Abstract
Yunnan Baiyao was first established as a Chinese family business by Qu Huanzhang in 1933 in China and became a state-owned enterprise (SOE or work unit) in the 1960s. The listing of the Yunnan Baiyao Group in 1993 made this SOE a self-responsible legal corporation under China’s Company Law. However, after its listing, the state remained the largest shareholder and had absolute control over both Yunnan Baiyao Group and Yunnan Baiyao Holdings.
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Notes
- 1.
Qu was not alone in this situation. The Chinese government established a National Resources Commission (NRC) to develop and mobilise industrial resources for the war effort, including the nationalisation of numerous private businesses. By 1947, the NRC controlled nearly 70% of all industrial output in China.
- 2.
SASAC, a government agency that plays the role of both a holding company and a supervisory authority, holds 100% of the shares of the parent companies of each of the 107 central SOE groups.
- 3.
Before the merger, any changes in the business strategy of Baiyao Group had to be approved first by each administrative layer of the Group, then by Baiyao Holdings and finally by Yunnan SASAC.
- 4.
As mentioned in a previous section, after the second-stage reform, Yunnan SASAC, New Huadu and Jiangsu Yuyue owned 25.14%, 25.14% and 5.59% of the shares of Baiyao Group, respectively, becoming the top 3 shareholders. Hehe Group was the fourth largest shareholder and thus held the position of nonindependent director.
- 5.
The decisions of the board of directors of Baiyao Group were not independent and could indirectly be affected by Yunnan SASAC through Baiyao Holdings. The double-layered control mechanism led to inefficient decision-making.
References
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Chen, J.J. (2022). Yunnan Baiyao. In: International Cases of Corporate Governance. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-19-3238-0_13
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DOI: https://doi.org/10.1007/978-981-19-3238-0_13
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