Analysis Of The Causes Of Zombification Of Private Enterprises

China first proposed the cleanup and disposal of zombie enterprises in 2014,and since then the disposal of zombie enterprises has been an important policy task of our government,After years of efforts,China’s state-owned zombie enterprises have made significant progress in their liquidation,According to the disclosure of the State-owned Assets Supervision and Administration Commission,as of February 2023,all 2041 key zombie enterprises nationwide have been disposed of,However,the problem of private zombie enterprises still exists,and the data disclosed by Guangdong Province 2022 show that the number of state-owned zombie enterprises cleared in Guangdong Province in 2021 has declined,but the number of private zombie enterprises cleared has increased significantly compared with 2020,which indicates that the problem of zombification of private enterprises still exists and the problem of zombification of private enterprises has not been significantly reversed,The difficulty of solving the zombification problem of private enterprises is related to many factors,and exploring the formation mechanism of private zombie enterprises in line with China’s national conditions can help us effectively discover the crux of private zombie enterprises,Many scholars’ studies point out that government subsidies may be a major cause of zombie enterprises,As an important policy tool,government subsidies play an important role in helping enterprises to develop rapidly,bridge the capital gap,and improve their operating capacity,However,at the same time,it also allows enterprises that have lost their viability to continue to survive,becoming an important driver of enterprise zombieization,This paper focuses on the zombification of S enterprises in an agricultural primary processing export industry,and investigates the formation path of zombification of S enterprises in depth by collecting data for financial analysis and field survey,This paper finds that inappropriate government subsidies will encourage enterprises to invest in unprofitable projects,resulting in over-investment and overcapacity,which will gradually turn a normally operating enterprise into a zombie enterprise,The findings of this paper include:(1)Since government subsidies are mostly granted in the form of project subsidies,in order to obtain government subsidies,enterprises must invest in projects that meet the conditions of subsidies,which may not be necessary for enterprises,and such new investment projects of enterprises do not carry out due diligence before the establishment of the project or the due diligence is formal,the project lacks feasibility and profitability,and the enterprises are not efficient.(2)Excessive investment by enterprises from the financial data camp to reduce the efficiency of the enterprise’s operations,raising the operating costs of enterprises.And to add insult to injury,in order to fight for government subsidized projects,enterprises have spent a lot of money and taken on huge debts.Once the investment in these projects fails,it will cause the enterprise to fall into losses and cash flow difficulties,which will then affect the normal operation of the enterprise and eventually lead to the enterprise being reduced to a zombie enterprise.(3)The collusion between government departments and enterprises is the root cause of the problems of government subsidies.Enterprises have received many government subsidies that are not in line with the original policy design,and these government subsidies do not match with the development of enterprises,which makes government subsidies not help enterprises improve their competitive advantages,but lead to business difficulties.(4)The uncertainty of the policy,the failure to implement the subsidy in time due to the local financial pressure and the special provisions of the policy on the subsidy projects make the government subsidies themselves also have greater risks,enterprises often ignore such risk factors when seeking government subsidies and blindly pursue "free lunch".This is also one of the reasons why government subsidies can easily induce the zombification of enterprises.Based on the problems found in the case study,this paper puts forward targeted suggestions from both government and enterprises respectively,The government management should formulate a perfect evaluation mechanism and scientific research analysis,fully respect the spontaneous adjustment mechanism of the market,avoid the improper intervention of government departments in government subsidies,give proper play to the subjective and active role of industry associations,and take multiple measures to ensure the positive effect of government subsidies;enterprises should fully understand that government subsidies are not"free lunch",clearly judge whether the increase of government subsidies will cause financial risks for enterprises,and cautiously evaluate the effect of government subsidies on the possible financial risk of enterprises,Enterprises should fully understand that government subsidies are not "free lunch",clearly judge whether the increase of government subsidies will cause financial risks to enterprises,cautiously evaluate the effect of government subsidies,and reject projects that may cause financial risks to enterprises,After the emergence of the zombie problem,enterprises should actively save themselves,rather than just wait and rely on the government’s help to rely on their own strength to get out of the zombie enterprise quagmire,...