Overseas role needed to aid SOE reform
Beijing should allow more overseas involvement in its efforts to restructure state-owned enterprises (SOEs), a group of foreign consultants said yesterday.
Stephen Harder, of lawyers Clifford Chance, said the challenge for SOE reform in the coming year was to 'allow several big strategic transactions involving foreign investors and state-owned enterprises'.
'This will demonstrate that foreign investors and advisers will be able to analyse the risks involved in the pension schemes, in some of the employment and contingent debt issues and decide if they can go ahead with the deal,' Mr Harder said.
Thomas Sturgeon, of consultants Arthur Anderson, said timing was crucial in a transaction. 'The most difficult part is coming in too late in the valuation process. It's important local and international firms communicate at an early stage.' Mr Sturgeon said partners needed to agree on the appraising method and subject.
He said China would welcome foreign investors as it needed substantial capital for SOE reforms. 'Capital is not very emotional . . . fundamentals and business economics are.' Nova Chan, Arthur Anderson's Shanghai manager, said the three-year deadline on accomplishing SOE reform might lead to an inconsistent framework. 'You could create structures that may not last, then there will be arguments later.'