36 |
However,
we have the same objective, |
| 00:51:36 |
00:51:42 |
which is to provide a level
playground for the enterprises, |
| 00:51:43 |
00:51:47 |
and only in that case
the society can develop well. |
| 00:51:49 |
00:51:51 |
Good morning, Chairman Li. |
| 00:51:51 |
00:51:59 |
I’m from Hong Kong
and I’m engaged in financial lending |
| 00:52:00 |
00:52:05 |
and I have 12 years of experience
dealing with the Chinese SOEs. |
| 00:52:06 |
00:52:17 |
And in the 12 years, we feel
that among the 100 central enterprises, |
| 00:52:17 |
00:52:24 |
about 30 of them are included
in the 500 Fortune global list, |
| 00:52:26 |
00:52:30 |
and also, we have carried
out research on these enterprises. |
| 00:52:31 |
00:52:36 |
You’ve mentioned in different occasions
what is important |
| 00:52:36 |
00:52:42 |
for the central enterprises becoming
bigger is not as important |
| 00:52:42 |
00:52:47 |
as becoming stronger,
and we’ve done a research on this. |
| 00:52:48 |
00:52:56 |
So as a question,
I believe you also know a lot |
| 00:52:57 |
00:53:00 |
about the indicators of the companies. |
| 00:53:03 |
00:53:08 |
One important indicator
is the operation efficiency |
| 00:53:10 |
00:53:15 |
of the SOE’s capital and also the ROI. |
| 00:53:16 |
00:53:22 |
Such standards of the Chinese
SOEs in this aspect, |
| 00:53:22 |
00:53:27 |
the Chinese SOEs don’t perform
as well as other countries included |
| 00:53:28 |
00:53:30 |
in the Fortune 500 list. |
| 00:53:34 |
00:53:40 |
So do we have any financial tools to
help the SOEs to improve in these aspects? |
| 00:53:43 |
00:53:46 |
This is a very sharp question. |
| 00:53:47 |
00:53:54 |
When I was in my office,
that is what I focused my work on, |
| 00:53:54 |
00:53:57 |
and we are working on it right now. |
| 00:54:00 |
00:54:06 |
Profit,
the indicator of profit is not enough. |
| 00:54:07 |
00:54:11 |
We have started to evaluate
by other factors. |
| 00:54:16 |
00:54:18 |
I can give you an example. |
| 00:54:18 |
00:54:21 |
The National Grid,
Electricity Grid |
| 00:54:22 |
00:54:31 |
and the profits of National Grid is
several dozen -- is several billion. |
| 00:54:31 |
00:54:45 |
We need to take into consideration
the cost of capital |
| 00:54:45 |
00:54:49 |
because many companies
don’t have such a concept. |
| 00:54:51 |
00:54:56 |
After they have such a concept in mind,
I think the situation will improve. |
| 00:54:58 |
00:55:00 |
And I can give you two examples. |
| 00:55:01 |
00:55:09 |
A subsidiary company is not willing
to take the cash. |
| 00:55:12 |
00:55:19 |
So in the past, it wants to own
a lot of capital or cash, but now, |
| 00:55:19 |
00:55:22 |
it will turn the cash
to the mother company |
| 00:55:23 |
00:55:26 |
because they have to be
responsible for the cost of capital. |
| 00:55:26 |
00:55:32 |
And also, in Beihai, the manager, |
| 00:55:33 |
00:55:39 |
project manager requires
a capital to arrive on the right day. |
| 00:55:39 |
00:55:45 |
In the past, the capital, you really
arrived a week in advance. |
| 00:55:46 |
00:55:50 |
So now, it arrives on the right
day when it is going to be used. |
| 00:55:51 |
00:55:52 |
This is a very good beginning. |
| 00:55:53 |
00:55:55 |
We have made some achievement. |
| 00:55:55 |
00:55:58 |
However, compared
to the excellent companies, |
| 00:55:58 |
00:56:02 |
global companies,
there is still a long way to go for us. |
| 00:56:02 |
00:56:05 |
So we can tell you that we
are working on this, |
| 00:56:06 |
00:56:10 |
and I hold a strong conviction
that we will catch up |
| 00:56:10 |
00:56:13 |
with those excellent global companies. |
| 00:56:17 |
00:56:23 |
I’m from the Economic Daily newspaper
and I have a question to Chairman Li. |
| 00:56:24 |
00:56:34 |
Just now, you mentioned the ownership
is different but it is equally important |
| 00:56:34 |
00:56:38 |
to vitalize the SOEs
and the private companies. |
| 00:56:38 |
00:56:42 |
The SOEs are still
a special group of companies. |
| 00:56:42 |
00:56:52 |
Maybe one day SASAC or the state-owned
enterprises can get used to the fact |
| 00:56:52 |
00:56:55 |
that they will no longer
be the big shareholder. |
| 00:56:56 |
00:56:59 |
And also,
in the monopolized industries, |
| 00:56:59 |
00:57:06 |
can we step backward
and let the others share? |
| 00:57:09 |
00:57:14 |
And also, the management
model of SASAC, will it change? |
| 00:57:18 |
00:57:19 |
…very briefly,
I’m afraid. |
| 00:57:19 |
00:57:28 |
I think practice matters and the objective
is to vitalize the enterprises. |
| 00:57:29 |
00:57:38 |
During the U.S. financial crisis,
we wonder is it good to have |
| 00:57:38 |
00:57:47 |
a big dominating shareholder or is it better
just to share the stocks like equally? |
| 00:57:48 |
00:57:54 |
If we have a very dominant shareholder,
it may not be very beneficial |
| 00:57:54 |
00:57:58 |
because the purpose
is just to ensure the profits |
| 00:57:58 |
00:58:00 |
or the benefits of the big shareholders. |
| 00:58:04 |
00:58:09 |
We now invite more investors,
and the objective |
| 00:58:10 |
00:58:21 |
is to make the CEOs
realize his responsibilities. Thank you. |
| 00:58:24 |
00:58:27 |
This is truly a very emotional topic
and one that people are very interested |
| 00:58:27 |
00:58:33 |
in because it’s where politics, policy,
profits, management, people, |
| 00:58:33 |
00:58:36 |
and responsibility all come together.
We can’t solve it in an hour. |
| 00:58:36 |
00:58:39 |
We certainly can’t solve it
in the last 30 seconds. |
| 00:58:39 |
00:58:43 |
So I would thank everyone on this panel
and thank all of you for your participation.
|
