Private enterprises deserve fair treatment

The Chinese government needs to take concrete actions to support the development of private enterprises by creating a fair business environment, says an article of China Business News. Excerpts:

China has 100 enterprises listed in the World Top 500 enterprises of 2014 issued by Fortune magazine. Over the past 11 years, the number of Chinese firms on the list has continued to increase. China now only trails the United States in terms of the number of big enterprises among top 500.

The US has 128 enterprises in the list, with an average annual net profit of $6.24 billion, nearly twice that of their Chinese counterparts. Among the 100 big Chinese enterprises in the list, 92 are State-owned ones in monopoly industries like energy, finance and manufacturing. The other eight are private enterprises.

This proportion does not reflect the true landscape of Chinese enterprises.

Private companies contribute more than 50 percent of the tax revenue that the Chinese government receives from business, more than 60 percent of the nation’s gross domestic product, about 70 percent of innovations in industries, and over 80 percent of jobs and 90 percent of newly added jobs in China.

SOEs enjoy various forms of government subsidies and preferential policies. But the business environment for private enterprises, especially medium- and small-scale ones, is very difficult. Tax burdens, arbitrary fees, lack of financing and rising costs of land and labor are all challenges for private enterprises.

Although the central government has repeatedly vowed to support the healthy development of private enterprises, most of the policies have only existed on paper.

Some local governments issued their mixed ownership reform plans for SOEs this week. They are welcoming private investment in some SOEs. This is a good beginning toward improving SOEs’ performance in the market and serving the people. The reform can also open up more markets to private firms that were formerly monopolized by SOEs.

Private businessmen should know that SOEs are expected to seek strategic partners with resources, market and advanced management, instead of only money.