Beijng News丨Fostering Private Enterprise Growth through Tangible Initiatives: Government Agencies Take Action as Enterprises Embrace Agile Strategies

2023/08/16 2217

On August 16th, the Beijing News published an article titled "Fostering Private Enterprise Growth through Tangible Initiatives: Government Agencies Take Action as Enterprises Embrace Agile Strategies". As a leading voice for private rnterprises in the ecological environment sector, ZEHO ECO engages in an interview with the reporter. Vice Chairman Zhang Huipeng chronicles the company's 26-Year journey and expresses optimism towards the '31 policies for private economy', aiming for their vigorous and fruitful execution.

August 16, 2023, Beijing News B02-B03 Edition

Fostering Private Enterprise Growth through Tangible Initiatives: Government Agencies Take Action as Enterprises Embrace Agile Strategies

Beijing News reporter Li Yunqi, Yan Xia, Zhu Yueyi, Zhao Fangyuan Editor Chen Li

"Spanning from comprehensive top-level design to unaddressed facets of private enterprise growth, the issuance of the 'Opinions of the Central Committee of the Communist Party of China and the State Council on Advancing the Development and Expansion of the Private Economy' heralds a fresh phase of growth prospects for the private sector."

As autumn settled in, shortly after dusk around 8:30 pm, the highway leading from the city to Shunyi Capital Airport was abuzz with vehicles in swift motion. Exiting the airport highway, these vehicles veered northeastward, each finding its way into the dedicated logistics parks that house industry giants such as Yuantong, SF Express, and Postal Service.

Reflecting on the past decade, Chen Wentao, a ten-year veteran of the Jingbei sorting center in Nanfaxin Town, Shunyi, within Yuantong Express's North China region, remarked, 'A decade ago, this place was a blank canvas.' The 'miniature train' of automated sorting and express delivery now races tirelessly, bearing witness to the remarkable transformation of this once-vacant terrain.

Underpinning the swift dispatch of packages lies the dynamic surge of the private economy, propelled by the rise of emerging trade, e-commerce, diverse consumption patterns, and automated production. This narrative also embodies China's overarching economic advancement, amplified trade activities, and the enhanced business landscape.

As an integral component of the national economy, the private sector serves as a driving force behind China's path to modernization and high-quality development. In 2018, General Secretary Xi Jinping mentioned during a dialogue with private enterprises that the private economy exhibits the characteristics of 'five, six, seven, eight, nine,' namely contributing over 50% of tax revenue, more than 60% of the gross domestic product (GDP), over 70% of technological innovation achievements, over 80% of urban employment, and more than 90% of total enterprise numbers.

To foster ongoing growth and resilience within the private economy, a significant step was taken on July 19th with the release of the "Opinions on Advancing Private Economy Development and Growth" by the Central Committee of the Communist Party of China and the State Council (referred to as the "Opinions"). These comprehensive guidelines outline 31 strategic measures aimed at refining the private economy's development landscape, enhancing policy backing, fortifying legal safeguards, prioritizing high-quality progress, and nurturing the robust maturation of the private sector.

Spanning from comprehensive top-level design to unaddressed facets of private enterprise growth, the issuance of the 'Opinions of the Central Committee of the Communist Party of China and the State Council on Advancing the Development and Expansion of the Private Economy' heralds a fresh phase of growth prospects for the private sector.

Opinions on Advancing Private Economy Development and Growth" by the Central Committee of the Communist Party of China and the State Council

Entrepreneurial Discussion on "31 Policies"  Governments at all Levels Have Taken Action

During the afternoon of July 21st, a chamber at the Beijing Enterprise Confederation bustled with the presence of 14 private entrepreneurs and industry representatives from various sectors.

This is the third day after the release of "Article 31 of the Private Economy".

"My social media feed has been buzzing," said a friend. "Absolutely, numerous groups are abuzz with activity, everyone's delving into these 31 points," another chimed in. "You can sense the government's strong push for us to shed our load and tread nimbly," someone added. "Indeed, we're in dire need of policy backing for sustainable progress," voiced another. The meeting had yet to commence, but the arriving entrepreneurs were already engaged in animated discussions, exuding an indescribable sense of elation.

This assembly serves as a platform for entrepreneurs to voice their perspectives. Zhang Jianli, a member of the Beijing Municipal Committee of the Chinese People's Political Consultative Conference and President of the Beijing Entrepreneurs' Federation, emphasized that the comprehension and enactment of the "Opinions" are processes that unfold over time. The Beijing Enterprise Confederation is dedicated to collaborating with private entrepreneurs to progressively deepen their comprehension and bolster the execution of the "Opinions." We hold the belief that the private economy is poised to embark on a more expansive developmental phase, brimming with promising prospects. Regarding the inquiries, aspirations, and recommendations put forth by the attendees, the Beijing Enterprise Confederation is committed to thoroughly compiling and synthesizing them. Subsequently, these inputs will be conscientiously relayed to pertinent government entities for consideration and action.

Similar to the entrepreneurs present at the gathering, the most conspicuous focal point in the market is the execution of the "31 policies for the private economy." As outlined by data from a Shell Finance journalist, starting from late July, regional administrations have recurrently organized forums aimed at advancing private economy growth. These discussions pivot around strategies to bolster private sector development and efficaciously address tangible challenges confronted by private enterprises, thus taking center stage in the discourse.

Being among the forefront regions in terms of a thriving private economy, Zhejiang is also actively coordinating experts to conduct meticulous research and formulate pragmatic strategies, building upon preceding regulations and guidelines aimed at propelling private enterprise growth. While we may have previously witnessed instances where certain policies supporting the private economy weren't optimally executed, the current scenario portrays a resolute commitment to action across all governmental tiers, spanning from the central to local authorities. In a conversation with Shell Finance journalists, Zhou Dewen, President of Zhejiang Investment Research Association, Founding Dean and Chairman of West Lake Academy, and Special Vice President of China Association of Small and Medium Enterprises, emphasized this concerted dedication as "earnest."

The prevailing apprehension at present centers on the potential shortfall in execution by local authorities. The past few years have witnessed considerable strain on local finances, creating a plausible scenario where supporting private economy growth across regions might face resource constraints, thus impeding the effective enactment of targeted supportive measures. In this current context, Zhou Dewen asserts that the decisive factor lies in the resolve of local governments. Once the foundational commitment to prioritizing private economy advancement is firmly established, avenues for action will inevitably manifest.

In concrete terms, the initial stride for local administrations involves enhancing the business environment for private enterprises. Despite considerable strides in recent years compared to the past, there remains ample scope for refinement, as instances of substituting legal frameworks with discretionary power and administrative practices sporadically persist. Historically, China operated its market under a "positive list" framework, yet with the unveiling of the "Negative List of Market Access (2018 Edition)," a comprehensive transition toward the negative list approach commenced, effectively curbing the government's discretion in market entry decisions. Fundamentally, a market economy hinges on the rule of law, and augmenting market conditions hinges upon fostering legal enhancements. The law should inherently serve as the guiding "amulet" for the growth and functioning of private enterprises.

Next, the issue of financing challenges faced by private enterprises comes into view. While this is a widespread concern, it necessitates concerted efforts from governments and departments at every tier to drive progress. Notably, the "Opinions" have placed a greater emphasis on this concern. Currently, financial institutions often channel their funds towards central state-owned enterprises and a handful of modest-sized private enterprises, thereby leaving a substantial number of small and medium-sized private ventures struggling to access funding support. To rectify this, financial institutions could independently calibrate and oversee lending to private enterprises, allowing for a certain degree of bias and experimental adaptation. This approach would potentially ensure that private enterprises secure adequate capital resources, facilitating more robust development prospects.

Exceeding 40 Million Private Enterprise Expansion in 10 Years

In 2012, Chen Wentao initiated a Spicy Hot Pot establishment within Jinzhan Township, situated in Chaoyang District. In close proximity stood the Yuantong Express transfer hub. Coinciding with this period was the rapid expansion of e-commerce, leading to a surge in express shipments traversing the Jinzhan Township transfer station. Foreseeing the burgeoning potential within the logistics sphere, Chen Wentao promptly shuttered his eatery and seamlessly transitioned into the fold of Yuantong Express.

During that juncture, Yuantong was embarking on a phase of expansion, wherein the establishment of hub transportation centers emerged as pivotal for ensuring the seamless operation of its logistics network. In March 2009, Yuantong made a substantial investment of 300 million yuan to establish a more sizable transfer hub – the Jingbei Transfer Center – positioned in close proximity to Shunyi Capital International Airport.

Reflecting on those times, Chen Wentao reminisced, "Back then, the landscape here was mostly devoid of towering structures, and the sorting center operated through manual efforts, with barcode scanners employed for the task. Fast-forward to 2018, a transformative shift occurred with the introduction of an advanced automated sorting system."

Presently, the process of updating this (automated sorting equipment) is already underway," shared Shen Yanbing, a team member at the Yuantong Jingbei Transfer Center, during an interview with reporters.

Continuous refinement characterizes the policy bolstering the logistics sector. In 2022, the issuance of the "14th Five-Year Plan for Modern Logistics Development" underscored the imperative of advancing a contemporary logistics framework, prioritizing adeptness in supply-demand equilibrium, seamless internal and external connectivity, safety and efficacy, and the integration of intelligent and environmentally sustainable practices.

Amidst this timeframe, a slew of private enterprises, including Yunda Group, Shentong Express, SF Holdings, and Debang Group, emerged as significant players in the logistics landscape. Particularly noteworthy is the burgeoning presence of more than 30 private logistics enterprises within the realm of A-share listed companies. Notably, SF Holdings led the charge, amassing a staggering total revenue exceeding 260 billion yuan in the year 2022.

Throughout the nation, a multitude of governmental bodies have adopted a plethora of measures aimed at facilitating the seamless functioning of shipping enterprises. These initiatives encompass a spectrum of policy assurances to underpin an unobstructed transport network and the streamlined and robust functioning of express logistics. Spanning the gamut from the enactment of tax reduction policies, upholding terminal outlet operations, to safeguarding the lawful rights and welfare of express delivery personnel, these efforts have been highlighted by Yuantong Express in its annual report.

The evolution of private enterprises constitutes a prolonged journey, punctuated by multiple cycles of transformation. Undoubtedly, paramount to this progression has been the unwavering backing from local administrations. Be it through policy directives or the refinement of the private economic framework, our enterprise has undergone considerable growth in terms of both scale and industrial advancement," Yu Weijiao, Chairman of Yuantong Express, imparted to Beike Finance journalists.

The growth trajectory of Yuantong mirrors the broader narrative of private enterprise development in China. Across the past four decades of reform and opening-up, the ascent of China's private economy has assumed a pivotal role in bolstering the nation's socio-economic evolution – starting from humble beginnings, advancing from modest proportions to remarkable magnitudes, and ultimately culminating in resolute strength.

During the Sixth Plenary Session of the 11th Central Committee of the Communist Party of China in 1981, a noteworthy declaration emerged, affirming that "within certain boundaries, the individual economy of workers serves as a crucial complement to the public ownership economy." Subsequently, in December 1982, a revision was made to the Constitution of the People's Republic of China, and in 1988, an amendment further clarified the constitutional standing of the private economy.

Based on statistics provided by the State Administration for Market Regulation, the timeframe spanning 2012 to 2021 witnessed a remarkable surge in the count of private enterprises in China, soaring from 10.857 million to 44.575 million – marking a doubling over the span of a decade. Concurrently, the proportion of private enterprises within the overall enterprise count experienced a significant uptick, ascending from 79.4% to 92.1%.

Back in 2010, a solitary Chinese private enterprise managed to secure a spot within the prestigious Fortune Global 500 list. Fast forward to 2018, and the tally surged impressively, with 28 private enterprises establishing their presence on this esteemed index. Building on this momentum, recent data from the All China Federation of Industry and Commerce reveals an even more remarkable feat – in the year 2022, a notable 33 mainland Chinese private enterprises have earned coveted positions among the Fortune Global 500 corporations.

In 2022, the All China Federation of Industry and Commerce unveiled data concerning the leading 500 private enterprises, underscoring a significant elevation in the entry bar for China's top 500 private enterprises in 2021, which surged from a revenue threshold of 7.772 billion yuan to an impressive 26.367 billion yuan. In the year 2021, the cumulative operational revenue of these top 500 private enterprises aggregated a substantial 38.32 trillion yuan, boasting an average revenue of 76.644 billion yuan per enterprise.

Accelerating the Financing Process of Private Enterprises by Launching a Sprint towards the Main Board

Enterprise advancement relies heavily on the interplay of policy support and enhancements in the business environment.

In 2005, the "Several Opinions of the State Council on Encouraging, Supporting, and Guiding the Development of Non-Publicly Owned Economies, including Individual and Private Enterprises," emphasized the parity of non-publicly owned enterprise issuance and listing in the capital market with their state-owned counterparts. Committed to enhancing the small and medium-sized enterprise sector and fostering institutional innovation, a gradual approach was adopted to propel the ChiNext market, enhance the capabilities of the securities company agency share transfer system, and establish conducive conditions for non-public enterprises to leverage the capital market.

In the most recent "Opinions" issued in July, an emphasis was placed on the augmented policy support for the private economy. Among the outlined measures, there's a directive to enhance the financing support policy framework to facilitate eligible private enterprises in accessing public markets for fundraising and refinancing purposes.

Fueled by policy backing, the pace of financing and listing for private enterprises has gained momentum. Notably, data from Shell Finance reveals a continuous enlargement in the realm of private A-share listed companies. As of August 15th, the count of private enterprises listed on the A-share market has surpassed 3,500, constituting more than 65% of the total. Among these, prominent entities like BYD, Midea Group, Ningde Times, Rongsheng Petrochemical, and SF Holdings all command annual revenues that exceed the 200-billion-yuan mark.

Seizing the opportune momentum of the era, back in 1997, Qinhuangdao City saw the inception of a venture named Qinhuangdao Tongda Wansheng Decoration Co., Ltd. This company, in turn, served as the precursor to the present-day listed entity, ZEHO ECO.

During its formative years, ZEHO ECO embarked on its entrepreneurial journey by venturing into the landscaping sector, employing technological prowess to propel its market presence. In 2007, the company achieved the prestigious first-level qualification for landscaping engineering. In that same year, Zhang Huipeng, now Vice Chairman and General Manager of ZEHO ECO, joined its ranks. Subsequently, the company embarked on a trajectory marked by significant milestones including business elevation and metamorphosis, corporate relocation and rebranding, a phase of delisting from the New Third Board, investor infusion, application for IPO on the main board, culminating in a triumphant listing. Today, ZEHO ECO stands as an A-share listed entity, having achieved a notable total revenue of nearly 350 million yuan in the year 2022.

Retrospectively tracing ZEHO ECO's evolution, it becomes evident that its growth trajectory is intrinsically intertwined with China's ongoing pursuit of green development and the nurturing framework of supportive policies.

On August 10th, Zhang Huipeng shared with Beike Finance reporters that in March 2008, ZEHO ECO achieved the prestigious Grade A qualification for landscape architecture design. Subsequently, it embarked on a series of notable projects including the revitalization of the Beijing Sports University campus, the transformation of Beidaihe Olympic Park, and the enhancement of the environs of the Beijing Olympic Badminton Hall at Beijing University of Technology. By 2011, ZEHO ECO had undergone a strategic relocation from Qinhuangdao in Hebei to Beijing, along with a rebranding and the establishment of a joint-stock company, thereby establishing a solid national presence. Amidst the backdrop of 2019, when several private ecological and environmental protection enterprises sought to "rescue" themselves through control rights transfers and similar measures, the resolute ZEHO ECO embarked on a focused ascent toward the Shanghai Stock Exchange's main board market. This resolute journey culminated in a successful public listing in August 2021, setting a firm marker of achievement.

On August 16, 2021, ZEHO ECO successfully landed on the main board of the Shanghai Stock Exchange

Currently, ZEHO ECO is actively advancing its corporate transition towards a "ecological restoration+new energy" paradigm. This strategic pivot involves forging deeper partnerships with central enterprises, energy investment committees, and allied institutions. The overarching objective is to instigate breakthroughs both in market dynamics and business models, while concurrently identifying fresh avenues of business growth.

Within the sphere of industries, ZEHO ECO operates within the domain of ecological protection and environmental management, constituting a subset of the broader ecological environment governance sector. Over an extended period, the nation has accorded significant significance to the safeguarding of the ecological environment, and has been resolutely dedicated to initiatives encompassing ecological environment protection, pollution reduction, ecosystem preservation, and the pursuit of sustainable development.

Throughout our journey, we have consistently aligned ourselves with the evolving currents of industry development. Concurrently, we've proactively engaged in enduring transformation and elevation, harmonizing with national strategies and policies. These concerted efforts have culminated in a sustained augmentation of the company's fundamental competitiveness," Zhang Huipeng shared with reporters.

ZEHO ECO focuses on the two major business directions of "ecological environment, ecological manager and park+"

ZEHO ECO has an integrated solution of "NbS technology concept technology system innovative processes innovative materials intelligent monitoring"

Since the 18th National Congress of the Communist Party of China, the central government has placed significant emphasis on ensuring financial security within the realm of ecological environment. This has been achieved by channeling more social capital investment through policy incentives, coupled with the optimization of business models to elevate industry revenue, all aimed at bolstering the construction of ecological civilization. A noteworthy milestone occurred in 2013 when the Decision on Several Major Issues Concerning Comprehensively Deepening Reform explicitly called for the establishment of a market mechanism to attract social capital for investments in ecological and environmental preservation. Concurrently, it urged the implementation of third-party governance to combat environmental pollution. Further advancing this trajectory, the year 2021 saw the issuance of the "Opinions on Encouraging and Supporting Social Capital to Participate in Ecological Protection and Restoration" by the General Office of the State Council. This directive not only accentuated the encouragement and support for social capital participation across the entire spectrum of investment, design, restoration, and management in ecological protection and restoration projects but also marked another crucial step towards fostering a harmonious relationship between socio-economic progress and ecological well-being.

The full industry chain service model of ZEHO ECO DBIFO (design construction wisdom investment operation) is highly compatible with the full lifecycle management model encouraged by policies

The aforementioned policy documents extend crucial policy underpinnings to facilitate the systematic advancement of the ecological protection and environmental governance sector. They effectively broaden avenues for enterprise investment and financing, while steering market participants towards active involvement. This approach resonates with the overarching focus on environmental preservation and collective action, with a keen emphasis on harnessing the potential for blue and green values to metamorphose into tangible economic assets. In the words of Zhang Huipeng, "These documents perpetuate the impetus for the industry to cultivate innovative paradigms, chart novel trajectories, and embrace pioneering models in the realm of ecological protection and restoration."

Enhancing Support and Waiting for the Market to Implement "31 Policies"

China's policy support for the private economy is constantly increasing.

The "Opinions" feature an extensive compilation of the "31 articles on private economy," encompassing a diverse array of subjects. Notably, the initial two articles underscore the imperative of "ongoing removal of market entry barriers" and the "full-scale enforcement of a fair competition policy framework."

As a complementing policy action aligned with the implementation of the "Opinions," several governmental bodies, including the National Development and Reform Commission, have collaboratively released the "Notice on Executing Several Recent Measures to Propel Private Economy Advancement," referred to as the "Several Measures." This notice outlines that, through the organization of significant project promotional events and the establishment of dedicated sections on the national online platform for investment project approval and monitoring, comprehensive project details will be centrally disseminated to private enterprises. This proactive approach serves to provide essential guidance for project implementation. Furthermore, by conducting a comparative analysis of the aforementioned measures, diverse regions are set to curate a catalog of projects designed to foster private capital involvement, thereby amplifying promotional efforts.

An executive from a private enterprise, who goes by the pseudonym Song Xian, conveyed to reporters that businesses primarily catering to local governments have grappled with numerous challenges, including instances of disparities and even discriminatory treatment during the project bidding process.

Following the issuance of the "31 Principles of Private Economy," Song Xian observed an immediate impact. He shared with reporters, "Lately, we've noticed a shift in the government's approach during project negotiations. In the past, certain governments would intentionally elevate the bidding threshold, frequently stipulating qualifications tailored exclusively for state-owned enterprises. This situation left private enterprises with the options of either withdrawing or collaborating with state-owned counterparts. However, from a professional standpoint, the nature of these projects didn't necessitate such qualifications at all. Recently, many governments have demonstrated a disposition to ease their qualification requisites."

Subsequent to the unveiling of the "31 Articles on Private Economy," Zhang Huipeng was brimming with enthusiasm. "For one, it is gratifying to witness an objective appraisal of the worth and significance of private enterprises. Additionally, the pragmatic nature of the supportive measures detailed in each article is commendable. Having perused these opinions, my confidence has notably surged," he remarked.

Zhang Huipeng asserts that the timing of the central government's issuance of the "Opinions" is pivotal. It signifies the reiteration of policy cues that buttress the expansion and maturation of the private economy. This strategic move stands as a pivotal catalyst in bolstering anticipated confidence within the private economic landscape, thereby propelling a renewed surge of dynamism into its developmental trajectory.

As outlined in the Opinion, within the realm of augmenting policy support for the private economy, initiatives such as "enhancing the standardized prevention and resolution framework for overdue accounts," "establishing a routine disclosure mechanism for overdue accounts," and "refining the grievance resolution and credit oversight framework for overdue accounts" have been delineated. Zhang Huipeng underscored that these measures will substantively expedite the resolution of arrearage challenges faced by private enterprises, thus fostering a conducive environment for their development.

During a press conference held by the National Development and Reform Commission on August 1st, Wang Shancheng, Director of the Comprehensive Department of System Reform, introduced that alongside proposing specific measures, the "Several Measures" have also meticulously delineated task assignments, streamlined responsibilities, and distinctly outlined the designated authorities to oversee each task. This strategic approach ensures that private enterprises have a clear point of contact when encountering challenges. For instance, to address the resounding concerns raised by private enterprises regarding overdue payments, the document designates the Ministry of Industry and Information Technology as the spearhead for promoting resolution. Alongside, bodies such as the National Development and Reform Commission, the Ministry of Finance, the Audit Office, the State-owned Assets Supervision and Administration Commission, and the State Administration for Market Regulation will collaborate in this effort. Particularly noteworthy is the proposal for the audit department to accept debt-related leads submitted by private enterprises, thereby reinforcing audit supervision and affording private enterprises a transparent understanding of the avenue through which overdue debts can be reported.

Moreover, Zhang Huipeng underscored that the "Opinions" have outlined explicit directives aimed at curbing the practice of private enterprises resorting to procedural or personnel changes as a pretext for payment defaults. This stipulation is poised to serve as a timely and pivotal measure in mitigating forthcoming financial pressures faced by private enterprises. The Opinion asserts that government entities, public institutions, and major corporations are prohibited from denying or delaying payments to small and medium-sized enterprises and individual entrepreneurial entities on grounds related to internal personnel shifts, adherence to internal payment protocols, or awaiting approvals like project acceptance, final audits, etc., when contractual provisions are absent. The Opinion further accentuates the safeguarding of property rights for private enterprises and the preservation of entrepreneurs' rights and interests in accordance with legal norms. It actively discourages the use of administrative or criminal means to meddle in economic disputes, while also addressing instances of localized protectionism in law enforcement and judicial proceedings. By fostering enhanced standardization of mandatory actions pertaining to property rights, the Opinion ensures that measures undertaken do not surpass their authority, scope, magnitude, or timeframes, thereby curbing undue imposition and overreach in activities such as asset sequestration and freezing.

Zhang Huipeng remarked, "While the introduction of the Opinion is significant, its effective implementation holds equal importance. Upon reviewing this document, our confidence has surged twofold, fostering optimism that the diverse policies will be earnestly executed. This endeavor demands a collaborative synergy between governmental bodies and enterprises. Much like shaping iron requires our unwavering diligence, we are committed to fortifying our internal structures and management, enhancing our competitive prowess and capacity for sustainable development. Through these concerted efforts, we aspire to make substantial contributions to both economic progress and social stability."

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