During this year's National Two Sessions, Premier Li Keqiang stated that SOE reform will be comprehensively deepened, and delegates and members also offered suggestions on SOE reform. In this banquet that has already begun, state-owned construction machinery enterprises are confident and fully prepared, releasing the wisdom and energy of construction machinery enterprises with high aspirations.

Changing the situation of state capital dominance

Liu Yonghao, a deputy to the National People's Congress and chairman of New Hope Group, once said that in his eyes state-owned enterprises are generally "flush with money," receive relatively strong state support, and operate in industries with certain advantages. In fact, this is also how most people view state-owned enterprises. Once labeled "state-owned," "dominance" seems to have become the hallmark of SOEs.

In this regard, Zhang Yi, director and Party secretary of SASAC, emphasized during this year's Two Sessions that the pace of SOE reform needs to be "accelerated," and first of all efforts should be made to develop the mixed-ownership economy.

So-called mixed ownership is a form of shareholding system that includes both the public ownership economy and the non-public ownership economy. It is an economic behavior in which different ownership economies jointly produce or operate according to certain principles, and it is a proven and effective form of realizing public ownership. The state-owned and collective components in the mixed-ownership economy are both important parts of the public ownership economy. With the development of the socialist market economy and the diversification of investment entities, the mixed system economy will further develop in China.

It is understood that on the eve of this year's National Two Sessions, at the "Power of Samples: Symposium on the Development of Mixed-Ownership Enterprises" held by SASAC of the State Council, experts and scholars unanimously praised Zoomlion's experience in mixed-ownership reform, saying that "Zoomlion is a successful sample of China's SOE mixed-ownership reform."

Zoomlion Chairman Zhan Chunxin said, "Developing the mixed-ownership economy can effectively amplify the driving force of state capital and stimulate the vitality of state-owned enterprises." Mixed ownership is an important support for SOE reform. "To further promote mixed-ownership reform, innovation is the soul, standardization is the premise, democracy is the guarantee, openness is the key, and sustainability is the goal."

Zhan Chunxin believes that the current Chinese construction machinery industry faces a situation of survival of the fittest and overcapacity. It is necessary to break disorderly competition within the industry through resource integration, while further upgrading the industrial structure and promoting scientific and technological innovation. It is necessary to establish a scientific corporate governance and operating mechanism that places equal emphasis on incentives and constraints, reflecting the trinity of innovation in system, governance, and mechanism. The overall restructuring plan must strictly comply with laws and regulations, equity transfers must be open and fair, and internal distribution must be fair and transparent. Employees must be guided to change their concepts, fully communicate face to face with employees, and fully leverage the role of workers' congresses. Equity must be opened up, and human capital management, capital operations, cultural management, and more must be pursued. Sustainable development of system, strategy, talent, management, technology, and culture must be achieved.

Chu Xuping, director of the SASAC Research Center, said in response to questions from netizens that by 2020 the vast majority of state-owned enterprises will achieve equity diversification, and except for a few special fields, most state-owned enterprises will develop into mixed-ownership enterprises.

Reforming the SOE property rights system

The key difficulty in SOE reform is the issue of property rights.

The so-called reform of the SOE property rights system is reform of the specific realization form of state ownership under the condition that the nature of assets owned by the whole people remains unchanged. What specific realization form should assets owned by the whole people adopt under market economy conditions in order to adapt to the objective requirements of the market economy is the purpose or goal of our reform of this specific realization form of state ownership.

Weichai Group, the flagship enterprise of Shandong Heavy Industry, was revived through reform back then. This veteran state-owned enterprise with a history of more than 60 years exposed all kinds of abuses when it encountered the 1998 Asian financial crisis and was once on the verge of bankruptcy. Tan Xuguang, a deputy to the National People's Congress and chairman of Weichai Group, led the new leadership team in thoroughly reforming the three systems of personnel, labor, and distribution, implementing property rights reform, breaking the single state-capital composition pattern, achieving diversification of investment entities, and initially tasting the "sweetness" of mixed ownership.

In 2004, Weichai Power was successfully listed in Hong Kong, and the overseas shareholders introduced brought vitality to the enterprise's technological innovation; the introduction of the then largest state-owned and private enterprises in the domestic loader industry gave the engine stable customers; and joining hands with a well-known domestic professional investment company as a shareholder provided intellectual support for future capital operations. After 2005, it successively strategically reorganized and absorbed and merged Xiangtorch Automobile Group, enabling Weichai Power to be listed again on the domestic A-share market. The establishment and improvement of the modern enterprise system enabled Weichai to truly gain vitality and momentum from mixed ownership.

Deputy Tan Xuguang said with emotion that without the reform determination of cutting off one's wrist like a warrior back then, there would be no development of Weichai today. It is precisely through reform that state-owned enterprises like Weichai can regain confidence in development. "SOE reform has only a continuous tense, not a completed tense," Tan Xuguang said.

The core of reform is transformation and upgrading

In 2013, China's GDP grew 7.7% year on year, slower than 8% for the second consecutive year, and the Chinese economy is entering a new stage of transformation and upgrading. The communique of the Third Plenary Session of the 18th CPC Central Committee clearly proposed accelerating the transformation of the economic development model, accelerating the building of an innovative country, and promoting more efficient, fairer, and more sustainable economic development.

In the view of Yan Ping, a deputy to the National People's Congress and chairman of the board of Yuchai Group, enterprises promoting reform must adhere to the modern enterprise management concept of "sustainable operation and healthy operation," and the core of reform is transformation and upgrading.

Deputy Yan Ping believes that SOE reform must first ensure the appreciation of state-owned assets and avoid the loss of state-owned assets; second, systems must be established to activate the vitality of SOEs themselves and promote enterprise transformation and upgrading. To fully participate in international competition, China must achieve industrial transformation, move from traditional manufacturing to high-end manufacturing, pay more attention to the production and application of intelligent products, and master core technologies.

Deputy Yan Ping introduced that in the face of pressure and challenges, Yuchai Group began implementing the development strategy of "second entrepreneurship" at the end of last year. The planned Yuchai Industrial New City is the carrier and platform for Yuchai's "second entrepreneurship." It will take the development of high-end equipment manufacturing as the main body and accelerate the pace of Yuchai Group's transformation and upgrading.

In its second entrepreneurship, Yuchai Group is using practical actions to perfectly perform and interpret transformation and upgrading, reform, and innovation.

State-owned enterprise reform is a grand proposition of the era. In the storm of reform, driving forces and resistance coexist, which requires enterprises participating in reform to have both wisdom and courage. For construction machinery enterprises that have experienced more than 60 years of wind, rain, frost, and snow, growing from weakness to galloping across the globe, they have long been accustomed to the grand scenes of worldly changes. Facing the tide of SOE reform, construction machinery enterprises have unique insights, keen foresight, and even faster-response execution. We have reason to believe that in the future, the reform path of state-owned construction machinery enterprises will surely be bathed in sunshine.