Progress of State firms is public’s fortune

Source:Global Times Published: 2015-7-24 0:43:01

Fortune magazine Wednesday released this year's Global 500 list. The number of Chinese enterprises listed grew by six to 106, second only to the US with 128. Three of the top 10 enterprises by revenue are Chinese, ranked second, fourth and seventh. They are Sinopec, China National Petroleum Corporation and State Grid. The three most profitable businesses are the Industrial and Commercial Bank of China, Apple, and China Construction Bank. 

It is pleasant that more and more Chinese enterprises are listed among the Global 500 and that State-owned enterprises (SOE) can match the top companies worldwide. This indicates the increasing power of the Chinese economy and the ability of SOEs to compete globally.

In the past, the public would be thrilled if Chinese enterprises, State-owned or private, were among the world's top 10 or particularly the top three. But things have changed. Overwhelming praise will go to private companies listed on the Global 500, but when it comes to the SOEs, some people will turn sarcastic and claim the SOEs have plundered the people and their growing strength only reflects the degree of their monopoly, which can do no good for the economy. However, when the number of listed SOEs decreases, the same group may still criticize SOEs for low efficiency and capabilities. For them, the SOEs are sinful.

Despite complex causes of these attitudes, they are unfair to the SOEs. As the SOEs contribute 70 percent of China's total tax revenue and 30 percent of the GDP, they deserve acknowledgement and respect.

The corruption in SOEs cannot stand for the SOEs as a whole and those working in the SOEs. They have their strong points that are often neglected. They shoulder a big share of social responsibilities and maintain relative equality in income. Their managers are well constrained and employees have channels for appeal.

The public is not happy with high profit margins at State companies. It can be adjusted, for example, through distributing more benefit to consumers or to public projects. The government can connect these State companies more closely with public welfare.

Chinese SOEs forged a different path than their foreign counterparts. They functioned as the backbone of the State economy from the beginning. After the country adopted mixed economic ownership policies, they continue to drive China's development and stability. The identity of State companies is splitting, facing market competition but not completely subject to market rule, for example, with salary caps but the need to recruit top talent. They receive support from the government, but also contribute to society.

There are many reasons for State companies to be demonized. They need to learn from private companies, but ultimately, the development of SOEs will be the fortune of the people.

Posted in: Editorial

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