The State Council: Promote Reorganization of Central SOEs in Power Sector and Other Industries to Reduce Disorderly Competition

　　The original link: http://www.chinapower.com.cn/focus/20160727/42545.html

Recently, General Office of the State Council issued "Guiding Opinions on Promoting Structural Adjustment and Reorganization of Central SOEs" (hereinafter referred to as "Guiding Opinions"), which makes clear to promote megamerger, centralize resources to form joint force, reduce disorderly competition and homogeneous management and effectively resolve overcapacity in related industries.

"Guiding Opinions" makes clear to promote megamerger; go abroad to participate in international competition and maintain the domestic market’s fair competition; steadily push forward corporate restructuring in equipment manufacturing, constructional engineering, electricity, steel, non-ferrous metals, shipment, construction materials, tourism and aviation services; centralize resources to form joint force; reduce disorderly competition and homogenous management; effectively resolve overcapacity in related industries; encourage the restructuring of central SOEs in coal, electricity, metallurgy and other upstream and downstream industry chains; build whole-industry chain competitive advantages; and better exercise synergy effects.

"Guiding Opinions" points out promotion of professional integration; support to resources centralization toward advantageous enterprises and major enterprises among central SOEs through asset restructuring, equity cooperation, asset replacement, free transfer, strategic alliances, and joint development, under the national industrial policies and industry development planning guidance; encouragement of central SOEs in the related fields including telecommunication, electric power, automobile, new materials, new energy, oil and gas pipeline, marine equipment, and air cargo to jointly fund the establishment of joint-stock professional platforms; increasing joint development in new technologies, new products, and new markets; reduction of disorderly competition; and improvement in resource allocation efficiency.

"Guiding Opinions" makes clear to accelerate integration of corporate internal resources; encourage central SOEs to use common stock, preferred stock, introduction convertible bonds and other tools to promote professional integration, and enhance sustainable development capacity by relying on capital markets, and through ways such as capital injection cultivation, business restructuring, and attraction and merger; reduce corporate management levels; clean up and integrate companies below level five; centralize the investment decision-making power toward enterprises above level three; actively promote management and control model, organizational restructuring, and process rebuilding; construct management and control system featured by clear functional positioning, clear duty and right relation, and reasonable level setting.

"Guiding Opinions" displays an active, steady carry out of M&A and restructuring; encouragement to central SOEs to actively carry out M & A and reorganization, raise industrial concentration, and promote quality and brand enhancement around development strategies, and by taking key technologies, core resources, well-known brands, and marketing channels as focuses; establishment of a sound mechanism to evaluate restructuring; strengthening linkage and integration after corporate mergers and acquisitions; promotion of collaboration and integration among management, business, technology, market, culture and human resources; guarantee in realizing merger and acquisition expected targets; specialization and comparative advantages fully exercised in M&A and reorganization; respect to laws of market; strengthening communication and coordination; and prevention of disorderly competition.