The strategic reorganization of central enterprises has optimized the allocation of resources, improved the efficiency of resource utilization, promoted the aggregation of innovative resources, and enhanced the innovation and development potential of enterprises. To fully stimulate the vitality of central enterprises, we also need strong support from reforms in other areas.

Recently, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) published its latest list of central enterprises on its website. The list shows that the number of central enterprises is 96.

In recent years, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has taken a series of concrete measures to promote the strategic reorganization of central enterprises, professional integration within or among enterprises, and merger and acquisition of the upstream and downstream of the industrial chain. On the one hand, it has made "subtraction" and promoted the merger and reorganization of 45 central enterprises in 24 groups. On the other hand, according to the need to do the "addition", the newly established China Tower, the national pipe network company, China Rongtong, Air China and so on. The fundamental purpose of both "subtraction" and "addition" measures is to promote the development of central government enterprises in the direction of further strengthening, excellence and expansion.

Merger and reorganization optimize the allocation of resources and improve the efficiency of enterprise resource utilization. First of all, the integration of similar or similar businesses can improve the efficiency of resource utilization through optimal resource allocation and synergies. Experience has shown that the involvement in many business areas and repeated investment in the same business area will lead to low resource utilization efficiency and weak overall profitability of enterprises. By separating out the similar businesses and resources scattered in different central enterprises for professional integration, or conducting strategic reorganization of multiple central enterprises with the same or similar main businesses, unnecessary repeated investment can be avoided on the one hand, and on the other hand, disposal and revitalization of existing assets can also be promoted. According to statistics, since the 18th CPC National Congress, central enterprises have put more than 1.4 trillion yuan of state-owned assets into use through mergers and acquisitions in the capital market alone. Secondly, the merger and reorganization of upstream and downstream businesses along the industrial chain can also improve the efficiency of resource utilization through the coordination of internal businesses after merger and integration.

Merger and reorganization promote the accumulation of innovation resources and enhance the innovation development potential of enterprises. Dispersion of innovation resources often goes hand in hand with business duplication. For central enterprises with diversified investment, R&D resources need to be distributed to all business areas. In the allocation of R&D resources, it will inevitably be skewed according to the importance of business sectors, and the R&D resources allocated to marginalized businesses will be relatively limited. For similar businesses scattered across multiple SOEs, although within each SOE, the business segment can be allocated some research and development resources, but the amount is limited. With the help of merger and reorganization, while integrating relevant assets and resources, it can also synchronously gather the originally relatively scattered innovation resources, and obtain the synergistic effect of "1+1 BBB 0 2" after reasonable aggregation and integration.

Merger and reorganization improve the degree of market concentration and strengthen the enterprise's voice in the development of the industry. The proper concentration of industrial market is conducive to the formation of leading enterprises in the industry, the standardization of market competition order and the formation of a good pattern of common development of large, medium and small enterprises. By means of the strategic reorganization of central enterprises with the same business, or the industrial merger and reorganization carried out on the platform of central enterprises, the market concentration degree can be enhanced to a certain extent, and the competitiveness and influence of state-owned capital in the industry can be enhanced.

Indeed, M&A has created favorable conditions and possibilities for improving the efficiency of resource utilization, enhancing the potential for innovation and development, and strengthening the voice of the industry. However, to fully stimulate the vitality of central enterprises and unleash their development potential, we also need strong support from reform in other areas. For this reason, merger and reorganization has always been an aspect of the State-owned Assets Supervision and Administration Commission of the State Council to promote the reform of state-owned enterprises. At the same time, the construction of modern state-owned enterprise system with Chinese characteristics, the reform of authorized board of directors, the professional manager system and the reform of mixed ownership have also been continuously deepened. It is under the common support of various reforms that the above objectives of the central enterprises' merger and reorganization will be better realized, thus comprehensively promoting the central enterprises to continue to grow stronger, better and bigger.

Source: State-owned Assets and Administration Commission of the State Council