Not true. The WSJ has a reputation for integrity on front-page articles. It is the editorial pages that are suspect. An old friend Joel Milman, who did a profile on my organization Tecnica for Technology Review, dreamed of writing for the WSJ. As a left-winger, he said that he would get hassled there less than anyplace else.
>Unfortunately for Wall Street, the real China is very different.
>While Wang Jun is the head of Citic, he personally does not own a single
share
>of Citic stock. He holds the top management position, albeit with attendant
>privileges and benefits, but with no stock options, golden parachutes,
incentive
>packages and what not common to American CEO's. Citic is 100% state-owned on
>behalf of the entire Chinese people.
It is not helpful to sweep under the rug the fact that the Chinese Communist Party is about to eliminate state-ownership of firms like Citic. As "Marxist economists", it is mandatory that we analyze the DIRECTION of the Chinese economy. The whole point of dialectical materialism is to understand the MOTION of social-economic processes. In China, the privatization of the state sector will cap off a process of capitalist transformation that was set in motion when Mao toasted champagne with Nixon while the Vietnamese were being bombed into the stone age.
---
Financial Times (London)
May 26, 1998, Tuesday LONDON EDITION
Remove the iron rice bowl:
MANAGEMENT INVESTING IN CHINA:
Foreign investors may never be able to buy Chinese state assets as cheaply again. But they will suffer a culture shock, warns
James Kynge
What would you get for your money if, as a foreign investor, you decided to buy a former state enterprise in Shenyang, the centre of China's north-eastern industrial rustbelt?
The question is more than academic. Such businesses have, in the past, been largely off-limits to foreigners. But China's faltering economy has forced the authorities to search for investors wherever they can find them.
This month Mu Suixin, Shenyang's mayor, toured Europe to find foreign investors for 18 large state companies, with a total workforce of 309,436.
Other cities in the north-east are also planning mass sales; Harbin, near the Russian border, is to put about 1,000 medium and small enterprises under the auctioneer's hammer in June.
As to the question of what a foreign investor could expect, the answer is likely to be an appallingly managed business. But this is the main attraction, according to Jiang Enhong, a leading corporate turnaround expert in the region, who has himself taken on such companies.
Rebellious workers, deception and years of inertia bred from central planning define the opportunities for any new investor - local or foreign - in China's crumbling state-owned sector, he believes. "I have straightened out the management of companies within 44 days, and set them on the way to profitability," he says. "This just shows how bad their management was."
The work is arduous, but foreigners may never get the chance to buy into state assets as cheaply again.
Foreign investors can also benefit from preferential terms, such as municipal tax concessions, which are not on offer to locals. Joint venture and foreign-invested companies also have advantages in raising local bank finance - which private companies in China find difficult to secure. "If only I could get banks to lend to me, I would not just be a tiger, but a tiger with wings," says Mr Jiang.
His main problem has been in rationalising the many managers who clog most state-owned enter prises. When he bought the Shenyang Antibiotics company, which had not made a profit nor paid any tax since 1979, there was one manager to every four workers.
Some managers had been awarded offices out of favouritism but their roles had not been clearly defined.
Mr Jiang has removed two-thirds of the managers in all three state companies he has bought, and defined clearly the task of those remaining. Anyone who failed to perform their duties was fired, he adds.
A measure of shock therapy was necessary to teach workers that when their factory passed from state to private hands, their "iron rice bowl" of socialist-era benefits was taken away. When he took over the Xincheng Pharmaceutical factory, workers were supposed to arrive at 8am but most came at 10am and many would return home for the day before lunch.
At the opening ceremony for the factory, one worker sat down on a seat reserved for dignitaries. When he was told to move, he smashed the chair. Mr Jiang told him he would be sacked if he did not donate a new chair by the following Monday. "He brought the chair, but we fired him anyway," says Mr Jiang.
Laying off workers in China has been fraught with ideological and social impediments. It is not as simple as Mr Jiang makes it sound, but a Communist Party congress in September ushered in a phase of faster free market reform. Redundancies are increasingly seen as unavoidable.
The September congress, and the subsequent National People's Congress in March, also helped to overturn an ambiguous official stance on private ownership by permitting "diverse forms of public ownership". In Shenyang, this has been taken as a cue for the rapid and comprehensive sale of state assets. Thousands of state enterprises are to be sold this year and next.
Gai Ruyin, the deputy mayor, says that a severance allowance of, say, 10,000rmb (£738) could be paid per worker by the new owners of state companies, and that the cost of providing for those who are made redundant may be set against the purchase price of the factory.
Morale among the remaining workers is a complicated issue. But Mr Jiang believes that some of the control mechanisms found in state enterprises, such as the Communist party cell and the trade unions, should be retained.
The Communist party has been invaluable in resolving industrial disputes because it carries the authority of China's most powerful body.
One worker had lost his legs when he was run over by a train. He was causing trouble outside the factory, inciting others to militancy. With the party cell's intervention, a settlement was found. Mr Jiang's company bought him a mobile telephone and a stall: he now rents out the phone for calls and sells wine by the factory gate.
But Mr Jiang is conscious that the heavy hand with which he has put his corporate empire in order should at some point give way to a lighter touch. Eventually his three factories are to be "democratised", with each worker owning shares.
Louis Proyect
(http://www.panix.com/~lnp3/marxism.html)