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Not long ago, when discussing the supervision of state-owned enterprise managers, Li Rongrong, director of the SASAC, mentioned that CEOs should change positions if they are "not in the state." This statement was both thought-provoking and unique, raising important questions about how to evaluate and manage top executives in state-owned companies.
Veterans of state-owned enterprises often face complex challenges. While legal accountability is possible for major violations, identifying and addressing issues like negligence or mismanagement remains a difficult task. What exactly constitutes being "not in the state"? Director Li did not clarify this, leaving room for interpretation.
From a subjective perspective, could "not in the state" refer to a lack of focus on core business operations, or even potential criminal negligence? If so, it's hard to justify; but if it's included in performance evaluation, many CEOs might be labeled as such. Some are constantly attending meetings, visiting clients, and engaging in administrative tasks, yet still fail to deliver real value. Others may follow local government directives closely, but end up with no market relevance. This leads to wasted investments and massive losses for the company.
These CEOs might have contributed to GDP growth, but at the cost of long-term sustainability. How can we hold them accountable? It seems that "not being in the state" has become a common issue among state-owned enterprise leaders — a recurring problem that reflects deeper systemic flaws.
It's not just about removing the wrong people; it's about fixing the system. When leaders are "in the state," they align with market demands and act with integrity. But when they're distracted by political pressures or internal bureaucracy, their focus shifts away from real business.
The root cause lies in an outdated performance evaluation system and management mechanism that still operates under a top-down model, rather than a market-driven one. Simply replacing CEOs won't solve the problem — it's like treating symptoms instead of the disease.
To truly improve, state-owned enterprises must adopt a management structure that aligns with market principles. Only then will leaders be able to focus on sustainable growth, rather than pleasing superiors or chasing short-term gains. Until then, the "not in the state" mindset will continue to plague the industry.