Tue, Sep 24, 2019 page10

• PRC government boosts presence in private firms

  TECH HUB: The Hangzhou City Government has assigned representatives at 100 firms to facilitate communication and expedite projects, it said

  • Bloomberg
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  The government of one of China’s top technology hubs is dispatching officials to 100 local corporations, including e-commerce giant Alibaba Group Holding Ltd (阿里巴巴), the latest effort to exert greater influence over the nation’s massive private sector.

  The city government in Hangzhou, Zhejiang Province, is assigning government affairs representatives to facilitate communication and expedite projects, it said on its Web site.

  Chinese beverage giant Hangzhou Wahaha Group Co (杭州娃哈哈集團) and automaker Zhejiang Geely Holding Group Co (浙江吉利控股集團) are among the other companies based in the prosperous region that have been singled out, state media reports said.

  The initiative is aimed at smoothing work flow between officials and China’s high-tech companies and manufacturers, the city government said.

  However, the move could be perceived also as an effort to keep tabs on a non state-owned sector that is gaining clout as a prime driver of the world’s No. 2 economy.

  Representatives of the nation’s public security system are already embedded within China’s largest Internet companies, responsible for crime prevention and stamping out false rumors.

  Government agencies may also be heightening their monitoring of the vast private sector at a time the Chinese economy is decelerating — raising the prospect of destabilizing job cuts as enterprises try to protect bottom lines.

  Alibaba is hosting its annual investors’ conference this week in Hangzhou against the backdrop of a worsening outlook for the country.

  “They might be checking whether the [Chinese] Communist Party [CCP] units are working effectively within the companies,” said Paul Gillis, a professor at Peking University’s Guanghua School of Management.

  “While China legitimized capitalism, the level of government influence was never intended to disappear. Occasionally private entrepreneurs forget about this and are reminded of it,” Gillis added.

  Zhejiang is considered the cradle of modern Chinese private enterprise, home to a generation of self-made billionaires from Alibaba’s Jack Ma (馬雲) and Geely founder Li Shufu (李書福) to Wahaha’s Zong Qinghou (宗慶后).

  The CCP accepted so-called “red capitalists” or private entrepreneurs into the party in 2001, allowing them to become part of the nation’s legislature a year later.

  Still, the relationship between Beijing and well-known businesspeople remains sensitive.

  The government has been seen to try and step up an official presence within non-state firms, by among other things mandating that private companies of scale set up and maintain a party branch.

  It was not clear whether the 100 Zhejiang-based companies included foreign enterprises.

  “We understand this initiative from the Hangzhou City Government aims to foster a better business environment in support of Hangzhou-based enterprises. The government representative will function as a bridge to the private sector and will not interfere with the company’s operations,” Alibaba said in a text statement.

  Representatives for Wahaha and Geely did not immediately respond to requests for comment.

  The Hangzhou initiative also underscores how the government is trying to arrest a slowdown in the economy brought on by the trade war, Kaiyuan Capital Ltd (開源資本) managing director Brock Silvers said.

  He expects similar policies to soon follow for other manufacturing-intensive areas.
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