Flotations run into a mental barrier
THE biggest hurdle facing state-owned enterprises adopting shareholding systems is mental acceptance of change, says KPMG Peat Marwick partner Dominic Ho.
Of the rush by state-owned companies to issue shares, Mr Ho said: ''The biggest difficulty is getting the mental acceptance of the change from a centrally-directed to a market-based operation.
''The management, staff and society have to accept the shareholding structure [for it to work] . . . but certain people still resist it.'' Arthur Andersen partner Ivan Chan Yiu-tong said a state-owned enterprise could take years to gain government approval to issue shares.
He also said he was also concerned about the shortage of mainland professionals, such as accountants, to bring about the conversions.
''Many professionals are required, but we cannot produce a large number of professionals right away,'' Mr Chan said.
Price Waterhouse partner Robert Sze Tsai-to said the assessment of net asset value was the most difficult.
''It's different from Hongkong where we can refer to experience. In China, there are no standards, no guidelines,'' Mr Sze said.
''The machinery, for instance, may be so old the models are not available any more. Their values are difficult to assess.''