The Research On Corporate Governence Reform In GuiLin Pharmaceutical Co.,Ltd.

Since the 1990s, with the development of institutional investors, economic globalization and liberalization, corporate governance comes to be internationalized. The Third Plenary Session of the Sixteenth Central Committee of the CPC has brought new breakthrough in managing the problems of SOEs' fund providers, which will definitely be advantageous for the establishment of effective corporate governance. Corporate governance, being heatedly-discussed and difficult problems of deepening the reform of SOEs and establishing the modern enterprise system, gains considerable attention and concern of all lines.Guilin Pharmaceutical Factory, a state-owned enterprise with a history of more than 40 years, is located in Guilin National High-Tech Industrial Development Zone, Guangxi Zhuangzu Minority Autonomous Region, has generated great amount of profit and tax for the past few years and enjoyed high reputation at home and abroad. Confronted with increasingly vehement market competition, this debt-burdened old brand SOE has reformed time and time again, but the force of reform has not been strong enough. As a result, the effect of reform is not desirable. In June 2001, four corporations, relying mainly on Guilin Pharmaceutical Factory, jointly set up Guilin Pharmaceutical Works in the hope of opening up the financing channels and extending promptly the productive scales. This reform, directed dominantly by Guilin Municipal Government without real and substantial breakthrough, featured that the corporation's inner mechanism was still irrational and the corporation's governance mechanism was imperfect. Consequently, because of state-owned shares as the only dominant shares, the Shareholder Meeting and Board of Directors couldn't function effectively and the Board of Supervisors couldn't exert effective supervision so that the systems led but the mechanism lagged. By the second year after the reform, the corporation experienced the unprecedented deficit. Facing the great changes of the international and domestic market situations, the Board of Directors realized that the reform of SOEs should further on, that is, for survivor and development, it is necessary for the corporation to establish the modern enterprise system with "clearly established ownership, well defined power and responsibility, separation of enterprise from administration, and scientific management" and perfect corporate governance.This paper puts forward the target and content of the corporation's further reform through the research of the corporate governance in existence of Guilin Pharmaceutical Works. The corporation ensures the successful realization of the corporation's second reform by fostering the diversification of share property-rights and investment, normalizing the behaviors of the Board of Directors, establishing the mechanism of incentives and disincentives of the executives, and further improving the supervising functions of the Board of Supervisors.