Kodak, Anglo-Dutch Uni lever, Michelin??.If the names of these world top 500 enterprises appear on the market quotations board of the Shanghai Stock Exchange, turning red and green together with our "old brands", will you think that this is a distant dream?
It was learned recently from the Shanghai Foreign Investment Work Committee that the above-mentioned transnational companies have currently completed the work of transformation in line with the share-holding system, some of them have just finished the guidance period. Before long, these world-famous enterprises will likely begin listing in succession in the Shanghai and Shenzhen stock exchanges, thus changing the existing pattern of the Chinese securities market.
An official with the China Securities Regulatory Commission has pointed out that the plan for foreign companies to list in Shanghai and Shenzhen stock exchanges will be carried out in three stages, it is likely that Chinese-foreign joint ventures will be the first to start. In view of this, many transnational companies have sought this shortcut-to establish joint ventures with outstanding local Chinese enterprises, or to buy up local brands, so as to achieve the objective of listing through the establishment of new joint ventures.
The Anglo-Dutch Uni lever, which ranks 43rd among the "Fortune" top 500, has become the focus of attention of Chinese and foreign media for its long-standing determination to list A-share market.
Its firm determination comes from its global business strategy of making itself a "localized transnational company" which it has pursued for a long period of time. Given this, the company's stocks have been successively listed in stock exchanges in London, Amsterdam and New York; meanwhile, it also issues stocks in some countries and lists them locally, such as in the newly emerging securities markets in India, Indonesia, Malaysia and Brazil.
Kodak Company, king of the world film industry, went into action earlier and took bigger strides than others. It began implementation of its purchasing plan in 1994 in the whole industry. In 1998, Kodak spent US$380 million in buying up three enterprises such as Century and established two Chinese-foreign joint stock companies, Ltd.
Although Michelin Group, in possession of the world's top brand tire, was a latest-comer to China, its listing consciousness was the strongest. In March 2001, it signed an agreement with the Shanghai Tire Rubber (Group) Co. Ltd. and set up the Shanghai Michelin-Herculean Tire Co. Ltd. which mainly produces and sells radial tire, wire and mixed sizing material for sedan cars.
Insiders point out that an important reason why these transnational enterprises are eager to list is their wish to enhance integration with local society and speed up the pace of localization of enterprises through listing in local stock markets.
One of the reasons why transnational companies seek participation in China's securities markets is that they look upon the future development prospect of the new emerging market--China as promising. Another aspect is that these transnational enterprises also hope to give encouragement to local ranking managerial personnel through commonly used international means such as listing and stock option and enhance the cohesion of staff members. Related personages of Anglo-Dutch Uni lever point out that once stocks are listed, they will provide stocks for a specified proportion of staff members so as to speed up the process of localization.
According to related statistics from the Shanghai Foreign Investment Work Committee, there are 14 enterprises which have completed the restructuring work in line with the share-holding system but have not yet started listing. In addition to the eight enterprises such as Kodak, Anglo-Dutch Uni lever, Tech Mich Systems, Bright Dairy and Food Industry, the Novel Color Tube Co. Ltd. and Shanghai Midway Infrastructure, there are also Cimic Ceramic and several others. "Shanghai's foreign-invested enterprises have not been late for the work of listing, instead, they have all along been in the lead," said Xu, head of the foreign investment examination and approval management department of the Shanghai Foreign Investment Work Committee.
It is reported that apart from the 14 enterprises, the Shanghai Foreign Investment Work Committee also handles the application of a dozen or so renowned foreign-invested enterprises. Xu maintains that for foreign-invested enterprises to enter the securities market, they must meet the following conditions: first, they must conduct advance transformation work in line with the share-holding system and set up foreign-invested Co. Ltd.; second, they must have the business achievements of reaping profits for three straight years; third, they must conform to the State industrial policy. He said currently there exists such a phenomenon: some well-performed foreign-invested enterprises are afraid that after structural reform, their profits would be divided up by other sponsors, so they hope to side step the process of advance structural reform and then begin structural reform after gaining approval of listing. But this is unfeasible at the present stage.
(People's Daily November 19, 2001)
