Thoughts and Practices on the Transformation of Diversified Investment in State-owned Enterprises

Pan Xiaodong, general manager of Shanghai Zhonghua Printing Co., Ltd. Shanghai Printing (Group) Co., Ltd., after researching and relying on the publishing system as a whole, proceeded from the market demand and realistic conditions, and from the beginning of 1998, planned a demolition of the wall, reorganization of assets, transformation of the mechanism, Technological reforms have reinvigorated the major reforms in the printing industry in Shanghai. As the main battleground for industrial reform, in the three years since 1998, the original Shanghai Zhonghua Printing Factory went through a wholly state-owned investment and was transformed into a Shanghai Zhonghua Printing Co., Ltd. (1998) by Shanghai Fine Arts Printing Co., Ltd. The transfer of 55% equity from outside the company, and the expansion of investment scale to form a triple-jump of the new Chinese company (2000) with its multi-investment structure. The market positioning of the new Chinese company is also based on the guiding ideology of the Shanghai Municipal People’s Government on vigorously developing the six metropolitan industries such as packaging design, printing and publishing, and manufacturing operations. It has changed from a historically integrated book printing company to a color printing company. We can produce various types of high-end catalogues, books and packaging and decoration products, and can undertake the color printing bases for overseas printing businesses. Shanghai Zhonghua Printing Co., Ltd. was founded in early 1912. Its predecessor was the Shanghai Publishing House of Zhonghua Book Company. Along with the Shanghai Printing House of the Commercial Printing and Printing Center, Shanghai was the pioneer of the national printing industry in Shanghai. The Chinese company has a glorious past: In 1988, it was recognized by the State Planning Commission as the first batch of enterprises undertaking printing business externally. In 1990, it passed the examination and acceptance and became the only national second-tier enterprise in the Shanghai Publishing Printing System. In 1992, it was the Ministry of Personnel and News of the People's Republic of China. The publication department is rated as advanced enterprise... However, the past of success has become history. With the development of the times, printing technology has advanced by leaps and bounds, companies have been unable to adapt to this ever-changing changes, coupled with the company's heavy burden (nearly 1,000 retired workers and more than 200 laid-off workers and huge medical expenses) so that companies simply can not self upgrade. From 1984 to 1997, the 13-year slump in the book printing industry in the Shanghai region, which has suffered losses for three consecutive years since 1994, forced state-owned printing companies to seek new outlets; the printing of a large number of high-grade prints forced printing in Shanghai and even around the country. Enterprises must be determined to engage in technological transformation. General Secretary Jiang Zemin's idea of ​​"cultivating and developing diversified investment entities" at the party's fifteenth National Congress pointed out the direction for the reform of state-owned enterprises. Based on the fact that state-owned enterprises cannot do the same as foreign-funded or joint-venture companies, they lose their burdens and start from scratch. They also cannot raise tens of millions of funds to purchase new equipment. In 1998, Chinese printing companies and the Shanghai Fine Arts Printing Factory “married” according to modern enterprises. System requirements, through the competition established a Chinese company plate making center and color printing center. After the restructuring, China Printing Co., Ltd. has increased the number of four-color offset presses from the original 7 to 10, becoming the strongest color printing company in Shanghai. In the year of the restructuring of the Chinese company, the scale advantage of color production capacity was clearly demonstrated. The company’s color production in kind achieved a color reproduction order of 430,000 pairs in 1997 and reached 660,000 pairs in 1998. In 1999, it further improved. , to reach 960,000 pairs of color order. In order to further enhance Shanghai's printing standards, Chinese companies have borrowed more than 60 million yuan in recent years and have introduced many advanced equipment. The introduction of these devices has greatly improved the company's color printing production capacity and book production grades, but huge loans have increased the company's asset-liability ratio. In order to further expand capital, strive for market, and promote restructuring, in 2000, under the coordination of the Municipal Party Committee Propaganda Department, the Chinese company increased its registered capital from 40 million to 120 million, from the original investment of two legal persons in the industry. The main body became a cross-industry five investment entities, of which the printing group companies accounted for 45% of the shares, and the other four investment entities accounted for 55% of the shares. With diversified investments in place, the company's asset-liability ratio has dropped from 74.04% at the end of May to the current 39.92%. It provides a solid foundation for further deepening reforms. Secondly, the transformation of enterprises by diversified investment entities will help the separation of government from enterprises and form a truly legal person governance system. After the Chinese printing factory was transformed into a limited liability company in 1998, the board of directors and the board of supervisors were established to strive to operate in accordance with the regulations, but it was the superior company that actually exercised the command. Although everyone wants to do a good job, due to the long-term impact of the planned economy, some practices that do not conform to the operating laws of the market economy still occur frequently at work. After the implementation of diversified investment in the true sense, in order to safeguard the interests of various investment entities, administrative intervention will be greatly reduced. The shareholders who have the greatest power are the shareholders' meeting or the board of directors that represents the shareholder units. The general manager is responsible for the national laws and responsible for the board of directors. You can use your talents within the terms of reference given by the board of directors. Thirdly, operating in accordance with the main body of diversified investment can also help the company to change the operating mechanism and take the maximization of the economic benefits of the enterprise as the first goal of the operator. After the implementation of diversified investment, the issues that directors are concerned with are the return on investment, which is the operating performance of the company. This forced operators to expand their operations, strengthen management, improve quality, and work hard to improve the economic efficiency of the company. Theory must be based on practice. For the Chinese company, in the three years after the start of the reform, the following five-tier relationship was handled better, ensuring the advancement of the reform plan. First, handle the relationship between transformation and stability. In the final analysis, the assets reorganization and conversion mechanism is between the enterprise and the enterprise. The interest adjustment between this part of the employees and that part of the employees cannot be without contradiction. In the process of advancing the reform, we must make bold and bold decisions and advance resolutely. We must also gradually and progressively develop the reform in accordance with the carrying capacity of the employees, so that the reforms can have a stable foundation. In the three years of reforms, the Chinese company paid great attention to handling this relationship. In 1998, the Chinese plant was restructured from a wholly state-owned enterprise to a limited liability company. According to the plan of the group company, the printing equipment of the books and periodicals was transferred to the Shanghai Commercial Printing Factory. Only 38 people in the 143-person book and branch factory followed the machine to the business factory. The workers were After hearing the news, it could not be accepted for a moment, resulting in the suspension of work for one and a half days. In the face of the fluctuations of employees, business leaders have come forward and made clear their reasons. At the same time, they have come up with practical plans for diversion of laid-off workers to ensure the basic lives of laid-off workers. As a result, under the leadership of the workshop cadres, the plan was smoothly advanced. After the diversified investment has been put in place, in order to allow the shareholder units not to carry on backpacking and to highlight the ability to create profitable quality assets, the higher level decided that all personnel outside the main production department should be divested. The use of stripping equipment to form a new enterprise requires not only independent accounting but also self-financing. Moreover, it is necessary to provoke the responsibility of resettling all the surplus personnel of the original company and managing more than 1,000 retired workers of the company. This is a very difficult task, because in the face of a thriving company, he has to be excluded, but also to provoke the burden left by history, what a contrast this is. However, since we have successively pushed the copper and zinc plate making, offset printing, and material supply departments into the sea from 1998 onwards, in 1999 we established a color printing plant with the remaining equipment and built them. After a year or two of testing, They already have independent viability, which laid the foundation for the final stripping this year. The company also intends to arrange a deputy general manager with strong dedication and strong sense of responsibility to pick this burden. And the newly-built companies can take on the business in the name of the Chinese company, which provides convenience for the new company's operations. These practices stabilize the mentality of employees and ensure the smooth implementation of the final reform plan. Second, handle the relationship between adjustment and production. The success of the reform is reflected in the actual production performance and economic benefits. It is based on this understanding that in 1998, the company drastically promoted restructuring, frequent equipment inflows and outflows, fluctuations in staff ideology, and the unfavorable conditions of the division's all-round investment in decoration. We firmly seized upon this central task of production, resulting in the company’s Sales increased by 32.4% over 1997, of which color printing sales increased by 102% over the previous year, physical output reached 663 thousand pairs of color orders, a net increase of 50.7% over the previous year, sales gross profit growth of 62.76%. The growth in production encouraged employees' confidence in reforms. Laid-off workers also learned from the necessity of reforms. Good economic benefits also provided strong economic support for reforms. Since 1998, enterprises have intensified the introduction of equipment. The actual production performance and economic benefits have changed significantly every year. This has strengthened the confidence of employees in reforms. In order to ensure production, we carefully arrange the progress of equipment relocation and renovation projects; strengthen the assessment of business personnel, clearly require salesmen to not only more business, but also pay attention to the return of goods; focus on the expansion of social business, not only get rid of the production subject to In the case of publishing, and because the social product price is higher than the publishing house price, the average color printing price per unit has risen. Third, handle the relationship between laid-off and re-employment. The biggest pressure in the reform of state-owned enterprises is the laid-off and placement of surplus personnel. By the end of July this year, 891 employees in the entire company have been preparing employees and 318 laid-off workers, accounting for 35.7% of all employees. Over the past few years, we have been strictly in accordance with the production needs of posts and posts, through social recruitment and competition within the unit hired employees to form a competitive mechanism; on the other hand spent considerable energy, do everything possible to do a good job of laid-off workers resettlement and re-employment. The general principle of carrying out this work is: The only point of departure for production needs is not to provide redundant personnel, and to include “three types of production”, we must also “save people” to employ people in accordance with actual needs in order to organize production and ensure the value of state-owned assets. In terms of specific operations, we first formulated internal corporate policies and raised some employees. By the end of July this year, this part of the target population accounted for 23.3% of the total number of employees. The second is to actively identify jobs in the society and in the industry, so that employees with the ability to work can be transferred to work. In the past few years, we have recommended that some of the participants participate in the work of sales staff at the Oriental Newsstand and the Group’s mobile newsstands. In order to support the reform of state-owned enterprises, the bureaucrats arranged for laid-off printing workers to enter the work unit to take up guards and cleaners after dismissing part of the employed social labor force. Fourth, handle the relationship between reform and funding. Reforms must be funded to ensure that even the best ideas without financial guarantees will be difficult. In order to complete the restructuring of China Printing Co., Ltd., the group company arranged in April 1997 that the then China Printing Factory merged with the Shanghai Printing Eight Factory. This merger is due to the fact that the main business of the Eighth Printing Factory has been eliminated, and it is also the property that allows China to accept the original plant of the Eight Factory. Facts have proved that after negotiating with us, the transfer of more than 20 million yuan in the real estate market from the downturn of the real estate market in the more ideal conditions in 1997 was crucial to ensuring the restructuring of the Chinese factory. It not only solved the decoration costs, but also ensured The basic expenditure for reemployment of laid-off workers. In order to help the Chinese company after the restructuring of the transformation of the technology, with the assistance of the municipal government, it has obtained the full support of the bank and got tens of millions of loans. This fund was put into place in 1999 for the purchase of hardcover co-motivators and high-configured four-color offset presses. In 2000, the purchase of eight-color offset printing presses provided strong financial guarantees, meeting the relative backwardness and color printing requirements for changing Shanghai's post-press processing. Can not solve the pressing needs of the commercial printing short-term situation solved the urgent need. Fifth, deal with the relationship between hardware and software. For state-owned enterprises, the introduction of hardware and the acceleration of technological transformation are important steps to reverse backwardness, but the shift in the concept of employees is even more important. In the event that state-owned enterprises do not have the power to enter employees at any time after being dismissed, there is still a gap between employees' professionalism and work pressure and foreign-funded enterprises. In the past few years, while introducing hardware, we have endeavored to change the concept of employees. Without changing the relationship of long-term labor contracts, we have signed contracts with employees once a year to eliminate backwardness. The concept of “customer is God” was repeatedly promoted among employees, emphasizing the concept of “turning around the market and turning around production”. Actively implement the ISO9002 quality system, emphasizing the standard of product quality is recognized by customers. The year 2000 was designated as the "Training Year" for enterprises, and all employees were trained in terms of job responsibilities, technical specifications, quality standards, and public relations etiquette to improve the quality of employees. In the final analysis, the market competition is the competition of talents. Improving the quality of employees and strengthening internal management are the eternal topics of the company and the guarantee for the competitiveness of the company. Shanghai Zhonghua Printing Co., Ltd., reform in recent years is a microcosm of the reform of state-owned printing enterprises. If we say that our management and quality cannot reach the advanced level as quickly as possible, our state-owned printing companies may be submerged in a variety of economies, large and small.