No more sales - Exposing the myth of corporate restructuring

Author: Zuo Dapeng
Publisher:
Publish Date: 2006-07-01
Features: The chapter is named "Selling" to plunder people's property. On the surface, most "state-owned enterprise property reform" has adopted the practice of selling the ownership of state-owned enterprises. Many people believe that this transfer of enterprise ownership is not the plundering of the masses by a few, because it is merely a "transaction." However, in reality, it is not difficult for a few to plunder the majority under the guise of a "transaction." Whether a transaction becomes plunder depends on the price: if one party is forced to sell its property to another for only 1/10 of its value, there is no doubt that this "transaction" is a form of plunder. The sale of public enterprise ownership is no different from the sale of any other enterprise ownership in that one of the biggest issues is the actual value of an enterprise's ownership. According to common practice, under the current "capital employs labor" corporate system, the value of any enterprise's ownership should be the value of its capital. From the perspective of enterprise accounting, the amount of capital is very clear—it is the difference between the total assets and liabilities on the company's balance sheet. However, as different economics professors with differing views, such as Zhang Weiyi and Hu Jingbei, all emphasize together, the common sense of mainstream economics is that the book value of assets itself is not an accurate measure of an enterprise's actual assets. The actual measure of an enterprise's assets can only be the capitalization of its total future profits. But such a correct measure is very difficult to achieve in practice, and even more so, there is no consistent and widely recognized method of measurement. Precisely because the actual value of enterprise assets, and thus its capital, is difficult to measure accurately, it becomes possible to drastically reduce the selling price of enterprise ownership. In this way, "selling" the ownership of public enterprises allows buyers to get rich. The latter part of this chapter will elaborate in detail that in recent years, the book value of public enterprises in their "reform" may not be equal to their actual assets, becoming the main basis for a few to "buy" the ownership of enterprises without regard to the book value of public net assets. They use this as a pretext to employ every possible means to drive the selling price of public enterprises far below their actual value. There, it will be fully explained what specific methods they have adopted. Among these methods, the most egregious ones are various illegal and irregular acts, from falsifying accounts and concealing assets to transferring enterprise property and even embezzlement and bribery. Another method is the collusion between officials and business interests, where private deals are made, refusing to conduct a true auction of state-owned enterprise property rights. The third method is to allow the former leaders of state-owned enterprises to buy their own enterprises or control stakes in them. Since the managers of enterprises are better informed about the actual situation of their own enterprises, they can take advantage of their informational advantage to manipulate others, forcing them, including the original administrative departments of state-owned enterprises, to lower their asking price and bidding, ultimately "buying" the property of their own enterprises at a price that is too low, even free. In addition to the above practices, certain regulations on state-owned enterprise property rights reform issued by relevant authorities in recent years have also greatly facilitated the plundering of the property of the masses by a few. And here, the first issue to discuss is another level of problem. As mentioned earlier, the book value of enterprise assets