Interview with reform witnesses

The following article comes from the state-owned enterprise view, and the author is Li Wenjia.

Enterprises view state-owned assets.

The new media number of Enterprise Observer (CN11-0279) focuses on the reform and development of state-owned and state-owned enterprises, focusing on cutting-edge issues.

In promoting the reform of mixed ownership, we should persist in strengthening incentives to enhance vitality, improve the system and mechanism, avoid "mixing and not mixing the same", reasonably determine the shareholding structure of mixed-reform enterprises, standardize the relationship between powers and responsibilities among governance subjects, and achieve clear positioning, equal rights and responsibilities, and coordinated operation.

Taishan Gypsum Co., Ltd. (hereinafter referred to as "Taishan Gypsum") is an enterprise that has undergone three mixed reforms.

Many years ago, it was only a local state-owned small gypsum mining enterprise. Today, it is a large enterprise with an annual sales income of over 10 billion, an annual net profit of over 2 billion, the asset profit rate and the sales profit rate all rank first in the same industry in China, and the market share of gypsum board in China exceeds 50%.

How did all this come about?

Taishan gypsum has a long history, but its early development has been tossing and turning. It was not officially put into production until 1988, and it was only in 1992 that it was transformed from a mining enterprise to produce gypsum board.

Over the years, this little-known enterprise has been in the stage of small-scale development, and the biggest problem that restricts the development of the enterprise is lack of money.

The first mixed reform hoped to solve the problem of lack of money, which was in 1996. At that time, the registered capital of the company was 83 million yuan, of which state-owned shares accounted for 60.24% and employee shares accounted for 39.76%.

Giving employees shares can’t solve the problem of the company’s lack of money. Due to long-term operational difficulties, in 2002, under the guidance of the local government, Taishan Gypsum was privatized and 30% of its shares were sold to the principal responsible persons and management. This is the second mixed reform.

The second mixed reform released the potential of Taishan gypsum, and the company entered a benign development track and became the largest gypsum product enterprise in the industry.

But it still faces many constraints in its development.

First of all, the original culture of old state-owned enterprises has not changed much. For example, people can go in and out; Cadres can go up and down; The identity of employees has not changed and their thoughts have not changed much, which seriously restricts the development of enterprises.

Secondly, in the process of changing state-owned enterprises into private enterprises, due to the poor consideration of the reform plan, all employees hold shares, the management holds a low proportion of shares, and there is no equity withdrawal mechanism, which makes it difficult to make decisions, the new backbone can not get equity incentives, and it is difficult for the old shareholders to withdraw.

Finally, it is difficult for enterprises to raise funds. Enterprises must raise funds to develop, but it was very difficult for private enterprises in small cities to raise funds more than ten years ago.

In other words, after two mixed reforms, Taishan gypsum has not fundamentally solved the problem of lack of money.

Therefore, from 2005 to 2006, under the leadership of Tai ‘an Municipal Government and China Building Materials Group, Taishan Gypsum and Beixin Building Materials (Group) Co., Ltd. (hereinafter referred to as "Beixin Building Materials"), a subsidiary of China Building Materials Group, reorganized their assets by increasing capital and shares, with a total share capital of 155.625 million shares, with 19% held by the company’s executives and employees. This is the third mixed reform, and it is also a real mixed reform.

The third mixed reform not only solved the capital problem in the development of the company, but also stimulated the vitality of the enterprise, increased the development momentum of the enterprise and created conditions for the enterprise to improve its performance.

A few days ago, the 2021 annual performance report released by Beixin Building Materials showed that the output of gypsum board products of the Group was 2.423 billion square meters, and the sales volume was 2.378 billion square meters, an increase of 18.01% over the previous year; The gross profit margin was 37.26%, an increase of 1.36 percentage points over the previous year. Among them, Taishan gypsum contributed a lot. Beixin Building Materials has achieved a leap-forward growth from a market value of less than 10 billion yuan to a market value of more than 50 billion yuan today.

Obviously, the mixed reform has achieved a win-win situation for private enterprises and state-owned enterprises: Beixin Building Materials has obtained a high-quality enterprise, and the private shareholders of Taishan Gypsum have also received rich returns in the development of the enterprise.

In an interview with Enterprise Observer, Jia Tongchun, the witness of the third mixed reform of Taishan Gypsum and the chairman of Taishan Gypsum, said "win-win" the most.

01

Major shareholders do not interfere in the normal operation of the company.

Enterprise Observer: Since the establishment of the State Council State-owned Assets Supervision and Administration Commission, the reform of mixed ownership has been continuously promoted. Your company is a typical example of successful reform. However, private enterprises often have many concerns about participating in mixed reform. What is the reason why Taishan Gypsum is willing to participate in mixed reform?

Jia Tongchun: It mainly stems from the trust in state-owned enterprises and state-owned entrepreneurs.

We were originally in the same trade and knew each other. In 2005, China Building Materials Group proposed that its two companies, Beixin Building Materials and Taishan Gypsum, should merge their property rights in order to gain more development space.

Considering that Beixin Building Materials, as a listed company under China Building Materials Group, has advantages in brand, resources, market and financing, if Taishan Gypsum cooperates with Beixin Building Materials, it can achieve rapid development with this advantage. At the same time, based on the overall situation of domestic economy, it is also the responsibility of our national enterprises not to let foreign enterprises dominate the China market, so we finally chose to join China Building Materials Group.

Of course, at first, we also had concerns. The main concern is whether the power of management will be marginalized and whether it will return to the state of old state-owned enterprises in management methods. China Building Materials Group said, "How can such a good management team of Taishan Gypsum be changed?", which dispelled our concerns.

As a matter of fact, China Building Materials Group and Beixin Building Materials did the same.

After Beixin Building Materials holds a large share and is wholly-owned, I am still the chairman. No one left the original management team except for retirement due to age. The senior management team has not been assigned by Beixin Building Materials for a long time, and only one CFO was assigned in 2021, which does not interfere with the normal operation of the company. This reflects the full trust of major shareholders in us. We should live up to this trust, work harder and create greater returns to shareholders.

Enterprise Observer: Some people worry that mixed ownership enterprises will lead to the loss of the original business vitality of private enterprises. Why didn’t Taishan gypsum encounter this problem?

Jia Tongchun: Because of the high cultural recognition. "Innovation, performance, harmony and responsibility" are our souls. Everyone takes personal responsibility in a harmonious family, and only innovation can create better performance.

After the mixed reform, I am gratified that Taishan gypsum has developed rapidly and healthily, and its income, profit and long-term compound growth rate have reached 25%, creating a miracle in the same industry.

First of all, the company obtained great financing support from Beixin Building Materials, and secured financing of 900 million yuan for Taishan gypsum for a long time; The reform has also created a good atmosphere for the national layout. Our private shareholders and management have taken on the responsibility of catching up with the first-class counterparts in the world and developed the production technology with unique characteristics in China. I personally contributed management wisdom and technical expertise in this great era and platform.

02

There is no distinction between high and low shareholders.

Enterprise Observer: With the deepening of mixed ownership reform, what do you think of the increasingly mature changes in concepts and systems of state-owned assets from exploration to stereotypes?

Jia Tongchun: This change has a very positive effect on guiding private capital and private enterprises.

Take China Building Materials Group as an example. Since the succession of Chairman Zhou Yuxian, he has paid more attention to our private shareholders and paid more attention to the role of private shares.

The status further clarified the "equal status" of private shares. Zhou Yuxian has repeatedly stressed that there are only a few big and small shareholders, and there is no distinction between "high and low". Non-public shareholders and state-owned shareholders have no leadership, and they should all play a role under national laws and regulations.

Ensure the role of non-public shareholders in the joint venture from the system, and arrange corresponding positions according to the principle of party management of cadres, the size of equity and the specialty of shareholders. Although I am a small non-public shareholder in Taishan Gypsum Company, I have always served as Party Secretary, Chairman and General Manager.

Since 2021, it has promoted "differentiated" management of mixed ownership companies from the group level, that is, it has implemented greater decentralization measures in terms of people, finance, materials and investment, and its benefits are obvious. In mixed-reform enterprises, managers of non-public shareholders have a share of every penny spent. How can they not care? This reduces a lot of regulatory costs. "Differentiated" management is the soul of mixed reform. Without differentiated management, mixed reform is meaningless.

In recent years, under the care and leadership of Chairman Zhou Yuxian, Taishan Gypsum has developed rapidly. Last year, despite the difficult epidemic situation and the sluggish real estate, we still achieved a huge increase of 58% in net profit. This is the positive change brought about by the improvement of the system.

03

Trust and being trustworthy are the most critical factors for the success of mixed reform.

Enterprise Observer: From the perspective of private enterprises, what do you think is the reason for the success of Taishan gypsum mixed reform? What are your experiences?

Jia Tongchun: I think trust and being trustworthy are the most critical factors for the success of mixed reform. Taishan Gypsum is incorporated into China Building Materials, and after Beixin Building Materials Holdings, if the state-owned shareholders don’t trust us, they will tell us what to do and even change management personnel; Or wearing colored glasses that "private managers must have problems" to see problems, or even appearing jealous psychology and practices, cooperation can not be carried out, and separation is inevitable.

Whether it is trustworthy as a non-public shareholder and manager is also the key. He must have the ability to do his job well; Must have a strong awareness of the red line of laws and regulations; Must have a global industry vision and deep professional knowledge; Must have a strong spirit of cooperation; In the face of some special regulations of state-owned enterprises, we must also understand and implement them.

State-owned shareholders are a complex organization with many levels, rapid changes in actual controllers and many management departments, and their voices are often inconsistent. Non-public shareholders should understand them, otherwise they will not adapt.

04

Have a long-term cooperation plan.

Enterprise Observer: In recent two years, private enterprises have shown great enthusiasm for participating in mixed ownership reform. What suggestions do you have for private enterprises wishing to participate in mixed ownership reform?

Jia Tongchun: For private enterprises:

First, don’t change for mixed reasons. If you cooperate with state-owned enterprises, in your field, the partners have no obvious advantages and the resources are not rich, so don’t mix. Second, don’t have the idea of "taking advantage". State-owned assets are sacred and inviolable, which is stipulated by the constitution. Cooperation with the idea of eroding state-owned assets is bound to fail. Third, don’t cooperate with speculative psychology, and cooperation in order to dump "burdens" and hide debts will not succeed. Fourth, there must be plans for long-term cooperation. Some private enterprise managers leave their equity in the hands of state-owned enterprises, which often puts the company in trouble and makes the participants of state-owned enterprises passive.

For state-owned enterprises, respect and trust are the basis for state-owned shareholders to do well with non-public shareholders. In the reform of mixed ownership, we should always adhere to mutual benefit and win-win with other ownership enterprises, and respect and trust non-public shareholders in the principle that private enterprises are "brought in" to achieve complementary advantages and win-win results. Endure humiliation and bear heavy burdens is honed by most private enterprise operators for many years, and should not be too demanding. Regularly evaluate whether the cooperation between mixed reform enterprises is harmonious, whether there are problems and how the performance is, and create a good business environment for the development of enterprises.

In the reform, state-owned enterprises should adhere to the combination of property rights reform and institutional innovation to enhance the vitality of micro-market entities; in the reform of mixed ownership, they should persist in strengthening incentives to enhance vitality, improve institutional mechanisms, avoid "mixing and not mixing the same", reasonably determine the ownership structure of mixed enterprises, standardize the relationship between powers and responsibilities among governance entities, and achieve clear positioning, equal rights and responsibilities, and coordinated operation; It is necessary to fully mobilize the enthusiasm of employees and release the market vitality of enterprises to a greater extent.

Original title: "Interview with the reform witnesses | Taishan Gypsum Jia Tongchun:" Differentiated "management is the soul of mixed reform"