Strategic Challenges and Strategic Responses. The Transformation of Chinese State-Owned Enterprises

227 Pages·2007·1.345 MB·English

by  Jifu Wang (Auth.)

Strategic Challenges and Strategic
Responses
CHANDOS
ASIAN STUDIES SERIES:
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Cass Business School, City University, UK
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Strategic Challenges and
Strategic Responses
The transformation of Chinese
state-owned enterprises
J W
IFU ANG
CP
Chandos Publishing
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First published in Great Britain in 2007
ISBN:
978 1 84334 222 9
1 84334 222 7
© Jifu Wang, 2007
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Typeset by Replika Press Pvt Ltd, India.
Printed in the UK and USA.
Contents
Preface
The aims of this book are to identify the dominant challenges and forces
for change facing state-owned enterprises in China (SOE), to look at the
nature of SOE responses to those forces and to assess the degree of SOE
success in making the necessary transformations to compete in a global
business environment.
Five questions have been explored and examined.
1. What factors create strategic challenges to SOEs?
2. How have SOEs responded to a more market-driven environment?
3. What factors determine the strategies of the SOEs?
4. What new business processes and structures have SOEs planned
and implemented?
5. How do SOEs measure the performance of their new strategies?
The investigation was carried out by means of case studies of eight
companies in seven industries, of which six studies were used for this
book. A holistic conceptual model for SOE study was developed based
on the framework derived from Hofer’s preliminary research. This model,
which is built on the concept of business strategy, summarizes the findings
of this study, and has proved to be an effective analytical tool in studying
the patterns of strategic behaviours of China’s SOEs in the dynamic
environment of economic, social and industrial transformation. The
major contribution of this model is that it takes a holistic view and
studies the developments in strategic behaviours at a macro level. Even
though the variables in the model can change and their significance can
vary with the different stages of transformation, the model provides
theoretical guidance to research in emerging economies, and can catch
the dynamics of change. The beauty of this model lies in its simplicity of
logic flow and practicality in application.
State-owned enterprises (SOEs) in China are the dominant economic
organization:
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Strategic Challenges and Strategic Responses
(cid:1) Of the 305,000 SOEs, 118,000 are industrial firms that provide the
basic inputs for the economy, provide employment and social welfare
for the vast majority of China’s urban workers, and provide the
bulk of fiscal revenues for government at most levels.
(cid:1) SOEs account for 35–40 per cent of the nation’s gross national
product and 60 per cent of all state revenue.
(cid:1) SOEs constitute the nation’s entire heavy industrial base.
This study therefore will be of great significance in helping both scholars
and business practitioners around the world to understand what is
going on in China.
Finally, I would like to express my thanks to Dr William Boulton and
Dr Sharon Oswald at Auburn University for their great help. Without
them, there would be no such book.
x
Contents
List of abbreviations
ASMC Advanced Semiconductor Manufacturing Corp.
BICMOS bi-complementary metal oxide semiconductor
BMEHC The Beijing Machine and Electronic Holdings Co.
Ltd
BOM bill of materials
BYJC The Beijing No. 1 Machine Tool Plant
CAD computer-aided design
CAM computer-aided manufacturing
CAPP computer-aided process planning
CAQ computer-aided quality system
CAT computer-aided transcription
CEO chief executive officer
CEPR Centre for Economic Policy Research
CHN & CHN The Chongqing CHN & CHN Ceramics Co., Ltd
CIDC The China Integrated Circuit Design Corp. Ltd.
CIMS computer-integrated manufacturing system
CMOS complementary metal oxide semiconductor
CNC computer numerical control
CNPC National People’s Congress of China
CPCIMS ceramic production computer-integrated
manufacturing system
CPU central processing unit
DRAMS dynamic access random memory
EBITDA earnings before interest, taxes, depreciation and
amortization
EDA electronic design analysis
EDS engineering design system
EMIS enterprise management information system
FAS flexible automated systems
FGD flue gas disperser
GDP gross domestic product
GE General Electric Corp. (US)
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Strategic Challenges and Strategic Responses
GT-CAD group technology – computer-aided design
HEC The Harbin Electric Machinery Company Ltd
HR human resources
HSMC The Huaxia Semiconductor Manufacturing Co. Ltd
IC integrated circuit
ICC Integrated Industrial Circuit Design Center
ICM integrated computer management
JIT just-in-time
LSI large-scale integration
MAS manufacturing automation system
MCU microprocessor control unit
MIS management information system
MNE multinational enterprise
MOS metal oxide semiconductor
MPEG-2 Motion Picture Expert Group 2
MRP II manufacturing resource planning
NC numerically controlled
NEC The Nippon Electric Company
NIE newly industrializing economy
NPC National People’s Congress (China)
OEMC The Oriental Electric Motor Factory
PDM product data management
PPP purchasing power parity
QCS quality control system
QFD quality function deployment
RF radio frequency
ROA return on assets
ROE return on equity
ROI return on investment
ROS return on sales
SDRAM synchronous dynamic access random memory
SEMICO The Wuxi Huajing Semico Microelectronics Co. Ltd
SOE state-owned enterprise
SRAM static random access memory
SSS Shanghai SyncMOS Systems
TQCS time to market, quality, cost and service
TQM total quality management
TSC total safety control
TVE township and village enterprise
VLSI very large-scale integration
WTO World Trade Organization
xii
Contents
List of figures and tables
Figures
1.1 The strategic challenge–response process 13
2.1 Three development stages for Asian countries 23
2.2 Conceptual strategic challenge–response model 34
4.1 IC design centres in 1999 58
4.2 Product quality in three recent years 62
4.3 Evolution of Huajing Group structure 63
4.4 Sales target for Semico 71
4.5 Huajing science and technology level 76
4.6 New product development in three recent years 77
4.7 Sales revenue for Huajing from 1997 to 2000 78
7.1 Implementation of the safety management process 131
10.1 Perception of globalization 172
10.2 Summary of strategies 177
11.1 Holistic model of the strategic challenge–response
process for SOEs 197
Tables
1.1 Comparisons of US, Japanese, German and Chinese
GDP and per capita GDP 4
4.1 China: imports and exports by IC product type, 1999 53
4.2 Summary of Chinese IC fabrication plants 55
4.3 IC manufacturing technology status in China 56
4.4 The top 10 of China’s 100 largest electronics enterprises 64
4.5 Operation index for 1996, 1997 and 1998 67
4.6 Stock structure for China Huajing Electronics Group Ltd 68
4.7 Stock structure for Wuxi Huajing Semico
Microelectronics Co. Ltd 70
xiii
Strategic Challenges and Strategic Responses
4.8 Stock structure for Wuxi Huajing Microelectronics
Stock Co. Ltd 72
4.9 Progress of Huajing strategic restructuring 74
7.1 Important technical achievements 135
8.1 Sales comparisons 148
8.2 Summary of company valuations 149
8.3 Profitability comparison 150
9.1 Sales and profitability summary 160
9.2 Sales comparisons 161
9.3 Achievements for international projects 162
9.4 Achievements for domestic projects 164
10.1 Perception of strategic challenges 170
xiv