Recently, several provinces have successively released state-owned projects open to private capital, with total investment exceeding one trillion yuan. However, although private capital has a strong investment willingness, it is still generally concerned about losing money for nothing, lacking a say, and suffering policy discrimination.

Since June, various localities have placed attracting private capital to participate in state-owned project construction in an important position. According to public data from Chongqing, Jiangxi, Shandong, Hebei, Henan and other provinces and municipalities, the total investment scale has exceeded one trillion yuan.

Concern 1: Many projects are unattractive

Zhou Lifu, deputy general manager of Shandong Guanzhou Co., Ltd., said they have been looking for cooperation with large state-owned enterprises. Private enterprises do not have an advantage in securing resources. In order to obtain stable, low-cost, high-quality raw materials, they most hope to cooperate with large steel enterprises, which is crucial to private enterprises' own profitability.

“More and more state-owned sectors are opening projects to private capital, and the fields and scope are becoming wider and wider. We very much want to be a ‘catfish’.” said Ye Shenghui, chairman of Chongqing Yejia Industrial Co., Ltd. But although the “door” has opened, the motivation to enter and become the “master” is still insufficient.

A private entrepreneur in Chongqing said that many of the opened state-owned projects belong to sunset industries such as steel and machinery manufacturing. Even state-owned capital wants to withdraw from these industries, so how can they attract private capital? An established Chongqing steel(2.40, 0.02, 0.84%) enterprise offered several projects, including its Australian mine and Jiangjin electroplating sludge treatment, to attract private capital. But anyone with clear eyes can see that these projects are basically large-investment, slow-return, and with uncertain prospects.

“We initiated and established a railway industry investment fund, but currently market capital costs continue to rise, while the expected return on railway investment is not high, making it very difficult to raise social capital.” said a person in charge of Jiangxi Provincial Railway Investment Group Co., Ltd. Among the 300 demonstration projects that Jiangxi Province opened to non-state-owned capital this time, the first 11 projects all came from Jiangxi Provincial Railway Investment Group, and they do not have high expectations.

The reporter learned from the Shandong Provincial State-owned Assets Supervision and Administration Commission[Weibo] that 23 provincial state-owned enterprises, including Shandong Hi-Speed(2.95, 0.03, 1.03%) and Shandong Gold(16.38, 0.32, 1.99%), currently have relatively few cases of integrated development of mixed-ownership economies with private capital, and are mainly still exploring employee stock ownership within state-owned enterprises.

Concern 2: No say

Xu Dengquan, general manager of Chongqing Wuzhou Culture Media Group, said that judging from the list of opened projects announced by Chongqing, some projects are still good, especially the financial projects opened by companies such as Three Gorges Bank and Three Gorges Guarantee, which are somewhat attractive to private entrepreneurs. However, the extent to which private enterprises can participate still needs time to prove. There is always a feeling that the water is too deep, and even if one wades in, one will not know how to swim.

The West Inner Mongolia-to-Central China Railway connecting Inner Mongolia and Jiangxi is the first railway construction project in China to attempt equity diversification. It is invested by companies under China Railway Corporation, Shenhua, Shaanxi Coal(4.35, 0.06, 1.40%), Yitai Group and others, among which Yitai Group and others are private enterprises. Xing Lei, associate professor of the China Coal Research Institute at Central University of Finance and Economics, said that this project has had many twists and turns this year and has been debated endlessly. Various investors hope for independent operation, but China Railway Corporation requires unified dispatch, and in the future it will still be difficult to guarantee the interests of shareholders in profit distribution, especially for those with smaller shareholding ratios, who will find it even harder to have a voice.

Some private entrepreneurs worry that for some good projects and resources that are reluctantly opened to private capital, private enterprises join as minority shareholders and simply do not have much say or management power.

Concern 3: Disadvantaged in resource allocation

Zhou Lifu said that at present, policy discrimination against private capital in some places is still relatively serious, and private capital faces many “glass doors” that can only be viewed from afar and cannot truly be entered.

Wang Meng, general manager of Hebei Baile Clean Energy[Weibo] Company, said that state-owned enterprises are large in scale and enjoy many policy preferences, such as conveniences in transportation and train cars, which private enterprises cannot match. He worries that even if they “marry”, these resource allocation advantages will be difficult to place in the hands of private capital.

“A modern enterprise management system must be established, and decision-making power must be determined according to the size of equity.” said Huang Hongyun, chairman of the board of Chongqing Jinke Real Estate Group. When private capital first enters state-owned enterprises, it may face a short-term running-in period with state-owned capital. By establishing a modern enterprise management system, with corporate governance mechanisms, selection and appointment mechanisms, and incentive and restraint mechanisms as the core, the development goals of state-owned capital and private capital can be effectively integrated, authority can be established through equity, and an equal subject status between private capital and state-owned capital can be established. This will prevent state-owned shareholders from dominating and give private entrepreneurs a “reassurance pill”.