Role Of Foreign Equity In Standardizing China Private Enterprises

Having witnessed more than twenty years of economic reform, private enterprises have no doubt grown into the main force that is fueling China's incredibly rapid economic growth. The private enterprises in Guangdong and Zhejiang, for example, contribute to up to seventy percent of the regional gross product. The Sixteenth Congress of CCP created a more desirable investment environment for the development of non-state-owned economy on policy base. Besides, the development of private enterprises is also promoted by their profit-oriented nature and their entrepreneurs' ambition. But, in such an advantageous situation, China's private enterprises have more than often made us full of pities and sorrows. According to some data, around nine enterprises bankrupt every minute in China and the ones that can survive for more than three years account for less than ten percentage of the total number. In addition, the result of a survey, which was conducted by the State Economic &Trade Commission, also demonstrated that the average life-span of China's medium-sized and small-sized private enterprises is merely 5.7 years.The first group of private enterprises in China has inevitably withered, but the research on private enterprise has never slowed down. Recently, facing the case that China's private enterprises passed away in scores, our scholars have attempted to analyze the puzzles, handicaps, vitals, gains and losses of private enterprises, and raised such significant suggestions or viewpoints as "Standardize corporate governance structure and constitute rational organization frame and managementmode", "Set apart the property right clearly by restructuring stockholding system", "New Replacement Theory", "Institutional Transformation and System Innovation" and the like. By systematically analyzing these theories and findings, the author finds out that: for the moment, the defects lying in private enterprises stem from the unsoundness of corporate system this way or that, and thus the key solution to address the problems with private enterprises is to standardize and perfect the corporate system. However, perfecting corporate system is simply the bedrock or systematic security for domestic private enterprises to allay their difficulties, so the holdbacks of private enterprises will not disappear spontaneously as the corporate system gets better and better. To uproot the drawbacks of private enterprises also involves personnel, which is the most valuable factor in any enterprise, involves the managerial capacity of enterprises, involves the power of corporate system in restricting the organizational behavior, involves the execution of diversified corporate rules and restrictions, and involves all other human-related factors existing in enterprise administration. Therefore, to handle the defects of China's private enterprises is not only to standardize the corporate governance structure, comprise reasonable organization framework, and clarify property right by enforcing shareholding system in enterprises, is not merely to transform the constitution, innovate system, or set up modern corporate system, is not simply to consider thing as it stands, is not just to proceed unpractical systematic replacement of all the things in enterprises, but to standardize corporate operation, which is a systematic engineering pooling the efforts of corporate system, human, government, and outside environment.We have made clear that in order to alleviate their drawback, our private enterprises should step up efforts to standardize their operation on the base of consummating their corporate system, but there is still a problem puzzles us—how can the private enterprises standardize their operation? The author suggests that the only way for them to serve their purpose is to make full use of both internal force and external force, especially the latter. There are a good many ways to utilize external force, the author, however, believes that the dream method our private enterprisescan take to actualize the standardization of corporate operation is to introduce and take advantage of foreign investment. In that introducing foreign investment can not only alleviate their thirst for fund, but bring about wholesome corporate system and advanced managerial knacks for domestic private enterprises so that they can shorten their schedule to perfect corporate system, improve management, and standardize corporate operation.Non-standard as China's private enterprises are, they enjoy enormous potential and develop extremely fast Besides, many of them belong to such foreign-investment-concentrated industries as manufacturing, high-tech industry, and the tertiary industry. In addition, our state keeps reducing the confines regarding foreign investment, the domestic investment environment gets more and more tempting, and the profits foreign investors can seek in China keeps expanding. All the above-mentioned positive factors will sure induce foreign investors to broaden their investment spectrum and enhance their investment amount—a trend that can be taken advantage of by our private enterprises to use more foreign investment so as to standardize corporate management. Anyhow, the government, private enterprises per se, and service agencies are supposed to pool their efforts to facilitate the standardization of domestic private enterprises by making better use of more foreign investment.