Opinion | Reform move for state enterprises runs up against old obstacles
Absence of a clear policy for pilot programme suggests enterprises will still be subject to party meddling and struggle to attract talent
Beijing has finally unveiled a pilot programme to reform state-owned enterprises. The general buzz over the initiative notwithstanding, the only point of interest for veterans at state firms seems to be the lure of new openings at the top. An old tale will explain why.
It was 1996. Pan Ning was at the pinnacle of his career as chairman of state-owned Guangdong Kelon Electronic Appliance. Formerly a county-level official, Pan had not only built the country's most profitable fridge maker from scratch but had managed to get it listed in Hong Kong as well.
One day, he received an unexpected tea invitation from Zhu Xiaohua, the then head of China Everbright Group, the powerful conglomerate directly overseen by the State Council.
Everbright wanted Kelon's control, said Zhu over tea. In return, he promised Pan three personal favours: a salary increase, a management stake, and a Hong Kong identity card. All very tempting even today.
Managers of state firms are paid a fraction of what they are promised in the annual reports. Their share options, if any, are either rarely exercised or when exercised, put into a pool to be shared by all employees.
The pain of discretionary policy is clear when dealing with paperwork on the mainland
Their appraisals are not often done by the board or their supervisor, but by the Communist Party. And, their freedom to travel is so tightly controlled that an easy way to get things done in a state firm is to threaten a manager with travel restrictions until the task is completed.