The only way to reform mainland state-owned companies is to turn them into shareholder businesses which will clarify ownership structures, according to the chairman of Hong Kong-listed Legend Holdings. Only a few state-owned companies were competitive because management and employees had no way of acquiring equity, Liu Chuanzhi said yesterday. 'If bosses of state-owned firms don't have shareholdings in the companies and can't share in the profits then why should they work hard to make the businesses successful?' Also, all employees usually retire without any substantial financial support, said Mr Liu, who is also executive director of Legend Group Holdings, which owns 57 per cent of Legend Holdings, the mainland's largest maker of personal computers. This forces employees to 'build up their own financial back up' before retirement, he said. It often results in corruption or misappropriation of company assets by senior executives, Mr Liu said. 'If they have equity, employees will have an incentive to work for the sake of the company instead of their own interests,' he said. Beijing-based Legend Group Holdings is the government's pioneer company to undergo an ownership restructuring. Under the plan, the company's parent - the Chinese Academy of Science - is to transfer 35 per cent of its shares to more than 200 employees by the end of the year. Most employees of Legend Holdings have been granted share options. Mr Liu said the new structure was successful in motivating staff at both companies to increase earnings. Legend Holdings is one of the few mainland companies that boasts three consecutive years of strong earnings growth. In the year to March 31, the firm's profit jumped a better than expected 74.6 per cent from a year earlier to HK$480.88 million. As a result of the shareholding reforms, employees of Legend Group Holdings will share the HK$57.5 million dividend paid last year by Legend Holdings. Mr Liu is one of two executives from state-owned companies named in BusinessWeek 's 50 stars of Asia. China NetCom's chief executive Edward Tian is also on the list. The US magazine earlier this year ranked Legend Holdings eighth in its list of 100 top global information-technology companies.