A new policy on transnational firms' merges and acquisitions (M&A) of State-owned enterprises (SOEs) has largely taken shape, sources with State Economic and Trade Commission said.
In accordance with the new guideline, SOEs subject to M&As will include not only medium and small SOEs, but also those ranked as the top 500 heavyweight players in China's national economy.
After the M&As, the ratio of equities under transnational firms' control will not be restrained at the usual 50 percent or lower.
There might be a significant breakthrough in the ratio of equities controlled by transnaitonals, according to the Beijing-based China Economic Times, a newspaper sponsored by the Research Center of Economic Development under the State Council, a government think-tank. But the newspaper doesn't disclose the exact percentage or its range.
M&As among firms are, after all, a kind of transaction, which is, by nature, the same as an ordinary deal, Mao Yushi, an economist from the Unirule Economic Research Institute, a non-governmental research institution, was quoted as saying by the newspaper.
As long as the transaction is done on their own discretion, parties involved will surely benefit from it, Mao said.
Transnationals' involvement through M&As into SOEs economic restructuring will do good to China's overall economy, the newspaper said. The former's strength in capital, management and marketing network will complement well with the great market potential, formally taken up by the latter but not fully tapped because of its inefficiency.
But there are some problems to be alert about, the newspaper said, and one of which is how to prevent the likely drain-off of State-owned assets into private pocket.
What should be watched carefully are those "black hands", which are trying whatever means to transfer State-owned property to their own accounts, the newspaper quoted some veteran M&A experts as saying.
But some SOE leaders are cautious of subjecting their firms to M&As for other considerations: Either they are afraid of the infamy of a "spendthrift" who has failed to protect their ancestors' wealth well that it finally falls into others' hands; or they fear that they will have to come down from their present position and lose the power in their hands.
For the time being, only six per cent of foreign investment finally flows into SOEs through M&As, according to the newspaper, which means that there is still a great room for further expansion, given the mammoth size of China's SOEs.
( April 17, 2002)
