Ways And Performance Analysis Of Gree Electric Appliance’s Mixed Ownership Reform

For many years,state-owned enterprises（SOEs）in China have played a crucial role in providing employment opportunities,improving social development and promoting economic diversification.However,problems such as low efficiency,lack of vitality,and rough management style have grown due to excessive government intervention.Therefore,SOE reform has always been a hot topic.Greater reform efforts were explicitly called for during the Third Plenary Session of the 18 th CPC Central Committee,followed by relevant policies that signal the way forward for the mixedownership reform.The purpose of the reform is to enhance the comprehensive strength of the enterprise by integrating the advantages of SOEs and private enterprises,from operation technology and resource management,fairness and stability and efficiency and innovation,to the supervision system and the incentive mechanism,thus advancing China’s economic system to a higher level.Gree Electric Appliances is one of the practitioners who are in line with the national policy and the trend of the industry.At the end of 2019,Gree ended its ninemonth mixed reform plan with the official introduction of the strategic investor Hill House Capital,and planned to grant senior staff and core technical personnel incentive shares in the future.Since then,Gree has transformed from a state-owned capital holding company to non-state capital company,avoiding the phenomenon of “one person alone has the say”.Therefore,this reform is undoubtedly a benchmark in the industry.The purpose of the present study is to examine whether the introduction of non-state capital can fundamentally change the governance problems and operational difficulties of state-owned enterprises SOES by analyzing the motives,ways and effects of the mixed-ownership reform,so as to explore the options of the mixed-ownership reform of SOEs in the future.The present study adopts the method of literature research,case study and comparative analysis to analyze the motives and ways of Gree’s mixed reform in 2019,as well as the impact of the reform on Gree’s corporate governance,financial performance and non-financial performance.Firstly,this paper explains the motivation to introduce multiple capital and the urgency and necessity of the mixed reform for Gree from three aspects: policy background,current industry situation and Gree’s own needs to improve governance and operation.Secondly,this paper introduces the two ways of the mixed reform-ESOP and the introduction of strategic investors,and analyzes Gree’s endogenous capacity in terms of the financial and non-financial performance compared with Aucma and Hisense,two peer enterprises of Gree in the same industry.The analysis of financial performance is based on the four basic financial performance indicators and the enterprise’s long-term value after the implementation of the mixed reform,while the non-financial performance is analyzed longitudinal and horizontally in five aspects: industry status,innovation capability,diversification and international development,social responsibility and market performance.Finally,it is concluded that Gree’s mixed-ownership reform with the introduction of Hill House Capital is significant for Gree’s development as a whole.From the perspective of corporate governance,the reform has optimized the overall shareholding structure of the enterprise and enhanced the administration authority,which will help improve the vitality of the enterprise for future development.From the perspective of financial performance,the profitability and solvency of Gree have been improved significantly in the short term.From the perspective of capacity of operation and development,there are some improvements,but further investigation is needed in the long run.From the perspective of non-financial performance,the reform has improved the profitability and solvency of Gree.In terms of non-financial performance,the reform has improved Gree’s industry position,broadened its sales channels,optimized the main business structure and accelerated its internationalization process.The present study finds that the future of mixed-ownership reform tends to be more like the integration of capital.Although China makes great efforts to implement the reform,there are still many factors that impede the practices.In view of this situation,enterprises should choose an adequate mixed-ownership reform plan,set up a reasonable shareholding structure,establish a sound corporate governance system,increase the administration authority,and strengthen the government’s supervision.This study is expected to provide inspiration and reference for the reform of state-owned enterprises in China,and thus boost economic development in a faster and better way.