Opinion | Gree tastes pain of excess
The downfall of a top executive at a major state-run company indicates China's new campaigns against corruption and lavish spending may soon spread to big SOEs
I want to take a look today at Gree (Shenzhen: 000651), a major home appliance maker that is casting an interesting spotlight on a new kind of risk faced by major state-owned firms due to a central government campaign against excessive spending and corruption. Gree usually makes headlines because of its prominent President Dong Mingzhu, who was named last year by Forbes magazine as one of Asia's 50 most powerful women. But this time it has been in the news for far less glamorous reasons, as its internal party secretary Zhou Shaoqiang has been stripped of his posts for his lavish spending at a recent banquet.
Chinese Communist Party Chairman and incoming President Xi Jinping has sounded a number of major themes as he prepares to take his new office, and two of those are the need to crack down on corruption and lavish government spending. In this case, lavish spending appears to be the major reason for Zhou's downfall.
After netizens expressed outrage at the huge spending, Zhou reportedly faked a receipt for a much lower amount. This kind of rage by netizens over corruption and lavish government spending is becoming increasingly common, leading to a growing number of scandals that often result in the sacking of government officials. But this Gree case is somewhat interesting, because it shows that high-level officials at big state-owned enterprises may also soon be coming under attack.
Most China watchers will know that the distinctions between officials from the government and big state-owned enterprises (SOEs) are often blurry, with high-ranking party members often seamlessly moving back and forth between the two. Thus it's not all that surprising that the recent campaigns against corruption and excessive spending by government officials are now finding their way into big state-owned enterprises as well.