Research On The Liquidation And Disposal Of "Zombie Enterprises"

At the Central Economic Work Conference in 2015,China first put forward the structural reform tasks of "cutting overcapacity,destocking,deleveraging,reducing costs and identifying growth areas",and since then,supply-side structure reform has entered the public vision and become an important economic strategy.General Secretary Xi Jinping pointed out that overcapacity will cause waste of resources,and economic growth will face greater downward pressure,so it is necessary to eliminate "zombie enterprises" and increase industrial restructuring.Most of China’s "zombie enterprises" exist in industries with overcapacity.They operate inefficiently,occupy a large amount of land,raw materials,labor and other social resources.They also need financial subsidies from banks and governments,which increase the financial pressure of local governments and disrupt financial market order.Therefore,cleaning up and disposing of "zombie enterprises" is the key work of China to resolve overcapacity.This paper summarizes the relevant literature research of "zombie enterprise" at home and abroad,sorts out the identification methods of "zombie Enterprise".The article also introduces relevant literatures on mergers and acquisitions at home and abroad,and links “zombie enterprises” with mergers and acquisitions to lay a theoretical foundation for the later case introduction.In addition,the article summarizes the development and causes of "zombie enterprises" abroad,and describes the distribution status of "zombie enterprise" in China by year,industry and region.The article also summarizes five reasons for the formation of "zombie enterprises" such as improper government-enterprise relations and vicious competition between local governments and state-owned enterprises.In the case part,the case of Erzhong(Deyang)Heavy Industries Co.,LTD.(abbreviated to ErZhong Heavy),a “zombie enterprise”,was selected.First of all,the article introduces ErZhong Heavy and the merger and acquisition party,China National Machinery Industry Corporation(abbreviated to SINOMACH),and summarizes the motivation of the merger and reorganization from the perspective of both parties and the government;secondly,the paper judges the "zombie lesions" of ErZhong Heavy,that is,using ErZhong Heavy ’s financial data to judge whether ErZhong Heavy meets the judgment criteria of "zombie enterprise";then,there is the detailed introduction of the merger and reorganization process,that is,the cleaning and disposal process of ErZhong Heavy;finally,the paper judges whether the “zombie enterprise” successfully cleaned up and disposed of,that is,the performance analysis of the new ErZhong Heavy,divided into two parts: financial indicator analysis and targeted “zombie” indicator analysis.The article also summarizes the experience of Japan and the United States in the cleanup and disposal of "zombie enterprises",and combined with the case of this ErZhong Heavy and China’s national conditions,gave recommendations on the cleanup and disposal of "zombie enterprises" in China.At the financial level,it proposes three clean-up and disposal measures for mergers and acquisitions,which are mergers and acquisitions,trusteeship and bankruptcy;at the government and bank level,it proposes four suggestions for cleaning up disposal,which are appropriate government intervention,perfecting assessment indicators and strengthening punishment mechanisms,sticking to financial and tax support for enterprises and paying attention to employees’ resettlement.