Stock incentives not enough for real mainland reform, say experts
Companies are offering shares to employees in a major corporate step forward but experts say it is more important to remove state meddling
A mainland bank, an insurer, even a state-owned port, are issuing private stock to employees this year in what has been touted as an important step in emerging from an era characterised by state-driven inefficiency. But stock incentives alone will do little to break the Communist Party's grip on the management of corporations, say experts.
"If you want to make the management better, you have to get the party out of day-to-day operations," said Fraser Howie, co-author of Red Capitalism. "Stock incentives seem like a distraction from real reform."
China Minsheng Bank will likely be the first mainland lender to initiate an employee stock incentive plan. The only majority privately owned lender plans to issue 1.41 billion shares at 5.68 yuan (HK$7.17) each to "key personnel" in a private placement.
Minsheng's announcement comes as a wave of large firms make similar issuances, among them Shanghai International Ports, Ping An Insurance and dairy producer Yili Group.
"We see Minsheng as a test for expanding the stock incentives to other banks," said Zheng Chunming, an analyst at Capital Securities in Shanghai.
State ownership reform appears to have moved swiftly this year. Oil giant Sinopec jump-started a sell-off of subsidiary businesses in February, though the stakes have been sold mainly to other state-owned entities.