2020.05.29 CoStone Capital Views:
As for the mixed-ownership reform (MOR), Zhang Wei has set four personal investment creeds, including 1) don’t participate in the mixed-ownership reform of companies whose management does not hold shares, 2) don’t participate in the mixed-ownership reform of companies whose corporate governance has not been improved, 3) don’t participate in the mixed-ownership reform of companies with problems of domestic securitization, and 4) give priority to companies that have transferred the control. This is the 18th year that the investment team led by Zhang Wei has paid attention to the mixed-ownership reform of state-owned enterprises. The signals released during the two sessions in 2020 provide favorable policies for the further mixed-ownership reform of state-owned enterprises.
CoStone Capital Zhang Wei: MOR Rule-makers Shall Never be Rule-breakers
As for the mixed-ownership reform (MOR), Zhang Wei has set four personal investment creeds, including 1) don’t participate in the mixed-ownership reform of companies whose management does not hold shares, 2) don’t participate in the mixed-ownership reform of companies whose corporate governance has not been improved, 3) don’t participate in the mixed-ownership reform of companies with problems of domestic securitization, and 4) give priority to companies that have transferred the control. This is the 18th year that the investment team led by Zhang Wei has paid attention to the mixed-ownership reform of state-owned enterprises. The signals released during the two sessions in 2020 provide favorable policies for the further mixed-ownership reform of state-owned enterprises.
Many investors, including CoStone Capital Chairman Zhang Wei, hold that whether the bottleneck of the previous mixed-ownership reform can be broken is decided by both the macro-level policy support specifically for mixed-ownership reform and the actual measures essential to the reform of state-owned enterprises. And the reform of the property rights system is one of such measures. As an experienced investor who has participated in micro-level mixed-ownership reform for many years, Zhang Wei understands the key effects of the reform of the property rights system on the mixed-ownership reform of state-owned enterprises.
On May 29th, The Economic Observer had an interview with Zhang Wei. Against the backdrop in which state-owned enterprises have begun a new round of reforms, Zhang Wei still believes that “the core of reforming state-owned enterprises is to enable entrepreneurs to hold certain equity through the reform of the property rights system.” Being obsessed with protecting entrepreneurial spirit, he said that “I hope that regulators, investors and managers can be inspired, and especially hope that the rule-makers will not become rule-breakers.”
Rewritten by: Yang Yang, Edited by: Du Zhixin, Li Yunzhen
The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
