Research On The Impact Of Business Restructuring On The Market-oriented Transformation Of Local Government Financing Platform

Local government financing platform originated in China’s "taxation system reform”,in a particular period,it assumed the function of borrowing and infrastructure business for the local government in China,after the world financial crisis in 2008,our country issued " Four Trillion Rescue Plan”,with the help of local government financing platform,we get through the crisis successfully,but the development is too radical,leading to huge fiscal and financial risks hidden behind the massive issuance of urban investment bonds and government credit guarantee.Aware of the risks,Chinese government introduced several policies and decrees such as "new budget law" to limit the financing function of local government financing platform,and continuously promote the transformation of local government financing platform,but several problems such as local government financing platforms’ remaining severe debt,backwardness of internal management mechanism,different kinds of stakeholders make transformation work difficult.From the point of "14th Five Year Plan " spirit,market-oriented transformation is the direction for local government financing platforms,market-oriented transformation can introduce advanced management concept and putting enterprises into the competition in the market can also encourages enterprises reform continuously,but how to lead market-oriented transformation is a problem for most of the local government and platform company.Shanghai Municipal Investment(group)Corporation is the earliest local government financing platform in China which began market-oriented transformation,the transformation effect is obvious,its market-oriented transformation path can provide reference for other similar companies.Business reorganization refers to the division of the business of the restructured enterprise according to its business nature which is helpful in managing different business.It is also the mode of transformation tried by local government financing platform companies in some regions of China in recent years.The core of the market-oriented transformation of Shanghai Municipal Investment(group)Corporation is business restructuring and follow-up management.The business restructuring of Shanghai Municipal Investment(group)Corporation has been promoted since 2007 and is still being optimized.What Shanghai Municipal Investment(group)Corporation has done to promote and optimize the business reorganization and how business reorganization promote the market-oriented transformation of Shanghai Municipal Investment(group)Corporation has strong research significance.Therefore,this paper focuses on the analysis of the business restructuring and subsequent business management process of Shanghai Municipal Investment(group)Corporation since 2007,concludes that the business restructuring of Shanghai Municipal Investment(group)Corporation promotes the marketization transformation through analysis of marketization results,and then finds out the key points of its business restructuring and subsequent business restructuring management.Through the analysis of marketization effect,it concludes that the business restructuring of Shanghai Municipal Investment(group)Corporation promotes the marketization transformation of Shanghai Municipal Investment(group)Corporation.This paper also finds out the key points and drawbacks of success of the marketization transformation which can provide suggestion for other local government financing platforms.This paper found that through business restructuring,local government financing platform companies can clarify business units and allocate resources better,manage infrastructure and other market-oriented business separately,result in the promotion of their market-oriented transformation.However,the application premise of this method is that the local government invest market-oriented asset into platform companies.In the management process,the government can also settle the debts of local government financing platform companies on the one hand and increase the marketization potential of platform company at the same time.Platform companies should also actively explore their own market-oriented business resources and improve the utilization efficiency of resources injected by the government.Finally,after business restructuring,the company must carry out continuous and effective management and motivate different types of business through different assessment methods.The contribution of this paper include: Break through the limitations of the original literature studies,which mainly suggested the market-oriented transformation of platform companies from the perspective of government macro policies,it provided ideas for the risk mitigation and transformation of local financing platforms from the micro level.Besides,this paper promote marketization transformation method to many platform companies through micro-individual case study,which increases the universality of case analysis and provides a reference for local government financing platform companies that are currently embarking on marketization reform through business restructuring.The weakness of this paper is that a long market-oriented transformation path of platform companies and many policy factors behind the transformation make it difficult to directly reflect the impact of business restructuring on their marketoriented transformation.In addition,the specific operation path of business restructuring needs to be adapted to local conditions and is not suitable for all local government financing platform companies.For platform companies with poor qualifications and no market-oriented business,the transformation method needs to be further explored in the future.