Chinese Government to Promote Chinese Transnational
Corporations
Chinese Vice Premier Wu Yi said in a written message
that the Chinese government would work to help more Chinese
companies go global and become multinational corporations.
She said that this was part of a trend, and that China
would support companies going into China, as well as those
extending their business overseas.
This policy was first put forward in 2000, as part of
a shift from purely attracting foreign investment to China,
to combining Chinese talent and investments to take Chinese
products overseas.
Shao Ning, vice chairman of the State-owned Assets Supervision
and Administration Commission of the State Council, said
in a big economy with a broad domestic market, large enterprises
are bound to be the pioneers to go to the international
market.
But the large enterprises, mainly state-owned enterprises,
still lag far behind transnationals in terms of management,
marketing, technological development and product innovation,
and there is a huge gap in competitiveness, he said.
They did not elaborate about how they would help Chinese
corporations, but in the case of state-owned enterprises,
it would most likely be loans on preferential terms.
The main problem with helping state-owned enterprises
going global is that many of them have been the biggest
money-losers in China, and many of them have no hope of
being able to repay their bad loans. While going global
looks like an attractive strategy on paper, the key to
its success is execution, which depends on smart, capable
management.
This is exactly the area where, so far, the state-owned
enterprises have not been able to perform to expectations.
And going global, done incorrectly, can be very wasteful
and expensive.
The conversation should focus on how to attract good
international management teams to take control of state-owned
enterprises and turn them around, not just going global.
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