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On the Division of Labor and Cooperation between Private Enterprises and State-owned Enterprises

release time:2023-09-14Author source:SlkorBrowse:4974

On September 4th, two major events and a piece of good news took place on WeChat Moments. Firstly, Cong Liang, the Deputy Director of the National Development and Reform Commission, announced during a press conference held by the State Council Information Office that the Central Compilation and Translation Bureau has officially approved the establishment of the Private Economy Development Bureau within the National Development and Reform Commission. Secondly, "Luckin Coffee" and Moutai Liquor collaborated to create a sauce-flavored latte coffee. Our Slkor and Kinghelm colleague , and many others went downstairs to purchase and taste it. Cong Liang stated that the Private Economy Development Bureau will serve as a specialized organization to promote the growth and development of the private economy. It will enhance policy coordination in relevant fields and ensure the timely implementation and effectiveness of major initiatives. The co-branded coffee by Luckin Coffee and Moutai Liquor, with its product and Moutai-inspired packaging, accompanied by the catchy slogan "Love this cup with wine and coffee," has not only resulted in a significant increase in sales but also piqued consumers' interest. In terms of marketing capabilities, it can be compared to domestic enterprises and even Huawei's smartphone advertising, demonstrating remarkable leadership.

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Wine and coffee combined, I love this cup

The main responsibilities of the Private Economy Development Bureau under the National Development and Reform Commission are to track, understand, analyze, and assess the development of the private economy. It is also responsible for coordinating and formulating policies and measures to promote the development of the private economy, as well as policies to promote private investment. The bureau establishes a regular communication mechanism with private enterprises, coordinates and resolves major issues related to the development of the private economy, and supports the enhancement of its international competitiveness. Shenzhen is an excellent city for the development of private enterprises, leading in efficiency, innovation, market responsiveness, and growth rate. The Shenzhen Municipal Government is also known for its service-oriented approach. On August 7th, the Shenzhen government released three working plans: "Shenzhen's Work Plan for Optimizing the Market-oriented Business Environment," "Shenzhen's Work Plan for Optimizing the Rule of Law-based Business Environment," and "Shenzhen's Work Plan for Optimizing the Internationalized Business Environment." These plans aim to accelerate the optimization of a first-class business environment in terms of marketization, rule of law, and internationalization. Shiqiang Song, an entrepreneur in Huaqiangbei, noticed that these three plans consist of 55 tasks and measures, which are favorable for fostering confidence among enterprises and individuals in Shenzhen. As someone who has been engaged in long-term research on the private economy and small and medium-sized enterprises, as well as being an entrepreneur at the forefront of technological innovation, Shiqiang Song is very pleased with these initiatives!

As can be seen, the Pearl River Delta and Shenzhen are paradises for the development of private enterprises, making significant contributions to the national economy. They actively contribute to aspects such as tax payment, technological innovation, and employment. During the early stages of the reform and opening-up policy, Guangdong Province and Fujian Province, with their export-oriented economies, relied heavily on the private economy. The wealthiest regions in China, such as Jiangsu, Zhejiang, Shanghai, Fujian, and the Pearl River Delta, are all highly developed areas for private economy!

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Huaqiangbei Electronics Market, Slkor Store

As of the end of 2022, there were 2.379 million private enterprises in Shenzhen, accounting for 97% of the total number of enterprises in the city. They contributed 55.9% to the city's GDP, accounted for 62.1% of imports and exports, and contributed approximately 70% of tax revenue. This year, companies like BYD in the field of new energy vehicles and Kinghelm (www.kinghelm.com.cn) in the field of RF connectors have further expanded their market share. Huawei has also made significant progress in overcoming challenges from the United States. The 31 policies for private enterprises introduced by Shenzhen on July 19th this year have been jokingly referred to by netizens as "choosing to issue documents between giving out money and coupons," which indicates the goodwill of central policies and public opinion towards private enterprises.

After several years of exploration and practice, society has gradually reached a consensus that both state-owned enterprises and the private sector are indispensable for the healthy and rapid development of China's economy. State-owned enterprises are suitable for development within the scope of planned and command economies, focusing on providing public services, and typically characterized by resource monopolies, protected or partially protected markets, large scale, long cycles, and stable returns. However, they are often inefficient, lack innovation, and suffer from corruption. They also face severe competitiveness issues in completely open and competitive sectors. State-owned enterprises serve as ballasts for the national economy, ensuring social stability and avoiding crises in essential goods development.

 Private enterprises have advantages such as low utilization of social resources, high innovation, efficiency, vitality, and strong motivation. They excel in areas requiring continuous innovation and intense market competition. However, they may encounter problems such as crossing boundaries in business operations and inadequate regulatory control. Regarding job placement, state-owned enterprises create 1.85 million jobs for each 1% increase in GDP, while private enterprises create as many as 6.36 million jobs. Companies such as Huawei, BYD, Tencent, Kinghelm, and Slkor (www.slkoric.com) represent Shenzhen's private enterprises. 

Small and medium-sized private enterprises can quickly develop efficient innovations and find new growth points, thereby promoting technological innovation and social development. Over the past few decades, state-owned automobile companies have exchanged market access and sales profits for technology. They used to be incapable of innovation and have not learned how to innovate. In contrast, private enterprises such as BYD, Xiaopeng Motors, and Geely have achieved success in both technological innovation and market sales, and they are now approaching the strongholds of European and American automobile companies.

State-owned enterprises have significant advantages, but private enterprises are characterized by being small, fast, and flexible. In comparison, state-owned enterprises have relatively standardized management, but excessive constraints can lead to low efficiency. Even if profits are made, they are reluctant to provide too much incentive to employees. Leaders can also transfer to other positions. On the other hand, private enterprise owners are responsible for both the process and results of operations. If they perform poorly, they may have to run away. But if they do well, they can achieve financial freedom and even own private jets. There's a rumor saying that the deputy general manager responsible for energy at Huawei received a year-end bonus in 2022 for achieving a small target, which is very tempting!

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BMW 4S Store Replaced by BYD 4S Store

Private enterprises have also performed exceptionally well in the international market. In the past two years, "carbon neutrality" and "energy storage batteries" have been hot topics. In 2022, the global shipments of energy storage batteries reached 142.7 GWh, a year-on-year increase of 204.3%, surpassing even the high pace of Zhang Songwen's starring film "Mad Speed". Companies such as CATL (Contemporary Amperex Technology Co. Ltd.), BYD (Build Your Dreams), and Sungrow Power have captured 80% of the market share. The conflict between Russia and Ukraine has created bigger waves, leading to higher prices in the new energy market. These excellent private enterprises have entered the international market and knocked down their competitors with their strong capabilities. In terms of household energy storage, the market is relatively fragmented, and large enterprises have not yet fully responded, which has been largely taken over by small and medium-sized enterprises in Shenzhen. The rapid development and favorable environment for private enterprises in Shenzhen serve as powerful support for them.


Biography of Mr. Shiqiang Song

Mr. Shiqiang Song is a researcher of private economy at the Economic Development Center of the State Council, a member of the electronic information expert pool of the China Association for Science and Technology, and an expert in Huaqiangbei business research. Mr. Song was the CEO of a listed international real estate company, and now he invests and manages Shenzhen Slkor Semiconductor Co., Ltd. and Shenzhen Kinghelm Electronics Co., Ltd. (www.kinghelm.com.cn). Both Slkor and Kinghelm are national high-tech enterprises, owning dozens of original invention patents and software copyrights. At present, Slkor is one of the Chinese semiconductor companies developing rapidly and steadily. The company's vision is to become the "leader in semiconductor industry".

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"With Kinghelm, BDS is connected”. Starting from the development of BDS GPS antenna, Kinghelm has developed and produced RF microwave antennas, RF jumper cables and electrical signal connectors to embrace the intelligent digital era of the Internet of Things. Mr. Song has a high reputation and influence in the semiconductor and BDS positioning and navigation industry. Mr. Song has been working in the electronics industry for many years and is constantly striving for a better business environment in Huaqiangbei, in the hope that Huaqiangbei will become a window of reform and opening up and a symbol of Shenzhen's economic development and continue its glory.

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