State Grid's EV unit intensifies mixed ownership reform for enhanced vitality

State Grid Electric Vehicle Service Co has made continued efforts to advance mixed ownership reform at different levels, and stimulate corporate vitality through such efforts, the company's general manager said.

To carry out the reform, the State-owned enterprise has gradually identified key issues such as equity structure, potential investors, corporate governance, and employee shareholding, said Shen Jianxin, general manager of the company.

After research, the SOE formulated a draft plan for implementing mixed ownership reform, and submitted it to its parent company State Grid Corp of China, Shen said.

The company set up an office for leading mixed ownership reform, selected professionals to take charge of investment and financing, risk control, established cooperation with well-known intermediaries, and formed professional working teams, he added.

State Grid Electric Vehicle Service Co was founded in 2015. Its core asset is a connected vehicle platform, and its fixed assets include self-built, self-operated charging piles for electric vehicles and leasing vehicles.

"The new energy vehicle industry has strategic significance, with large market potential and new business models. One of its prominent features is cross-industry collaboration," Shen said.

"The company strengthens cooperation with private enterprises, gives full play to the advantages of mixed ownership, gathers industrial resources, and expands its core business at a fast pace."

After the launch of mixed ownership reform, the construction period of a charging station was shortened from more than one year to four to six months, according to Shen.

The number of charging stations available on the company's connected platform grew from 107,000 in 2016 to 302,400 in 2018.

The company's investment in charging station projects climbed from 2.79 million yuan ($396,000) in 2016 to 280 million yuan in 2018.

In November, State Grid Electric Vehicle Service Co and privately run China Grand Automotive Services Group Co established a joint venture. The new firm plans to build charging piles at more than 840 China Grand Auto dealerships.

The State-owned enterprise also encourages its branches in provincial-level regions and cities to partner with local public transportation firms and related investment companies, in order to reduce carbon emissions.

The central government has urged SOEs to carry out mixed ownership reform in a bid to stimulate their vitality and boost their earning capacity.

Tang Liming, a macroeconomy researcher at Dongxing Securities, said it is expected that more SOEs will introduce social or foreign capital, and focus on improving the operating efficiency while following market-oriented principles.

"Through the mixed ownership reform, SOEs will give play to their own advantages in scale, working together with social capital to promote China's corporate governance model to further integrate with the international ones," Tang said in a research note.

Data showed State Grid Electric Vehicle Service Co achieved sound results in recent years. In 2018, the company's operating income increased to 3.44 billion yuan, compared with 354 million yuan in 2016, according to the company.

Its total profit amounted to 61.06 million yuan last year, an increase of 1.51 times from that of 2016, the company said.