Supply-side reform invigorates old SOEs

SHENYANG - Supply-side reform has been reinvigorating State-owned enterprises across the nation, but it is not all plain sailing.

Due to the strict quality standards required for such products, few Chinese companies are able to produce the material needed for the caps of mineral water bottles, but Fushun Petrochemical has proved an exception to the rule.

In June 2016, after much research, an alkene plant for the company produced 2,000 tons of white bead-like material for the first time. The substance has been used to make bottle caps by top domestic drink brands, such as Nongfu Spring.

"Our target is a monthly capacity of 10,000 tons, estimated to bring a revenue of 60 million yuan ($9 million) a year," said Li Tianshu, general manager of Fushun Petrochemical, a company in northeast China's Liaoning Province that goes back more than 80 years.

After several years of losses, since 2015 the company has made a profit. In the first seven months this year, its profit reached 650 million yuan.

"Through pushing supply-side reform, our company has really grabbed the bull by the horns in terms of development," Li said.

China is pressing ahead with supply-side reform to achieve innovation-driven growth, and such reform is even more urgent for the decades-old state-owned industrial companies, which are commonplace in Heilongjiang, Jilin and Liaoning provinces.

"In the past we made a great variety of products, but it is difficult to be an all-round champion," said Ma Pinghui, deputy general manager of Harbin Bearing Group, one of the country's leading bearing manufacturers.

Currently, the company focuses on core products such as bearings for cars and precision machine tools. The Heilongjiang company produces one-third of precision bearings for the domestic market.

Companies pour heavy investment into research and development to upgrade or create new products, with management streamlining making companies more efficient.

For a long time the company has invested more than five percent of its main revenue into technological research, said Zhong Weibin, chairman of Harbin Electric Power Equipment Company.

To improve efficiency, China First Heavy Industries has cut its total staff by 2,355, according to the company's chairman Liu Mingzhong.

As pillars of the national economy, SOEs should play a leading role in carrying out supply-side reform, according to Cheng Yao, an economic researcher with the Heilongjiang Academy of Social Sciences.