Government needs to strengthen the management systems of State enterprises as well as improve policy transparency if the companies are to contribute positively to the domestic economy, Chinese ambassador to Zimbabwe Mr Lin Lin has said.
Addressing delegates yesterday at the International Business Conference, an event running concurrently with the ongoing 55th edition of Zimbabwe International Trade Fair, ambassador Lin said it was also important to remain steadfast on developing State enterprises with confidence.
ZITF, Zimbabwe’s largest trade exhibition started yesterday under the theme “New Ideas to New Heights-Progress through Innovations.”
The fair, which has attracted exhibitors from 19 countries, including the United States which last participated a decade ago is expected to be officially opened by President Mugabe of Friday and will close on Saturday.
Mr Lin was presenting on “State Enterprises Reforms and Innovation. Chinese Experience. Lesson for Zimbabwe as it implements Zim Asset.” He said since China embarked on State enterprises transformation, through not yet complete, the reforms “have brought tremendous changes to China and the Chinese people.”
The transformation was a three stage process-preliminary exploration, systems innovation and step by step implementation.
And the specific way of implementation included adjusting strategic lay out, deepening shareholding reform, improving corporate governance and perfecting management systems of state owned assets.
“History proved that swaying approach was detrimental and costly, and China’s practice provided a new way of thinking that state owned enterprises, if well managed could be the stabilizer of the national economy and guarantee of the national security in some areas,” Ambassador Lin told about 400 delegates.
“There is need to further strengthen the management of State enterprises and improve policy transparency. Recent measures taken by the Zimbabwe Government like implementing of salary ceiling and carrying our results based management systems are applaudable.”
Most Zimbabwe parastatals are underperforming, with the majority having been relying on fiscus support for years. But when capacitated, they could contribute about 40 percent to the Gross Domestic Product.
Ambassador Lin added that the Government need to widen its horizon and formulate suitable development strategy, dig deeper to exploit its unique comparative advantages and make full us if them as well as investing more in foreign market research and consumer analysis.
Parastatals are cornerstone of China’s economy. In 2013, the total assets for Chinese state entities were worth US$15 trillion and realised profit of nearly US$400 billion.
Among the fortune list of top 500 global companies, 85 are from the mainland China, 45 are China’s central state owned enterprises while three of them are in the top 10.
Chinese state entities are a strong supporting pillar of the country’s domestic industries. They take a large portion of industries such as energy, electricity, infrastructure, transportation, telecommunications, equipment manufacturing and construction.
As early as 1997, the export value of Chinese state enterprises surpassed that of foreign invested enterprises, taking up a large part of China’s foreign exchange reserve. Most of these state enterprises have invested 1 to 2 percent of their annual sales volume on research and development which have made them active participants and strong competitors in the global market.