Wanhua’s Pursuit of Reform—An Exemplar of China's State-owned Enterprise Reform
2019-06-10    [Source:PUdaily]

Overlooked from the air, office buildings in Wanhua Yantai Industrial Park look like huge benzene rings.

As one of the world's top 50 chemical companies, Wanhua is the only chemical manufacturer in China and one of the few manufacturers in the world that have independent intellectual property rights to the isocyanate MDI.

Engels pointed out in Dialectics of Nature that chemistry is a science that studies the quantitative and qualitative changes occurring in the substances.
Therefore, philosophy exists in chemistry.

If "entrepreneurship+reform" is the chemical reaction out of which Wanhua is born, then "reform+innovation" is the profound change that makes it prosper.

Wanhua Chemical Group Co., Ltd., which is as old as China's reform and opening up policy, at first was a traditional state-owned enterprise that specialized in producing synthetic leather. With its capacity for technological innovation growing from scratch and then from weak to strong, the Group has developed into a modern large enterprise leading the global MDI industry. It has blazed a remarkable path of reform and development with Chinese characteristics for building modern state-owned enterprises.

Making bold efforts to reform to answer questions posed by the market

Entering Wanhua Yantai Industrial Park, we came across crisscrossed pipelines, high towers and shuttling trucks. All this presents us a busy scene. The company has made bold efforts to reform to answer questions posed by the market.

Overlooked from the air, office buildings in Wanhua Yantai Industrial Park look like huge benzene rings (captured by unmanned aerial vehicle on April 30). Photo:Xinhua/Guo Xulei

Why can this synthetic leather manufacturer, which once provided raw materials for leather shoes, grow into a world leader in chemical industry?

Recently, the reporters visited Wanhua for an interview. We try to formulate an answer to the question with our first-hand experience.

As the saying goes, a journey of a thousand miles begins with a single step.

The birth of Wanhua is closely linked with the efforts to solve the problem of being unable to access leather shoes faced by Chinese people.

Just forty years ago, China was still a nation in cloth shoes. "You should make it a key construction project, because our people urgently need it." In Wanhua’s exhibition hall, the reporter saw the instruction from the central leadership 40 years ago, showing how eager they were for the project.

Funding was appropriated generously. The central government allocated 460 million yuan, accounting for about four thousandths of the national fiscal revenue in that year, to Wanhua for importing polyurethane synthetic leather facilities.

Manpower was also provided adequately. About 7,000 people from all over the country gathered in the sandstone-covered Chefoo Harbour and worked there for nearly 5 years.

Among them, Liu Yongzhen, the first-generation head of Wanhua, was transferred from the position of deputy director of Jinxi Chemical Plant by the Ministry of Light Industry. 

Li Jiankui, the second-generation head of Wanhua, also came. "I was working in the Ministry of Light Industry and squarely came to Yantai from Beijing, "he said.

Ding Jiansheng, the former president of Wanhua Group, arrived as well. "I was assigned to the Foreign Affairs Bureau of the Ministry of Chemical Industry after graduating from Qingdao Institute of Chemical Technology in 1982. When I heard that a large number of workers were needed here, I came."

At the old factory of Wanhua Chemical Group in Yantai, standing before the first MDI production line former president Ding Jiansheng is telling the story of starting businesses in the past (taken on November 25, 2018). Photo:Xinhua/Guo Xulei

Liao Zengtai, current head of Wanhua, followed. "I came as soon as I graduated from East China University of Science and Technology in 1983 and witnessed the bring-in of foreign technologies and facilities as well as their innovation and transformation."

Liao Zengtai, Chairman of the Board of Directors and Secretary of the Party Committee of Wanhua Chemical Group, gave a briefing (taken on December 7, 2018). Photo:Xinhua/Guo Xulei

In 1983, Wanhua succeeded in conducting the trial run. To celebrate it, officials from the central government made a special trip to the site and cut the ribbon.

Thus, Wanhua was born!

In the following 10 years, Wanhua provided raw materials for 200 million pairs of synthetic leather shoes, equivalent to one quarter of the total raw materials for leather shoes in China.

The Chinese people made a historical leap from "cloth shoes" to "leather shoes". Wanhua also embarked on the arduous journey of exploring how to shift from "planned economy" to "market economy".

On the one hand, Wanhua continued to adopt the traditional mode of organizing production according to the plan. Ding Jiansheng said, "The Ministry of Light Industry allocated raw materials and set targets. After we produced the products, the ministry would allocate them in a unified way."

On the other hand, the continuous influx of products from foreign manufacturers and the springing up of private synthetic leather producers threatened Wanhua's dominant position in the market.

Soon, Wanhua turned from a company never worried about selling its products into one receiving few orders.
The market taught Wanhua a bitter lesson.

Can state-owned enterprises, which were “cosseted” by the planned economic system, become "trendsetters" in the market competition? This is a big question that Wanhua and all other state-owned enterprises must answer at the time.

Ding Jiansheng, the then deputy director of the technical workshop, showed acute anxiety. He said, "The cost is 11,000 yuan, but the selling price is just 78,000 yuan. This is bringing us to the verge of bankruptcy ." With a Jiaodong accent, Ding is quick-tempered and likes to speak loudly.

On August 1, 1983, Yantai Synthetic Leather Factory (predecessor of Wanhua Chemical Group) successfully conducted the test run of its MDI unit. This photo shows the scene of the celebration meeting held at the time (provided by Wanhua). Xinhua

The punch by the market awakened Wanhua.

It is at this moment that Wanhua made a single-minded determination to shift from "planned economy" to "market economy". It firmly followed the steps of China’s reform:

In 1993, it abolished the institutions of lifelong jobs, regular wages and lifetime tenure of office;

In 1995, it for the first time carried out the reform of the enterprise system;

In 1998, it carried out the shareholding reform;

In 2001, it went public;

In 2006, it piloted employee stock ownership;

In 2016, it further carried out mixed ownership reform;

In 2018, its application for holistic listing was approved;

Resonating with the rhythm of national reform, Wanhua mustered up its courage to carry out a series of reforms. First, it restructured its business.

At the beginning of the 1990s, state-owned enterprises in China embarked on the reform of labor, personnel and income distribution systems. Wanhua took the lead in trying out labor contract system for all staff, eliminating lifelong jobs, lifetime tenure of office and regular wages.

Without these reforms, it would be hard for us to keep up with the national reform in later period, said Luan Xinguang, the then personnel manager.

Above: The first MDI production line of Wanhua Chemical Group was dismantled after its shutdown. Below: MDI production line of Yantai Synthetic Leather Factory (predecessor of Wanhua Chemical Group) under construction. Xinhua

In 1995, Yantai Synthetic Leather General Factory was restructured into Yantai Wanhua Synthetic Leather Group Co., Ltd., making Wanhua the first state-owned enterprise in Shandong and the eighth in China to establish a modern enterprise system.

Secondly, it divested its auxiliary businesses. Wanhua separated its main business from auxiliary businesses while making the former leaner. In the following years, of its 32 subsidiaries only the MDI business was retained, with the rest being divested or restructured.

The downsizing was aimed at making the organization healthier.

The most challenging task at the time was redirecting laid-off workers. Li Jiankui well remembered it, "At the time, there were more than 30 administrative offices for less than 7,000 employees. Cadres only above deputy head of the office amounted to 3-400 people, posing a serious problem of overstaffing."

He called Luan Xinguang, "I have a task for you—cut 4,000 staff. I will reward you if you successfully cut one and will dock your wages if you increase one."

Wanhua made leading cadres the first targets. A cadre was required to retire so long as he or she turned 55. As a result, 71 leading cadres stepped down from management positions.

Though those involved in the laid-off now remember their memories lightly, they experienced storms at the time.

A factory director, one of Wanhua’s founders, was also included in the list of the first retired employees.

Feeling angry and unwilling, that day he entered the office of Qu Jinsheng, the then general manager, to ask for an explanation.

"What mistakes have I committed? Why do you ask me to retire?"

"This is rule! anyone who reaches the stated age must retire." 

"What an absurd rule! You are booting out key employees! Do you dare to admit it? I will resign if you admit it! "

Nodding silently, Qu had mixed feelings.

Only by severing the arm can a hero survive in a dire situation.

Like a violent chemical reaction, reform released tremendous energy and accelerated Wanhua's development.

After implementing a series of reform measures, with competitive resources such as MDI business and nearly 400 key employees Wanhua Polyurethane Co., ltd. was officially listed.

The issue of property right has to be addressed as the reform further advances. Wanhua made further progress in establishing a modern enterprise system.

On January 5, 2001, Wanhua Chemical Group Co.,Ltd. ringed the bell on Shanghai Stock Exchange; in 2006, it implemented the employee stock ownership plan (ESOP) and explored mixed ownership and; in 2007, it brought in foreign investors.

After China's accession to the World Trade Organization, international chemical giants once dumped their products in China at a price that was about one third cheaper than in their own countries. This placed Wanhua under great pressure.

In accordance with WTO rules, Wanhua immediately resorted to the weapon of anti-dumping investigation to fight back. This is a typical case of domestic companies using anti-dumping investigation to safeguard their legitimate rights and interests shortly after China's accession to the WTO. Making good use of international rules won Wanhua development opportunities.

Reform, of which Wanhua was born, also made the company prosper. At this point, Wanhua, once a "beginner" in market economy, had grown into a "trendsetter" skilled in using market rules to play games with global giants.

This company, craving for bringing in foreign technologies at the beginning of the reform and opening up, is now taking big stride to "go global".

In 2011, Wanhua successfully acquired BorsodChem, a company based in Kazincbarcika of Hungary. Through measures such as increasing investment and lean management, Wanhua saved the company from bankruptcy and helped it quickly turn losses into profits, thus retaining more than 3,000 jobs in the small city, which has a population of 30,000. Later, it helped the company become one of the Top 100 Companies in Central and Eastern Europe.

The sweeping reform enables Wanhua to take off.

—the domestic market share of its MDI products rose from 8% in 1998 to current over 40%;

—its operating income, profits and total assets are 253 times, 427 times and 255 times the levels at the time when it was founded;

—it has expanded into the global market. Wanhua has operations in more than 10 countries and regions, which makes it possible to help countries along the "Belt and Road" develop their industries and to better serve its global customers.

After the 18th CPC National Congress, Wanhua accelerated its reform.

On February 2, 2019, the attention of the capital market was attracted by an announcement from Wanhua, which said that major assets restructuring and procedures of asset transfer for the holistic listing were all completed.

Liao Zengtai told the reporter, "Simply put, our listed company will merge its parent company through reverse acquisition. This makes the company’s hierarchy simpler and its structure more transparent." "Wanhua has fully become a market-oriented company."

The leader of the foreign technical guidance team, which was sent to provide technical guidance when the factory was built, made a special trip to Wanhua for a visit. Impressed by the changes, he deeply sighed, "the pupil excels the teacher!"

What is the reason for these achievements?

"Following the steps of the great era of reform and opening up is Wanhua’s fortune in pursuing growth and also the secret behind its success."

On December 20, 2018, Liao Zengtai gave a perfect answer at the ceremony to celebrate Wanhua' 40th birthday.

Pursuing innovation to answer questions posed by the times

Wanhua has taught us a rare chemical term—MDI.

"MDI, the abbreviation for methylene diphenyl isocyanate, is a polymer that has wide applications. It was invented in the 1930s. Nowadays it is widely used in many industries and people's daily lives, such as building insulation, light industry and textile, automobiles and household appliances. "

At the Central Research Institute of Wanhua Chemical Group in Yantai, workers are conducting a pendulum impact test on polypropylene (taken on April 30). Photo:Xinhua/Guo Xulei

Hua Weiqi, the executive vice president and technical director of Wanhua, gave a concise and clear explanation, "It is fair to say that every Chinese family now has MDI elements."

At the old factory of Wanhua Chemical Group, Hua Weiqi is briefing on the Group’s technological innovations (taken on November 25, 2018). Photo:Xinhua/Guo Xulei

However, Wanhua had unspeakable experiences in acquiring core technology for the production of MDI, which made them fully realize the vital importance of "independent innovation".

40 years ago, when the company bought MDI equipment from abroad, the seller made it clear that it would not transfer the technology.

"The equipment would not work once the foreign experts left, " said Li Chengyao, the first operator of the MDI production line. He deeply sighed when recalling the scene where he carried a water blast gun to clean up the waste in the tank, "I didn't know why the equipment and pipelines were always blocked. And I had to repaire them again and again."

Due to lack of core technology, the plant, with a design capacity of 10,000 tons/year, didn't achieve full capacity utilization even 10 years later.

In the process of bringing in MDI production technology, Wanhua experienced setbacks, suffered losses and was once fooled.

In the late 1980s, a multinational company held out an olive branch, "we want to see your core reactor and give you technical guidance ..."

Seeing a "lifeline", Wanhua shut down the equipment two days ahead of the experts’ arrival and cleaned it up.

The experts finally arrived. However, they did not show any intention of cooperation after looking around and figuring out the technology adopted by Wanhua.

Two years later, they asked for a survey report on the Chinese market as the condition of future cooperation. Without hesitation, Wanhua organized more than 80 people, who spent more than half a year travelling around the country, to conduct an investigation.

After the survey report was handed over, news for the two-years waiting was that the company planned to build a factory on its own in China.

This is another blow to Wanhua following the one by the market.

"I can't forget it! Core technologies can never be asked for, bought or begged for. The Chinese people will always be looked down upon if we are not self-reliant, " said Liao Zengtai, with a heavy but firm tone.

The cruel reality forced Wanhua to resolutely embark on the road of independent innovation.

But how to arouse the enthusiasm for innovation?

"Market competition is ultimately the competition between talents. Since it is market that makes choices, the value of people must be highlighted, " said Ding Jiansheng.

Like Xiaogang village, which liberated peasants with its "all-round contract" reform, Wanhua arouses the enthusiasm for innovation to the greatest extent by "ensuring the market value of people's creative labor is appreciated".

The reporter heard a story in Wanhua:

Shortly after it was established at the end of 1998, Wanhua Chemical Group began to implement the "Innovation Project". According to the project, technological achievements shall be rewarded according to their contribution to the profits.

In the following year, a production unit produced significant economic benefits after technological transformation. The rewards calculated according to the new method shocked everyone—10 people would share a total bonus of 920,000 yuan.

Should the company pay it?

The top management debated for a month. They finally decided that senior executives would not receive any reward, and the bonus should all be given to front-line research and technical personnel.

On that day, the company's financial staff used a sack to carry back the cash from the bank. Stacks of bank notes were neatly arranged on the table according to the head count of the rewarded winners.

Sun Dunxiao, an old engineer, took the largest share, with 210,000 yuan. Feeling frightened when she saw the money brought back by Sun with a small cloth bag, his wife in fear and trembling called Liao Zengtai.

"Where did my husband get this money?"

"It is our reward for him."

"Did he make any mistake?"

"No. It's his legitimate income."

"Can I deposit it in the bank?"

"Of course!"


The huge reward caused quite a stir in and outside the company. There were people who expressed admiration and also who were jealous. Some other people questioned whether they deserve it.

"We reward these researchers with only 920,000 yuan, but they earn us 12 million yuan in profits." When the executives made this comparison, everyone became silent.

At the Advanced Surface Materials Center of Central Research Institute of Wanhua Chemical Group in Yantai, Dr.Ji Xiaoxiao (right) and Dr. Li Tao are doing an experiment on water-based environment-friendly nail polish (taken on December 8, 2018). Photo:Xinhua/Guo Xulei

This reminds us of a story that has been circulating for a long time in business circles.

More than a century ago, the production line of a foreign automobile manufacturer ceased operation due to a fault. After careful observation, the invited motor expert found the fault only by drawing a line on the machine and solved the problem. Then, the expert charged $10,000.

You charge $10,000 for a line?

Drawing a line is worth one dollar, but knowing where to make the mark is worth $9999, answered the expert.

Knowledge is priceless and valuable. Incentivizing talents with huge rewards and protecting innovation with systems demonstrate Wanhua’s boldness and determination in promoting innovation.

In 2017, a HDI (the abbreviation for hexamethylene diisocyanate; it is a kind of specialty isocyanate) innovation project made a profit of more than 1 billion yuan in three years. In addition to generously rewarding researchers, the company also earmarked 100 million yuan to establish a science and technology incentive fund.

From 210,000 yuan to 100 million yuan, the company’s determination to promote innovation through incentives never wavered.

This is a chemical reaction occuring outside the laboratory, which releases huge energy that accelerates innovation!

Today, Wanhua has independently developed more than 100 major technologies and successfully commercialized its scientific and technological achievements. It has won seven national awards, including the first and second prizes for scientific and technological progress.

The key to innovation is talents. Like a magnet, Wanhua attracts talents from all over the country.

In the conference room of the old factory, the reporter had a deep conversation with Hua Weiqi.

As a doctor of chemical engineering from Zhejiang University, he has lived in Hangzhou since childhood and once studied abroad. He was favored by multiple central SOEs and multinational companies when he graduated.

"Why did you choose Wanhua?" asked the reporter.

Mr. Hua smiled, "18 years ago, when Mr. Ding warmly invited me to join Wanhua for the first time, I hesitated."

He didn't expect that he was so persistent. His repeated invitation prompted Mr. Hua to finally make his determination.

The reporter asked, "What attracted you?"

"Wanhua is the best company I have ever seen in the industry." Mr. Hua, who had always been rigorous about his words, used the word "best" without thinking.

"Best" is by no means a flattery word. Wanhua assigned Mr. Hua an outstanding scientific research team, an uncapped scientific research fund, a work platform for researching MDI technology and scaling the peak of the science and technology, as well as a flexible rewarding mechanism.

What moved Dr. Hua is the consideration shown by the company. It not only helped him look for a partner in marriage, but also assisted his wife finding job. The company specially held several meetings to discuss these issues and implored Yantai Municipal Party Committee to provide support.

Which other companies can match such a caring one?

"It took us three years to bring in Dr. Ding"; "We didn't succeed in inviting Dr. Ma to join us until we paid five visits to him"; "Even our human resources director, who is good at scouting talents, was poached from another company." In Wanhua, the much-told stories are about bringing in talents. In 2018, more than 1,100 talents from different fields joined Wanhua, hitting a record high.

It is trust, incentivization and tolerance that ensure the value of talents is appreciated to the greatest extent in Wanhua.

At the Advanced Surface Materials Center of the Central Research Institute of Wanhua Chemical Group in Yantai, researcher Chen Dingding is doing a polyurethane foaming experiment (taken on December 8, 2018). Photo:Xinhua/Guo Xulei

Mr. Hua told us the story of "ten consecutive defeats":

After more than 2 years of preparation, an MDI technology upgrading project would be put into production. But it encountered problems of pipeline blockage and repeated facility shutdowns.

"We lost 5 million yuan for each shutdown. Thus, 10 shutdowns led to a loss of 50 million yuan. "

Mr. Hua was the then manager of the MDI project. When the trial failed for the sixth time, he stood in front of the reactor, feeling extremely anxious.

The workers also lost patience and rushed up to surround him. Grabbing him by the collar, a worker pointed to piles of waste and shouted to him, "Do you know how much each shutdown costs? Do you really have the ability to fix this problem? "

Mr. Hua, who had always been gentle, also felt anxiety, "We will keep trialling until we succeed! This production line is not only your lifeline but also mine!"

The hand seizing his collar gradually loosened ...

Innovation requires not only wisdom but also persistence.

"Failed innovation can be tolerated, but stopping innovation is not allowed', this is the philosophy we follow in Wanhua!" said Ding Jiansheng.


Failure is not only an "obstacle" on the road to success, but also a "stepping stone" on which success is based.

The 11th trial finally succeeded: The annual capacity of a single MDI unit expanded from 80,000 tons to over 200,000 tons.

The oath sworn by staff at the time can be seen on the wall of the laboratory near the east gate of the old factory, "perseverance makes us Wanhua staff!"

God always smiles on person with high aspirations.

On January 8, 2008, in the Great Hall of the People in Beijing, Ding Jiansheng received the first prize certificate of national scientific and technological progress from the party and state leader with mixed feelings.

Innovation is productivity.

Looking back, between the original price of 50 million yuan and the accumulated profit of tens of billions of yuan so far, there is an "inequality" but also an "equation". In the process of solving this "inequality" and "equation", staff in Wanhua have fully realized the tremendous power of gathering talents, appreciating talents and tapping into talents.

Years later, Wanhua’s executive and the multinational company’s met again. They had a dialogue:

"What was your mood when you got the report?"

"As if I had found a treasure."

"Why didn't you transfer the technology to us?"

"Unless we are dying, we will never sell that technology!"

What is interesting is that Wanhua politely refused the multinational company’s offer when the latter announced the intention to cooperate with Wanhua again.

The executive of the multinational company sighed, "It was our biggest mistake not to buy Wanhua at that time."

In the interview, the reporter was deeply impressed by the strong sense of hardship showed by the company's management.

"We should never be arrogant as we have a long way to go before catching up with leading companies in the industry or meeting our goals, " said Liao Zengtai. In the future, Wanhua must make fresh progress while securing high-quality development, he added.

Only through constant innovation can we remain invincible in fierce competition. Today, Wanhua has six research and development centers at home and abroad, seven national innovation platforms and more than 150 laboratories with advanced equipment. Added to that is a whole raft of test products and pilot products which form an echelon ...

Innovation is not only about science and technology, but also about development philosophy.

This picture shows the application fields of Wanhua’s polymers, which are displayed in the exhibition hall of Wanhua Yantai Industrial Park (imposition photo, taken on April 30). Photo:Xinhua/Guo Xulei

Like a coin, which has two sides, the chemical industry causes environmental pollution while benefiting mankind.

Doing the utmost to protect the environment regardless of the costs it entails and making sustained efforts to ensure workplace safety are the goals that Wanhua will relentlessly pursue. In the chemical industry, Wanhua is the first to establish the goal of "zero emission".

Destination: Wanhua Ningbo Company, Daxie Island, Ningbo City, Zhejiang.

We saw waves beating the shore when crossing the cross-sea bridge in our car. As soon as arriving at the island, we saw from a distance a factory shaded by camphor trees. Standing in the drizzles were green mountains. Here, we didn't see leakage and venting, smell unpleasant odor, or hear machinery noise. It is a definitely environmental-friendly chemical manufacturer.

Besides, Wanhua has a "zero accident" target: paying attention to details to eradicate safety accidents.

Entering the production area, we saw this scene: "Two in a row and three in a line", the employees walked in neat rows and at the same pace; when ascending and descending the stairs, they were required to grab the rail.

Chen Yifeng, the safety director of Wanhua Chemical Group, introduced the safety management system (taken on December 6, 2018). Photo:Xinhua/Guo Xulei

Chen Yifeng, the safety director of Wanhua Chemical Group, explained that safety awareness should be embedded in employees’ every behavior.

Explorations in pioneering work nurture greatness.

This year marks the 150th anniversary of Mendeleev's compilation of the periodic table of elements. 150 years ago, there were only 63 known elements. With the explorations by human beings, the gaps left by unknown elements in the periodic table are being filled one by one. Currently, 118 elements have been found.

This is reminiscent of China's reform—

From ideological and theoretical innovation to system and mechanism innovation, from "science and technology are the primary productive forces" to "innovation is the biggest driver of development", from "respecting knowledge and talents" to "talents are the most valuable resources", the Communist Party has led the people to explore relentlessly, answering questions posed by the times, filling numerous gaps in different fields and reaching historic milestones one after another.

Blazing new trails to answer questions posed by practice

If the adoption of the reform and opening up policy is a great awakening, then the establishment of a socialist market economic system can be regarded as a great pioneering work.

Over the past 40 plus years, the Party has led the Chinese people to free their minds to seek truth from facts. Boldly, it for the first time in history explored and practiced the socialist market economy by discovering and proving two inequalities, namely, "planned economy ≠ socialism" and "market economy ≠ capitalism". Those efforts include:

Developing large, medium and small-sized state-owned enterprises, as well as private businesses, and deepening the reform of state-owned enterprises and developing mixed ownership economy;

Shifting from unitary public ownership to a basic economic system under which public ownership plays a leading role and all forms of ownership grows side by side; sticking to the "two unswervinglys" (to unswervingly consolidate and develop the public sector of the economy and to unswervingly encourage, support and guide non-public economic development);

Shifting from the traditional planned economy system to the unprecedented socialist market economy system and; Letting the market play the decisive role in resource allocation and the government better play its role.

Especially since the 18th National Congress of the CPC, under the firm leadership of the CPC Central Committee with Comrade Xi Jinping at the core, many new achievements have been made in implementing this great practice and new chapters have been written on the socialist political economics with Chinese characteristics.

Undoubtedly, the reform of state-owned enterprises is the most important chapter.

Wanhua's exploration and practice of reform, innovation and development over the past 40 years have become a good example of socialist political economics with Chinese characteristics.

The "changed" and "unchanged" in Wanhua reveal a lot.

The form of public ownership has changed, but the dominant role of public ownership remains unchanged.

From a subordinate enterprise of the Ministry of Light Industry to an incorporated enterprise after restructuring, and from shareholding reform, employee stock ownership, mixed ownership to going public, the structure of Wanhua's property right has changed from a unitary state-owned one into a mixed and diversified one. This is an epitome of the evolution of the form of public ownership in China.

After Wanhua’s holistic listing, employees, state capital, foreign capital and various social capitals will have stakes in the company. Thus, various stakeholders will coexist for win-win results. In 1978, Wanhua's assets totalled only several hundred million yuan. By the end of 2018, however, its assets had amounted to 76.9 billion yuan. A state-owned operating platform as the largest shareholder holds 21.59% of its shares.

Wanhua is a typical example demonstrating the reform of China's state-owned enterprises.

By the end of 2017, the total assets of state-owned enterprises in China (excluding financial enterprises) reached 183.5 trillion yuan, 400 times the assets in 1978. The vitality, control and influence of the state-owned economy have increased significantly.

Zhou Lisha, a researcher at the Research Center of the State Owned Assets Supervision and Administration Commission of the State Council, told the reporter, "The convincing practice of the reform of state-owned enterprises shows that we have not only creatively established the socialist market economic system, but also successfully maintained the dominant position of public ownership, thus promoting the consolidation and improvement of the basic socialist economic system."

Labor relations have changed, but the status of employees as masters remains unchanged—

In Wanhua, from "lifelong jobs" to labor contract system for all staff, and from "regular wages" to performance-based rewards and employee stock ownership, the labor relations have changed. However, the staff's status as masters of the company has not changed. Instead, their sense of fulfillment is heightened with the reform and development of the company.

Wanhua provides interest-free loans of up to 200,000 yuan and up to 12 years for employees to purchase houses. It sets up special allowance for technicians. And it launches the "blue gold collar project", under which a platform is built to help the frontline workers develop themselves. Besides, the company prescribes that college graduates’ salaries shall not be lower than those of their counterparts in the first-tier cities.

Wanhua has a "coffee time". Each month, the senior executives of the Group will preside over the meeting, drinking coffee and chatting with 10 randomly selected frontline employees, and asking them for advice. Problems that can be solved will be resolved immediately. For those that cannot be solved immediately, rectification plans will be formulated.

Wanhua has a culture of equality. At the gate of the factory, we met a young worker who stopped Liao Zengtai and bluntly said, "Mr. Liao, please wear your safety helmet ..."

Wanhua has a reliable system. The Group's rules stipulate that policies that address any major issue involving the interests of employees shall not be introduced without the approval of the workers' congress, and decisions on major issues that have not been discussed and approved by the congress shall not be made.

Zhang Weiguo, the director of the Economic Research Institute of the Shandong Academy of Social Sciences, said, "Adhering to the people-centered principle is the original intention of our reform, and the status of employees in state-owned enterprises as masters of the companies must be safeguarded in the reform."

The relationship between the enterprises and the market has changed, but the enterprises’ commitment to serving the country remains unchanged.

From delegating power and allowing the enterprises to keep part of their profits, and from managing personnel and operation to managing assets and capital, the relationship between the government and the market has undergone profound changes. The market has played a decisive role in the operation of enterprises.

However, the roles of state-owned enterprises as the important material and political foundation of socialism with Chinese characteristics as well as the "pillar" of the socialist market economy remain unchanged.

"Wanhua remains committed to its mission of serving the people and fulfilling the tasks entrusted by the government." The strong sense of mission and patriotism of Wanhua staff left a deep impression on the reporters.

In the interview, Zhao Junsheng, a 60-year-old worker, together with other workers proudly sang the factory song, "with great brilliance, we undertake the historical responsibility; this great brilliance reflects the nation's future. "

Staff in Wanhua demonstrates such a commitment: they will always link the fate of the enterprise with the future of the country and the nation.

When Wanhua became rich, some people suggested that the company foray into the real estate sector and build the tallest building in Yantai as a landmark. Li Jiankui frowned and said, "We have set the rule that we will never diversify away from the chemical business and will always focus on this main business. This is our understanding and practice of serving the country with industry. "

Wanhua is always grateful to the society. It contributed to disaster areas and many local geriatrics societies. Also, the company established the "sunshine Wanhua" fund to help prevent and treat leukemia. Besides, the chemical producer helped poor peasants lift themselves out of poverty through means such as making investments in the regions where they live.

Kou Guangwu, the president of Wanhua, said, "we should be in the forefront not only in producing economic benefits and shouldering social responsibilities, but also in realizing the ‘two centenary goals’."

The corporate governance structure has changed, but the leadership of the Party remains unchanged.

Wanhua's corporate governance structure has been adjusted and improved by introducing the board of directors, the management, the board of supervisors, the workers' congress and the shareholders' meeting as well as by allowing state capital, employees, foreign capital and private capital to have stakes in the company.

Wanhua holds high the banner of reform.

Zhou Zhe, the deputy secretary of Wanhua Party Committee, said with emotion, " there is extensive experience behind Wanhua’s successes achieved over the past 40 years. But they can be boiled down to one sentence, that is, resolutely following the party and making good use of every reform policy issued by the party! "

From Li Jiankui, the first chairman and party secretary to Ding Jiansheng, the chairman and party secretary of the joint stock company and to Liao Zengtai, the current chairman and party secretary, Wanhua’s party committee secretary and chairman of the board have always been "one person". This ensures that the party committee plays a leading role by making the enterprise keep to the set course, overseeing the overall operations and ensuring the implementation of decisions.

Wanhua ensures that there is a Party branch for each production unit and has developed them into strong bastion. Thus, all communists are always in the lead at critical times.

Reform is a journey that will never end.

Above: aerial photo of Wanhua Yantai Industrial Park (taken by UAV on December 4, 2018, by Xinhua reporter Guo Xulei); Below: Panorama of Wanhua Ningbo Company (provided by Wanhua). Xinhua

"We will make state-owned enterprises the backbone force for implementing the new development philosophy and comprehensively deepening the reform, and an important pillar and force that our party can rely on to govern and rejuvenate the country, " said Xi Jinping, the General Secretary of the Central Committee of the Communist Party of China. The general secretary's great trust in state-owned enterprises has always motivated Wanhua to remain committed to its mission.

On December 18, 2018, the Great Hall of the People attracted much attention.

At the important historic moment to celebrate the 40th anniversary of China's reform and opening up, General Secretary Xi Jinping issued a new marching order.

"Mobilize the whole Party and the people of all ethnic groups to continue to push forward the reform and opening up in the new era, and make unremitting efforts to realize the 'two centenary goals' and the Chinese dream of the great rejuvenation of the Chinese nation."

Thousands of miles away, from Wanhua Yantai Industrial Park to Wanhua Ningbo Company, thousands of Wanhua staff gathered in front of the big screen and listened attentively.

"It is a relay race to build a modern socialist country and realize the dream of the great rejuvenation of the Chinese nation. We will pass the baton from generation to generation."

The general secretary's speech echoed in the hearts of Wanhua staff for a long time, and also pooled a mighty power driving hundreds of millions of people around the country to strive for the dream.

As the Chinese saying goes, the way ahead is long and has no ending; yet high and low I’ll search with my will unbending.

Look, in the new era, numerous enterprises like Wanhua and hundreds of millions of people in China are determined to strive for further progress, thus creating new and greater miracles of the times that attract the world’s attention!

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