Profit Motive Praised For Chinese Firms; Party Congress Likely to Urge Privatization
At first glance, the insulation material factory in this mid-sized city doesn't look noteworthy: drab buildings, yellow plastic sheets rolling off assembly lines, mounds of coal lying beside generators.</br></br>But the Star Insulation Materials Joint Stock Co. is supposed to be a model for China's future. Four and a half years ago, it changed from a state-owned enterprise to one owned by its employees, and to hear company chairman Dou Baorong describe it, it was as though a magic wand were waved over the place. Output increased seven-fold, productivity tripled, tax payments rose 12-fold and profits soared 16-fold.</br></br>"The old system made workers lazy," said Dou, who now owns 8.4 percent of the company and gets a chunk of the profits in addition to his salary. Ni Shaobo, assistant to the general manager, added: "Before, it was the company that answered for it if performance was bad. Now it's all of us who answer for it."</br></br>Star Insulation is just one of hundreds of Chinese companies that have experimented with different forms of ownership, moving off the government dole and seeking more commercially viable footing. At the Chinese Communist Party congress that starts today, China's rulers are expected to endorse these companies as models for thousands of state-owned enterprises around the country, giving a push to a massive privatization process that so far has been regarded as experimental.</br></br>"Quite possibly, the world's largest privatization is going on right now in China," said Barry Naughton, a University of California at San Diego economist who specializes in China. It makes former British prime minister Margaret Thatcher's privatization efforts look small; more people work for Chinese state companies than live in all of Britain.