Opinion | Creative managers get cooking when fanciful targets served up
A revised directive of 10 per cent profit growth for SOEs leaves bosses with little choice but to come up with inventive recipes for success
In the corridors of power at state-owned enterprises you will hear two new buzzwords these days - and .
, meaning guarantee, and (10) refer to the 10 per cent profit growth target set by the state-owned Asset Supervision and Administration Commission (SASAC) for state-owned enterprises. , meaning operation, applies to all the creative accounting - if not book-cooking - needed to achieve that target, which was announced two weeks ago.
The SOE managers don't have much choice but to toe the line. Four months ago, SASAC said the 2013 target was "to maintain a stable growth in business". No number was specified to reflect the new state policy that emphasised the pursuit of quality over quantity in production.
That soft target set at the start of the year was in line with the 2011 target: no less than the past three years' average profit. But with only eight months to the end of the year, an about-turn came with the directive for the 10 per cent profit growth target. This goal is unrealistic, given that earnings at the central government-level state sector have grown only 2.7 per cent this year.
In announcing the tough new target to top SOE managers, SASAC chairman Jiang Jiemin said: "Central SOEs must shoulder the responsibility of guaranteeing growth. This is not just an economic responsibility but also a political one. By guaranteeing your growth, you are helping to stabilise the country's economic growth."
His comments followed a State Council meeting on the economy. For SOE managers, the meaning was clear: Meet the targets or your political life is over. In the inaugural year of a new leadership, no mandarin will take this warning lightly.
The big question is, how can the new target be achieved with just over a half year to go? Price increases? The honest manager will say: "No. There is a weak market. There are stringent price controls. There is the low inflation policy. Price hikes drive up inflation." The creative one says: "Get the buyers to accept a high price this year and we will rebate them in different ways next year."
