Zombie Disposal Will Last Two to Three Years

January 15 to 16, held a meeting of heads of central enterprises over the previous few days later, as usual, the meetings are usually held in December last year. Stakeholders analysis, the meeting postponed largely because the central enterprise restructuring and personnel changes frequently.

The meeting identified seven tasks in 2016, is to enhance the quality and efficiency of state-owned enterprises are developing actively disposal "zombie companies" to deepen the reform of state-owned capital of their own country and to promote the reform of the SASAC, conduct public business, Peoples innovation, promote international business strengthen supervision to prevent the loss of state assets, as well as state-owned enterprises to strengthen party building.

China Enterprise Institute researcher Lee Kum "Daily Economic News" reporter, said: "This meeting passed out six new ideas: First, the next two to three years will be 'in the throes of the' state-owned enterprise reform and development;.......

...In the meeting of heads of central enterprises, SASAC director Zhang also admitted that reform and development will enter "labor pains."

Li Jin told reporters that the "labor pains" First comes from iron and steel , coal , petroleum, petrochemical and other industries in the presence of a large number of "zombie companies", and such enterprises get together and mainly state-owned enterprises, therefore, the SASAC, the clean up zombie enterprises heavier tasks.

...It is worth noting that the SAC for the first time to clean "zombie companies" provides a timetable. Zhang said the SASAC is studying the program of work, and strive to use about three years to basically complete the main task, to 2020, the full completion of the work.
Three methods for reorganizing the zombies are horizontal, vertical and "leading enterprises:"
Zhang stressed that the increasing levels of mergers and acquisitions group, pushing combination; promote specialization restructuring to industry leading enterprises rely on cooperation through equity, asset replacement, free transfer, etc., to further strengthen the integration and homogenization of business sub-industry consolidation.

At this meeting, the SAC highlight three recombinant modes, horizontal industrial restructuring, reorganization and longitudinal chains to leading enterprises as the center of the restructuring.
Three examples of these reorganization strategies:
"Daily Economic News" reporter combing found that , operating sugar, meat and other food production and processing, wholesale and retail of Guohong [0.00%] Fu Trade Development Group entirety COFCO, China Ocean [ -8.88% funding research report ] and China Shipping, China South Locomotive [ -4.31% funding research report ] and China CNR [0.00% funds research report ] of the merger and reorganization, can be regarded as a generally horizontal industrial restructuring.

Vertical industry restructuring as the main chain of integrated logistics and shipping of China's Sinotrans [ -1.96% ] CSC entirety Merchants Group. Main daily consumer goods trade, hotels tourism , real estate management and development and integrated logistics services Nanguang Group.

The same as the world's top 500 enterprises in restructuring China Minmetals China Metallurgical Group Corporation was merged into another Fortune 500 companies, it embodies the characteristics of the industry leading enterprise restructuring.
iFeng: 僵尸国企兼并重组三年完成 官方定三种模式

Reuters has English coverage: China to clean-up 'zombie' companies by 2020: Xinhua
China's top state-owned asset administrator has vowed to clean-up the country's so-called "zombie" industrial companies by 2020, the official Xinhua News Agency has reported.

Zhang Yi, Chairman of the State-owned Assets Supervision and Administration Commission (SASAC), told a central and local enterprise work conference convened at the weekend that the agency will "basically" resolve the problem of unproductive "zombie" firms over the next three years.

Dealing with "zombie companies" is very difficult, Zhang said, according to the report, but "officials need to... use today's 'small tremors' to prevent a future earthquake."

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