| At the end of last century, there has been a phenomenon called "merging system" in China's capital market. The failure of these large-scale private enterprises like "Delong System", "Hongyi System", "Tuopu System" has the identical features: the speed of their increase is much faster than other enterprises of the same kind, but they tend to decline and even go bankrupt when they encounter crises. This phenomenon is not only strange but also hard to explain.Why is the proportion of the failure of large-scale private enterprises so high? Triggered by this question, this paper conducts researches into the "merging system" and makes study on the contributing factors and the means of value growth. After diagnosing and analysing the case of "Delong System", I find: 1) The process of "Delong System" which witnesses its decline proves that the actual cause for its value increase is the aimless multi-business expansion, chaotic strategy for the combination of industry and finance, and careless family management style. The paper points out that most of the merging system have the above-mentioned defective characteristics. 2) Influenced by China's current economic environment and system, private enterprises are more suitable to follow a route of relevant diversification on the basis of speciality. 3) In the present Chinese financial context, the enterprises will surely fail if they expect to achieve the combination of industry and finance by means of pure intention of finance. The combination of industry and finance which is based on the perfect management structure, strict risk control and efficient supervision system can benefit the long-term development of these enterprises. 4) As to the governance of the private "merging system", the problems mainly lie in the conflict between the endless rapid expansion and the family control within the groups and the conflict between the controlling shareholders and relatively minor shareholders of the controlled listed company. |
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