Research Of Development Path On Chinese Industrial And Financial Conglomerate

Nowadays, the collectivized operation conglomerates are the core of the world’seconomic pattern. The total revenue of a conglomerate per year might surpass theGross Domestic Product (GDP) of a middle-income country. Mostly, thecollectivized operation conglomerates adopt a model that combines industrial capitalwith financial capital, or penetrates personnels within the enterprise group.Experiences of those successful conglomerates abroad demonstrate that attachinggreat importance to the capital market, participating in the market, and managing thecapital with sophisticated financial skills may lead to a successful path of developingand strengthening an enterprise group, or conglomerate. Since1980’s, Chineseenterprise groups, as a by product of China’s reforming and opening up policy and ofexploring market economy, have grown from nothing and have developed rapidlyduring the past three decades. After China’s joining in the World TradeOrganization(WTO) in2001, Chinese enterprise groups lifted another climax ofacquisiting industrial corporations with financial institutions and companies.In this thesis, after briefly introducing the research achievements ofcombination of industry and finance by both foreign scholars and Chineseeconomists, the author overviewed the three types of combination model, includingmarket-based model (British-American model), bank-based model(German-Japanese model) and government-based model(Soviet model). The authorthen studied General Electronic(GE) Group of companies and Mitsubishi Group ofcompanies as successful foreign representatives of industrial and financialconglomerates of different type of model under different economic and culturalbackgrounds. The writer also studied Chinese successful conglomerates such asChina National Petroleum Corporation (CNPC) and Haier Corporation, and failedexample such as De Long Corporation, so as to compare and contrast the factors that result in different outcomes. At last, the author came to six strongpoints thatconglomerates which pursue successfully and substantially development shouldfollow. First of all, industrial conglomerates should focus on their major work, andcarry out financial business to enfold and support the major work. Secondly,decision makers of conglomerates should know their situation and the economicbackgrounds of the whole society, and make the best use of it. Thirdly, chief officersshould lay out the best pattern which fits for the characteristics and conditions of theconglomerate. In addition, administrators should pay more attention to risk control,and attach great importance to sustainable development. Moreover, risk managersshould build a firewall between financial capital and industrial capital, and avoidaffiliate transactions. Last but not least, the administrators and decision makers ofthe conglomerate should emphasize on cultivating and fostering a highlyprofessional and loyal team, and looking for talents who meet the needs ofdeveloping and operating the industrial and financial conglomerate.