| With the further development of the reform of state-owned enterprises and the state-owned economy gradually withdrawing from the competitive market area, the privately-run enterprises are surely to develop deeply and further step-by-step. From the whole perspective, the privately-run enterprises are still in the relatively low level in terms of developing scale, advanced degree of technology, management skills and human resource management. How can the privately-run enterprises, from management improving and system innovation, raise to a higher level in system, management, scale, human resource and technology is one problem deserving deep thinking for people who pay close attention to the privately-run enterprises. If we can take the first-undertaking as the process of capital accumulation, the second-undertaking can be seen as the structure adjustment or strategic adjustment. The fact is to make up the flaws created by the fast speed of perfecting the business structure during the capital-accumulation process. In that period, the speed of perfecting the business structure exceeded that of the capital accumulation. That means the enterprises should really be changed into modern corporations. The first relative thing about the structural transform of corporations is the reform of the property rights system. From a macro aspect, this is the problem about the perfecting process of structure administration. The management system is influenced and restricted by the structure administration of the corporation, while the traditional structure administration of the privately-run enterprises are centered on families and relations. Such a close management way has nature resistance to the outside forces. The innovation of management system includes not only the rules and work process, but also the ideas of operation and management. To a corporation, all elements like capital, technology, and human resource are flexible except the management system. It can only be formed from the inside. Dongwu Group is a township enterprise located in Suzhou. In the beginning of 90's, its business was solely about the production of silk clothes and almost all its product were exported. It was in this period of time that the group rapidly finished the capital accumulation. From 1997, the domestic clothes industry began to decline. Supply exceeded demand and the profits decreased. Added with the effect of the Financial Crisis, the clothes exporting industry was greatly hurt. So, Dongwu Group stepped into the difficult position. At the same time, many problems appeared from inside, such as the former investments were unduly decentralized. In such circumstances, the Group chose the strategy of quitting from the industry gradually. From 1998 till now, it successfully controlled a bond corporation and bought one that had gone public. All the assets it controls now have reached RMB 5 billion yuan, but the qualities are quite different. How to restructure them, form a desirable management platform, and set up an effective and efficient system of management and decision have become the first urgency for the Group. This is the background of the strategic restructure of Dongwu Group. Similar with many other township enterprises, Dongwu Group can be seen as a privately-run corporation. In fact, the property rights relations are indefinite because mainly the founder developed the Group. With the further growth, such indefinite relations showed its disadvantages. In 1999, Dongwu Group began to reconstruct its system. It purchased the majority shares from the town government after assets-assessment, so the property rights relations gradually turned smooth. But this restructure involved only the internal assets, not the external. The operations of external assets were no quite standard because of the excessive extension. As to the property rights structure, it was in a mass and in an urgent need of effective restructure on systematic management. From this aspect, the strategic restructure is in fact for the assets scattered throughout th...
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