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Guangdong and Shanghai begin SOE restructuring
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THE latest reform of state-owned enterprises is under way in Shanghai and Guangdong Province with a recombination of state-owned assets.
Shanghai took the first step toward restructuring when two major SOEs announced a merger agreement, Shanghai Securities News reported yesterday.
Shanghai East Best International Group has acquired the total equity of Shanghai Lansheng Corp. Both companies were previously held by the Shanghai State-owned Assets Supervision and Administration Commission.
The long-awaited merger raised the curtain on a new round of SOE reform in Shanghai, and how these two huge companies operate as one in the future remains a focus.
According to financial reports, Lansheng Corp and East Best Group realized business incomes of 1.33 billion yuan (US$219 million) and 68.4 billion yuan in 2012, respectively.
Meanwhile, Guangzhou, capital of Guangdong Province, has set up a new system of supervision for state-owned assets.
Previous systems featured myriads of separate regulations from local supervision commissions and the departments of finance, publicity and transportation. The new system establishes integrated supervision.
Peng Peng of Guangzhou’s state-owned asset watchdog told the newspaper that the city was examining Singapore’s Temasek style of investment management.
As a pioneer of reform, Guangdong said in 2011 that it would securitize more than 60 percent of its assets by the end of 2015, but with only two years remaining, the securitization rate remains at just 20 percent, worth about 4 trillion yuan, according to the report.
The resumption of initial public offerings could be one way for Guangdong to meet its target. IPOs on the Chinese mainland went on hold in October 2012, with around 700 firms left in the IPO pipeline. On November 30, the China Securities Regulatory Commission unveiled a complete overhaul of the IPO system, a major step toward market-oriented IPOs.
Lu Yesheng, director of the Guangdong state-owned asset commission, promised that capital supervision of state-owned assets would be reinforced.
A decision published on November 15 following the Third Plenary Session of the 18th Communist Party of China Central Committee urged improved management of state-owned assets.
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