Academic journal article Journal of International Business Research

A Study on Corporate Governance of China's State-Owned Enterprises - Focus on the Role of Baosteel Ccp Organization

Academic journal article Journal of International Business Research

A Study on Corporate Governance of China's State-Owned Enterprises - Focus on the Role of Baosteel Ccp Organization

Article excerpt

ABSTRACT

This study is focused on Corporate Governance of China's State-Owned Enterprises (SOEs) in which research was studied on the role of State-Owned Enterprises (SOEs) under Corporate Governance of CCP (China Communist Party) organization that has been not studied a lot in previous research. As a result of the case study of Baosteel, though China's State-Owned Enterprises (SOEs) accommodated western corporate governance system, the CCP organization in the corporate has been carried out the role of internal control mechanism which complements weakness of governance structure, and is giving positive influence on governance structure of SOEs as a distinctive character of China's State-Owned Enterprises through performance of political core function.

Key words: China's SOEs, Governance Structure, the CCP organization, internal control mechanism, Baosteel.

Abbreviations: CCP, China Communist Party; SOEs, State-Owned Enterprises; COSO, Committee of Sponsoring Organizations of the Tread-way Commission; CICSC, China Internal Control Standards Committee; SASAC, State-owned Assets Supervision and Administration Commission; PSC, Party Standing Committee; CPCC, China Party Central Committee;

INTRODUCTION

There is a common understanding that the economic development of China has been commenced since the Third Plenary session of the 11th Central Committee of the China Communist Party, and at the same time initiating open door policy from that time Chinese Government launched the first step of reformation targeting SOEs. The history of Chinese economic development acquires brilliant record of economic growth at this time, could be said fairly that it was the reforming history of China's SOEs. Before reform and opening-up policy was launched, all the corporations in China were owned by the Chinese government, for the reason that the productivity of SOEs was declined and the financial performance of the SOEs was in deficit in many years. Since 1978 Chinese government considered economic growth as the major issue to reflect the Advanced Socialist, and started process of structure renovation in versatile perspectives including ownership, management pattern, supervising and incentive mechanism of SOEs. Having proceeded reforming measure for SOEs for several times gradually for 30 years, and it looks China's SOEs have formed management structure as modern enterprise, but undeniably there is the fact that those are still behind management efficiency than western enterprise, and have many problems in ruling structure. Also because there is political peculiarity as socialist system, we could understand that China's SOEs has distinctive characteristics apparently different from the moment western countries accommodate the Capitalism. Due to these distinctive characteristics and because achievement and problems occurred in China's SOEs cannot be explained by theories of management formed based on western enterprise, so to explain the record and problems occurring from China's SOEs it is necessary to complement strategic management theories developed by other countries to adjust the Chinese situation.

This study commenced by the analysis of reforming history of ruling structure of China's SOEs which tries to find discord with strategic management theories developed previously through the case study on the ruling structure of Chinese style SOEs. Especially it aims to examine the role of CCP organization which the portion is never been discussed in the existing study on the ruling structure of China's SOEs. The interesting thing is that China's SOEs didn't remove CCP organization already in the inside the corporation during in the process of accommodating the modern enterprise system, and enforced structure renovation by strengthening the systematic function of this part's role. Therefore, it needs to investigate not only the role play of CCP organization the characteristics of China's SOEs but also what sort of relationship CCP organization has with other organizations among the system, and what kind of influence it gives to achievement of the corporation, and it is assumed by this approach it will help to understand the characteristics of ruling structure of China's SOEs more clearly. …

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