Dialogue With Song Zhiping: China'S Capital Market Will Enter A New Era Of Supporting Innovation

After leaving his post as chairman and Secretary of the Party committee of China Building Materials Group, song Zhiping became the chairman of China Association of listed companies and China enterprise reform and Development Research Association.

His most well-known identity is that he once built two "world top 500" enterprises, and was called "Chinese version of Daosheng Hefu" in the media; he is a capital market veteran who has 40 years of experience in state-owned enterprises and 18 years of experience in "top leaders" of central enterprises, leading state-owned enterprises from loss to listing, and even becoming industry leaders.

On the occasion of the 30th anniversary of the development of China's capital market, the 21st century economic report talks with song Zhiping. His latest career transformation from "athlete" to "coach" also brings us a deeper perspective to understand the development of China's capital market.

In September 2020, the number of A-share listed companies exceeded 4000. The tax revenue generated by listed companies accounts for 30% of the total corporate tax revenue, and the profits of Listed Companies in the real economy account for 40% of the profits of Industrial Enterprises above designated size.

"The listing of China building materials is also related to your 21st century economic report. I read in your office that there is a news in your newspaper that A-share can be packed into H-share in Hong Kong. I am very excited. I read it in the morning, and I will inform you of the meeting in the afternoon. We are going to go to Hong Kong for listing... "

In an exclusive interview with the 21st century economic reporter, song Zhiping talked about a gag when he presided over China's building materials work.

The remarkable achievements of China's capital market in the past 30 years have come from the efforts of a number of regulatory decision-making and leading figures in various industries, including many painstaking and outstanding pioneers. As a media observer and witness, the 21st century economic report has the honor to grow together with China's capital market.

Leading a number of state-owned enterprises to go public

21st century: you have worked in state-owned enterprises for 40 years, and successively served as the main leader of China Building Materials Group Co., Ltd., China Pharmaceutical Group Corporation and other large enterprises. What are the most impressive moments?

Song Zhiping: I think there are several nodes.

The first node is to be a salesman. In fact, I am a science student. My first job was a technician. After four years as a technician, the products produced by the factory could not be sold. When I was studying abroad, I saw that many companies such as Volvo were engaged in market work, so I felt that I should do marketing work and launch products. I have been engaged in sales for 10 years, from salesman to deputy director of sales, and opened up the market of this enterprise.

The second node is that I was the director of Beixin building materials factory. I became a factory director with thousands of people in my 30s. At that time, it was very difficult to pay wages, and thousands of people were crying for food. I put forward "to ignite the fire in the hearts of employees" to lead everyone to turn failure into victory and run the factory well.

One of the most important things was the listing of Beixin building materials in 1997. At that time, listing was to a large extent to help the development of state-owned enterprises, because after the government weaned the state-owned enterprises, the development of state-owned enterprises was in urgent need of funds, so we took the road of listing and financing. Today, Beixin building materials is an excellent listed company, and its development benefits from its listing.

The third node was in 2002, when the superior asked me to come to China building materials as a leader. What impressed me most was that when I announced my appointment on the rostrum, the director of the office took a notice from the court and froze all the assets of the company. China building materials restructured its debt after that, and then promoted its listing. It is also because of the listing that we have the funds to integrate the cement enterprises and the Chinese building materials today.

The listing of China building materials is also related to your 21st century economic report.

It was very difficult at that time. What to do? The only capital I want is capital support. But at that time, the mainland did not actually split up and go public. At that time, the company had two A shares, one was Beixin building materials, the other was China Jushi. Both of these two companies were small in scale and did not have the ability to issue additional shares. If we want to develop, we must find another way.

At that time, your newspaper was just released, and it was a relatively avant-garde newspaper. At that time, I read a news in the newspaper in my office. I was very excited that a shares could be packed into H shares in Hong Kong. I read it in the morning and will inform you of the meeting in the afternoon. We are going to go to Hong Kong for listing. So sometimes I say that 21st century business report enlightened us.

I think another important node is in 2009. The leaders of SASAC talked to me. I was on my way to the capital airport and was preparing to go to London for a road show. The leaders of SASAC called me back and talked to me about one thing. They asked me to become the chairman of China Pharmaceutical Group. I thought I was going to be transferred, but I was surprised to be two directors at the same time. When I came to Sinopharm, I promoted the listing of Sinopharm holdings in Hong Kong.

State owned enterprises in the whole listed company or in the pick

21st century: what kind of role has the state-owned enterprises played in the 30-year history of China's capital market?

Song Zhiping: as I said just now, our state-owned enterprises were initially listed to solve the problem of capital.

At that time, one of our problems was "where do people go?" how could surplus employees leave the enterprise; the other was "where does the money come from?".

Therefore, the only way for state-owned enterprises to raise funds is to go public. Today, most of the state-owned enterprises that survived in the field of full competition were on the market. At that time, most of the state-owned enterprises that were not listed at that time fell down.

However, after going to the market, it is not only the funds that have been taken, but also the market mechanism that follows. In this way, the state-owned enterprises have experienced a completely new change after the completion of the market. This change has inspired the vitality of China's state-owned enterprises today.

Today, 70% of the assets of central enterprises are in listed companies.

In the whole group of listed companies, almost one third are state-owned enterprises and two-thirds are private enterprises.

But from the total market value, the total market value of state-owned listed companies is higher. The capital market can have today, state-owned listed companies are indispensable. Whether in terms of standard governance, operation quality, or innovation, I think the state-owned enterprises are still picking the big beam in the whole listed companies.

21st century: this year, the central government has been promoting the reform of state-owned enterprises for three years. In the future, the reform of state-owned enterprises is still a key content of economic work. What ideas should we stick to today?

Song Zhiping: the direction of SOE reform is marketization. Our goal is to turn state-owned enterprises into real market players, so that they can separate government from enterprises and participate in market competition independently. It's easy to complete this process by going public.

Because the listed company is a public company and a highly diversified joint-stock company, we said that the direction of the reform of state-owned enterprises was the joint-stock system. In fact, the listed company is the most standard joint-stock company, so I think we should continue to adhere to these. We should make more state-owned enterprises become the main body of market competition through listing and transformation.

We always want to separate the government from the enterprise. We always want the state-owned enterprises to become the main body of market competition. But in fact, it is not easy. It is difficult for pure state-owned and wholly-owned state-owned enterprises to achieve this. However, after listing, due to the introduction of market mechanism and the entry of investment institutions, it is easier for the company to separate government from enterprise and become an independent market entity. Therefore, I think listing is indeed a reform of state-owned enterprises and a best way to make them become the main body of market-oriented competition.

In addition, in the new round of listing, we now encourage you to go to the gem, the science and technology innovation board, and some high-tech and new economic sectors. We encourage you to continue to go public and raise funds through listing. At the same time, we can also improve the market value, promote the development of the capital market and bring returns to shareholders.

21st century: when leading the mixed reform of state-owned enterprises, you proposed "three dishes of beef": the first is fair price; the second is equity cooperation and sharing; the third is paying attention to keep people. This idea was repeatedly mentioned by you later. At present, will there be new dishes added to the mixed reform of state-owned enterprises in the future?

Song Zhiping: I think the main thing is the "three dishes of beef". The first is to solve the problem of fairness, because we want to cooperate with private enterprises. In fact, state-owned enterprises are worried about the loss of state-owned assets, while private enterprises are more worried about losing money and being swept out. Therefore, the first "beef" is actually a fair evaluation of assets, not bullying private enterprises.

The second set of "beef" is to retain equity. Mixed ownership doesn't mean that I come to you to leave the house, nor is it the public-private joint venture in 1956. Today, our goal is to let private and state-owned enterprises form a joint-stock company and cooperate fairly under the company law.

The third "beef" refers to the fact that these private enterprises have undergone market experience. Frankly speaking, they have vitality, and they have the spirit of struggle and entrepreneurship. So it's not like we're going to beat them out.

We should continue to give full play to the "wolf nature" of private enterprises in the market, and at the same time, we are also regulating them. In fact, mixed ownership is doing two things. One is to help state-owned enterprises carry out market-oriented reform, introduce market mechanism into enterprises, and make enterprises full of vitality. The second thing is to help private enterprises standardize their governance. I have a formula, which is "the strength of state-owned enterprises + the vitality of private enterprises = the competitiveness of enterprises". Both sides complement each other's advantages and learn from each other's strengths. Therefore, I think the "three dishes of beef" has never been better.

We have made some achievements in the mixed ownership reform of state-owned enterprises, but we still need to further deepen and refine.

First, we should adhere to the principle of "independence, control and participation", follow the market law, proceed from reality, and support the reform of mixed ownership and diversified equity cooperation among state-owned capital.

Second, be prepared for mixed thinking. There are three key points in the mix of state-owned enterprises and private enterprises: first, strategic coordination; second, cultural tolerance; third, enlightened leadership.

Third, the most important thing about mixed ownership is not "mixing", but "reform". What should be changed? First of all, we should introduce market mechanism into state-owned enterprises. Secondly, it is necessary to increase the connotation of the three systems and realize the transformation from the "old three types" to the "new three types". It is necessary to promote the reform of employee stock ownership, management stock plan, scientific and technological dividends and the right to bonus for excess profits, so as to allow human capital to participate in the dividend and redistribute wealth.

Fourth, obtain good enterprise benefits. To develop mixed ownership, one is to give full play to the advantages of the mechanism and combine the advantages of state-owned enterprises and private enterprises. Second, strengthen operation and management. Any enterprise should do a good job in the main business and highlight the main business. The third is to carry out high-quality innovation to make the enterprise better. At the same time, entrepreneurship should be carried forward in the reform of state-owned enterprises. Entrepreneurs are scarce resources, which can be met but not sought. Therefore, it is necessary to protect and promote entrepreneurship.

Now the main contradiction is to be better and stronger

21st century: you mentioned in 2012 that China needs large enterprises, which are the engine of small and medium-sized enterprises and the stage for us to "go out". Eight years later, do you think there are enough big enterprises in China? In the future, what kind of large enterprises do we need to further cultivate?

Song Zhiping: in the early years, the relevant departments of the national development and Reform Commission conducted a survey. At that time, they went to South Korea and Taiwan of China. They made a comparison and found that South Korea was trying to build large enterprises, such as Samsung and other leading enterprises. Taiwan is basically dominated by small and medium-sized enterprises. Now, Korean enterprises are very competitive in the world.

As a big country like China, we felt that we should cultivate large enterprises and drive our small and medium-sized enterprises. We always say that "a big river has water, a small river is full, a big river has no water, and a small river has no trunk". Large enterprises and small and medium-sized enterprises are connected like rivers. Only with large enterprises can these small and medium-sized enterprises be promoted. At that time, some large Japanese enterprises left, and Japanese small and medium-sized enterprises were everywhere, leading to the hollowing out of the industry. This is enough to see the role of large enterprises in the whole economy.

Among the world's top 500 companies, there are 124 in mainland China and Hong Kong, and 133 in Taiwan. There are 121 in the United States. In 1995, the number of China's top 500 enterprises was far more than that of the United States. In other words, our big enterprises have grown up.

Among the 124 Fortune 500 companies, there are 32 local state-owned enterprises and 48 central enterprises. There are stages in the development of enterprises. In the past, we talked about speed and scale. What we need to do is to solve the problem of "whether there is one". We need large enterprises, which are the engine of small and medium-sized enterprises. Now we want to be stronger, better and bigger. Large scale is the foundation. But we should realize the high-quality development of enterprises. We should be strong and excellent, and highlight the quality. Now we are talking about quality and efficiency. What we need to solve is the problem of "good or bad". High quality development is very important.

This is not a simple word game. With the development of time, it is not our main contradiction to be bigger now. The main contradiction is to be stronger and better, so as to improve our core competitiveness and improve our quality and efficiency. This is an important topic for us today. What is strong is technology and core competitiveness. We can not always be "stuck in the neck" in technology; what is excellent is mainly benefit and value. Enterprises should have good business efficiency and market value.

There is a saying in the United States that enterprises in the United States are enterprises. In fact, enterprises in China are also enterprises. Large enterprises have a historical responsibility to lead and help small and medium-sized enterprises. The relationship between big rivers and small rivers is mentioned above. In fact, the water of big rivers is also gathered by small rivers, and they are highly related.

"21st century": at present, the registration system has been implemented in the science and technology innovation board and the growth enterprise market, and will be fully implemented in the A-share market in the future. What do you think of the listing and delisting of enterprises under the registration system?

Song Zhiping: the document "opinions of the State Council on further improving the quality of listed companies" requires that diversified exit channels of listed companies, such as active delisting, merger and reorganization, bankruptcy reorganization, should be unblocked.

For delisting, in fact, our listed companies are not particularly used to it. There are about 5000 listed companies in the United States now, but more than 10000 have been withdrawn in recent years. Many Chinese companies listed in the United States have retired and returned to the market. Some companies feel that if the valuation is particularly low, it will take the initiative to delist. At this time, delisting is not a particularly shameless and shameful thing.

Listed companies should be top students, we hope that listed companies are excellent companies. If you are not excellent, and your share price is so low, it is better to withdraw. After retiring, the enterprise can be listed again. Therefore, many companies in Hong Kong have gone through listing, delisting and re listing.

In the past, we thought it was very difficult to go public. We couldn't withdraw from the stock market. It seemed that it would be a great shame to withdraw from the stock market. Moreover, the local government was not willing to let it go. In addition, shareholders also had interests in it. "It's not easy for everyone to go public", so it becomes such a culture. That is changing now.

I always tell you that delisting should be normalized and viewed with a normal mind.

As a listed company, everyone wants to make it the best. However, due to various reasons, not all of them can do a good job. If they do a bad job, they can retire, and when they are finished, they can go on. Of course, there are also extreme cases. For example, if the company really violates the laws and regulations, does not meet the basic requirements of listed companies and becomes a black sheep, it will be forced to delist.

In fact, most of the delisting in the United States is not simply a retreat, but a restructuring. About 60% or 70% of the delisting is through restructuring.

Therefore, my personal view on delisting is that if the listed companies seriously violate the law and regulations, it is zero tolerance. But if it is a general business problem, or a cyclical problem, which is relatively poor, I still advocate to solve it through the reorganization of listed companies.

The association of listed companies is duty bound to improve the quality of listed companies

21st century: what is the main responsibility of the association of listed companies and what role does it play in the capital market?

Song Zhiping: the association of listed companies is a self-discipline management organization in the industry. On the one hand, we are a bridge for communication between the government and enterprises, and on the other hand, we are a platform for communication between enterprises.

It is unrealistic for every listed company to go to the government departments, and the efficiency will be relatively low. Therefore, the association summarizes their problems and provides them to the CSRC and policy departments.

It is our job to solve the common problems faced by listed companies.

For example, the SFC will give you guidance on how to implement the requirements of the SFC in a timely manner.

On the other hand, we are also a communication platform between listed companies.

With so many members from all over the world, you can exchange views on the platform, and you can also reach some opportunities for reorganization and merger. Therefore, the association of listed companies is equivalent to a matchmaker. Service is the most important work of our association. I always say that the association of listed companies is the home of listed companies. If you have anything, you can immediately think that we have an association.

This time, the State Council issued the "opinions of the State Council on further improving the quality of listed companies", which is to give full play to the "self-discipline management role of the association of listed companies". In the past, we stressed more on self-discipline. Why do we add the word "management" this time? We have so many listed companies, who will give them training such as "improving the quality of listed companies"? An important way for China Securities Regulatory Commission and China Securities Regulatory Commission to pass on policies to them. So the platform of the association is very important.

21st century: last year, the China Association of listed companies trained more than 6000 "key minority" of directors, supervisors and higher education enterprises. This year, more than 10000 people have been trained online due to the epidemic situation. As a "key minority" in a large-scale listed company, what do you attach most importance to when guiding the training of "directors, supervisors and senior executives"?

Song Zhiping: at the annual meeting of China Association of listed companies last May, chairman Yi Huiman proposed that "improving the quality of listed companies" is our central task. Since then, we have taken this requirement as the "top priority" of our work.

The association regards the training service for "key minority" as an important way to convey regulatory policies, reflect the demands of listed companies and promote the quality improvement of listed companies. In addition, the "forum on strengthening the country" and "through to the leaders of the association" have been carried out. This year, the association actively carried out online training, focusing on the contents of the new "Securities Law" propaganda and interpretation, investor protection, financial information disclosure, etc., to promote the "key minority" of listed companies to deeply understand the latest changes in the relevant policies and regulations of the capital market under the new securities law, and strengthen the compliance awareness of "listing".

This time, the State Council put forward the No. 14 document of "improving the quality of listed companies", with 17 articles in 6 parts, which is very grounded and accurate. In terms of improving the quality of listed companies, the association of listed companies is duty bound.

Every time the association holds a seminar for the chairman and general manager of listed companies, I will basically give them a lecture on how to improve the quality of listed companies. I will talk about the principles, positions, original intention and bottom line of listed companies. I will give them some suggestions on governance, management and operation based on my own 40 years' experience in running enterprises. At the same time, I will also share my views on entrepreneurs Spiritual understanding.

The chief executive of a listed company is responsible for the quality of the listed company. I think entrepreneurship can be condensed into six words: innovation, persistence and responsibility. A high-quality listed company must also be a listed company that adheres to innovation, adheres to the main business and takes responsibility bravely.

21st century: since you became president of the association of listed companies, you have visited dozens of listed companies and made face-to-face exchanges with many presidents. What are the most concerned issues during the visit? What is the most intensive feedback from Listed Companies in the interview?

Song Zhiping: the listed companies I go to are not all the best companies. I also go to the general companies, some backward companies and even companies with problems.

We should not only sum up the advanced experience of the good listed companies, but also help the backward listed companies to advance and drive the vast majority of the middle companies to improve their quality.

In the visit, one is to pay attention to their governance. I pay more attention to the normative issues of governance such as the operation of the board of directors and information disclosure. Every time I ask them about their equity structure, their board structure, and their standard governance.

The second is to pay attention to their operation quality. Many listed companies have problems because they blindly expand and deviate from the main business. In this regard, I have put forward requirements for listed companies to highlight their main business, to revere their majors and not to expand blindly.

The third is to care about their innovation and transformation, how to innovate and how to transform. Fourth, they should be concerned about their performance, including their market value management.

From the feedback of listed companies, I found that there are some common things.

First, we have reached a consensus on improving the quality of listed companies. We are seriously studying the spirit of the new securities law and the No. 14 document of the State Council.

Second, we are full of confidence in the performance of listed companies this year. Although we are faced with some pressure brought by the global economic downturn, most of the listed companies have indicated that they should concentrate on the business development of enterprises and do their own work well.

Third, listed companies are increasing the strength of digital transformation; fourth, listed companies are actively doing some market layout under the new dual cycle development pattern.

China's capital market will enter a new era of supporting innovation

21st century: you once said that this is the best time window to build unicorns. It is a great time for innovative economy and unicorn growth. In your opinion, what is the interaction between Unicorn enterprises and the capital market?

Song Zhiping: the State Council's opinions on further improving the quality of listed companies requires that we should vigorously develop venture capital, cultivate science and technology and innovative enterprises, and support the development and growth of enterprises such as the single champion of manufacturing industry and the "small giant" with special expertise and innovation.

Unicorn enterprises refer to some innovative enterprises that have been established within 10 years and have a capital market valuation of more than 1 billion US dollars. One of its characteristics is the combination of innovation and capital. The emergence and growth of Unicorn enterprises are inseparable from the capital market. They are cultivated by the soil of capital market.

The high investment of these enterprises in the early stage of development relies on the support of the capital market. At the same time, they feed back the capital market. The value of these Unicorn enterprises after listing will benefit the capital market. In the capital market, the funds and venture capital institutions that support Unicorn enterprises in the capital market usually get rich returns after the successful listing of Unicorn enterprises. Therefore, unicorn enterprises not only have great significance for innovation, but also for the capital market.

According to the 2020 Hurun global Unicorn list, among the more than 500 listed enterprises, the United States and China accounted for nearly 80% of the list, including 233 in the United States and 227 in China.

In other words, from a global perspective, China and the United States are the major innovation powers.

These enterprises in China are mainly distributed in Beijing, Shanghai, Shenzhen and Hangzhou. The four cities have a high degree of innovation, mainly due to the combination of capital and innovation, and active equity investment. Before going public, the companies with super market value in the United States have been cultivated by equity investment. After listing, venture capital funds withdraw, forming a complete innovation ecological chain.

Therefore, in order to produce more unicorns, I think we should first create an environment that encourages innovation and tolerates failure in the whole society, so that more excellent talents can invest in innovation and entrepreneurship. At the same time, our capital market should provide Unicorn enterprises with a broad financing platform and a competitive stage in the system construction.

I believe that China's capital market will enter a new era of supporting innovation.

From the implementation of the science and technology innovation board and the pilot registration system in July last year, to the launch of the gem registration system in August this year, and then to the full implementation of the registration system. The registration system provides more diversified and inclusive listing conditions, which can support more high-quality enterprises to go public, and enable the capital market to cultivate more scientific and innovative Unicorn enterprises.

21st century: with the full implementation of the registration system, the future market also puts forward higher requirements for investors. In your opinion, is the investment ecology the biggest part of the future growth space in the development of the capital market?

Our country has the characteristics of investors.

We have a large number of retail investors. Now we have 170 million account holders. There are only 300000 to 400000 institutional investors here.

We hope to cultivate more institutional investors, because institutional investors have a more systematic analysis ability and will be more mature. At the same time, the majority of Chinese investors are small and medium-sized retail investors, which is an objective reality, which is Chinese characteristics. Every family and everyone in China hopes to participate in the investment, and the majority of small and medium-sized investors have their enthusiasm.

But I think one thing we should pay special attention to is to protect and care for these small and medium-sized investors. Especially as a listed company, we can't damage their interests. To create value for shareholders, especially for small and medium-sized shareholders, this is the most important thing for our listed companies.

On the other hand, from the perspective of investors, we should establish a sense of investment value. We should change from the past "speculation concept" to "value". Investment can not be blindly speculation, can not simply follow the trend, can not fry the concept, but really understand the capital market, to learn innovative knowledge, to understand the company's fundamentals.

China's capital market has experienced 30 years. We call it thirty years old. Today, we focus on improving the quality of listed companies, which is the basic work of capital market. I think the role of the media in this respect is also very important. We always talk about the joint efforts of the regulatory authorities, listed companies, media and investors. This is the joint effort.

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