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Wendong Shi

Study on the enterprise growth under the transformation economy environment

Taking China`s first joint-stock enterprise as an example

ISBN: 978-3-8366-8062-2

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Produktart: Buch
Verlag: Diplomica Verlag
Erscheinungsdatum: 11.2009
AuflagenNr.: 1
Seiten: 138
Abb.: 41
Sprache: Englisch
Einband: Paperback

Inhalt

Since the end of the 1970s and the beginning of 1980s, with the political and economic system changes in the world, some enterprises being operated on the basis of market mechanism have emerged in the economy which once implemented the planning resource allocation (such as former Soviet Union, countries in eastern Europe and Mainland China, countries in Southeast Asia such as Vietnam). As the operation mode which complies with the market mechanism is adopted early in terms of the property right and operation mechanism, these enterprises grow rapidly under the loose regulation of the government and in the rapid development of the domestic market. However, with the competition intensified and the internationalization degree increased in the domestic market of the transitional economy, a large number of enterprises have suffered declined business, insolvency, bankruptcy or even winding-up since the 1990s. Some enterprises which grow rapidly in the 1980s are deep in the business operation crisis or even go bankrupt in the middle and later stage of 1990s. This is best demonstrated by the companies which are listed at Shenzhen Stock Exchange, Mainland China in the early stage. According to the report in International Finance News, March 6, 2002, 9 local listed companies in Shenzhen suffered losses in 2000, accounting for 9.38% of the total loss-incurring listed companies in the country in that year. Afterwards, the number of loss-incurring enterprises in 2001 increases to 12, accounting for 11.88% of the total listed companies in the country. In addition, according to the statistics of Shenzhen Stock Exchange, of the 9 loss-incurring local listed companies in Shenzhen in 2000, 6 of them undergo the system reform and are listed before 1993, and of the 12 loss-incurring local listed companies in Shenzhen in 2001, 7 of them undergo the system reform and are listed before 1993. In 2002, of the 67 A-share listed companies in Shenzhen, there are 8 ST companies, accounting for 13.43% of the total listed companies in Shenzhen. Of these ST companies, 5 of them undergo the system reform and are listed before 1993. The above cases show that those leading enterprises which achieve rapid growth through the system reform or other measures in Mainland China have encountered the sustained growth problems after a period of rapid growth. In the middle and later stages in the 1990s, referring to the U.S.A as the example, the Chinese enterprises carry out the Enterprise Reconstruction in extensive fields and begin the practices of getting rid of the crisis and maintaining the sustained growth of the enterprise. Through reconstruction, a lot of enterprises have got rid of the crisis, improved their operation results and enabled the enterprises to grow again. The cause and mode of the enterprise growth in the transitional economy, the root cause of the crisis and the measures to overcome the crisis, as well as other enterprise management practices, have presented an inevitable research subject to the theoreticians. Meanwhile, the issue concerning whether enterprise reconstruction can be used as a new strategy to help enterprises to get rid of the crisis and achieve sustained growth also arises.

Leseprobe

Textprobe: Text Sample: Chapter II, Occurrence of Operation Crisis in Realty Business for Bank’s Money Squeeze Policy: In 1993, in order to deal with the economic overheating, the government started to implement the economic policy of macrocontrol and money squeeze”. As a result, the real estate market became rational again and the tendency of recession in demand came into being. Due to the lack of current capital and recession in demand, the realty business of Baoan Group experienced the operation crisis. Due to the lack of current capital required for real estate development, funds invested including 10.56 million US dollars invested in Shanghai Pudong Baoan Building in 1992, RMB 0.15 billion Yuan in Haikou Xiuying Street and RMB 106.44 million Yuan in Wuhan Nanhu Airport, could not be turned into sales income so as to realize the capital withdraw in time after being converted into stock in trade. Due to the lack of capital, Baoan Group failed to pay the engineering funds timely as a result, Meilian Garden” developed by Baoan Group in Shenzhen had to be suspended for the construction company did not have enough building materials. Hence, the enclosure strategy” conducted by Baoan Group to ensure the follow-on development power of real estate industry directly lead to the operational capital chain rupture due to the change of state macropolicy and weakening in market demand. After quickly growing up in 1990, 1991 and 1992, the realty business of Baoan Group declined in 1993. Realized profit of 1993 was decreased by 41.28% compared with that in 1992. (Case 4): Failure of overall reconstruction of Haikou Xiuying Street: In 1992, People’s Government of Xiuying District, Haikou called for bids on overall reconstruction of Xiuying Street” throughout the country. The management of Baoan Group believed that the development and opening-up of Hainan would be just like that of Shenzhen and the comprehensive growth of local real estate market would be stimulated by the opening-up policy. Thanks to a huge sum of funds raised in capital market in 1992, Baoan Group won the development rights of the above-mentioned project relying on its advantages of one who paid the highest lump-sum and one who paid the funds most rapidly”. On May 14th, People’s Government of Xiuying District, Haikou signed the Contract for the Reconstruction of Xiuying Street, Xiuying District, and Haikou with Hainan Hengchang Real Estate Development Co., Ltd. (later being renamed as China Baoan Group Hainan Industrial Company). As a result, Baoan Group acquired the development rights of this project and the corresponding development qualification certificate. Moreover, Baoan Group made a commitment in the Contract that it would build Xiuying Street into the first-class modern ‘BAOAN Street’ in Southeast Asia, along which, there would be at least 54 over-18-floor commercial-residential buildings covering 1.53 million square meters in area. However, macrocontrol policy soon showed its negative influence on the real estate industry and this project. After paying the first fund of RMB 0.16 billion Yuan in accordance with the contract, Baoan Group lacked the following-up development funds for the bank financing was prohibited by the administrative order and all funds of Baoan Group were used to buy the land in enclosure strategy”. At the same time, due to the fact that reconstruction of Xiuying Street” was involved in the relocation of residents in old urban areas, lack of funds triggered a confrontation between residents in old urban area and demolition offices. As a result, the whole reconstruction of Xiuying Street” came into a standstill. Hence, Baoan Group, who was eager to seize the opportunity to do something in the real estate market of Hainan, made the funds of RMB 0.16 billion Yuan tied-up into Haikou no profits were won by the group in this project. In 1999, 7 years later, People’s Government of Xiuying District, Haikou, in consideration of municipal planning, invited Baoan Group again to re-implement the reconstruction of Xiuying Street. However, Baoan Group at that time was unable to take into account of this project. Finally, on 29th, September, 1999, Agreement on the Termination of Contract for Reconstruction of Xiuying Street, Xiuying District, and Haikou was signed between Baoan Group and People’s Government of Xiuying District, Haikou. Both parties reached an agreement on exchanging the land into development rights and thus settled this historical issue. By the end of December 31st, 1999, Baoan Group had accumulatively invested RMB 0.16 billion Yuan in the reconstruction of Xiuying Street”, with the audit result of RMB 0.15 billion Yuan. However, evaluated value of above-mentioned investment on the reconstruction of Xiuying Street” was only RMB 100.39 million Yuan on the base day of May 31st, 2001, which meant that total losses of RMB 60 million Yuan were incurred to Baoan Group.

Über den Autor

Ass.Prof. Dr.Wendong Shi, Studium der Wirtschaftswissenschaften an der Universität Zhongshang, China, Promotion im Jahr 2006, Reisemanagement als Forschungsschwerpunkt.

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