In recent years, analysts have pointed out that since 2011, electricity prices have been increased multiple times, while coal prices have dropped significantly. This has led many home appliance companies to turn losses into profits, resulting in outstanding performance evaluations. Among the hundreds of central state-owned enterprises (SOEs) under the supervision of the State-owned Assets Supervision and Administration Commission (SASAC), the annual performance evaluation is one of the most closely watched aspects.
Since 2004, the SASAC has conducted both annual assessments of the operating results of central enterprise leaders and three-year term evaluations. The results of this year’s assessment have drawn even more attention than usual. On August 3, the SASAC official website released “The Third Term of the Central Enterprise Leader and the Results of the 2012 Business Performance Review.†According to the report, 45 companies were shortlisted for the 2010-2012 Responsible Personnel Performance Evaluation A-level, and 44 companies received the A-level rating for the 2012 annual performance assessment.
When comparing the past three years’ performance evaluations, it was found that among the top five power groups, only Guodian Group and Huaneng Group had made the list for two consecutive years in 2010 and 2011. However, in 2012, all five major power groups were rated as A-level companies. According to Xinhua News Agency, there are currently 113 central SOEs supervised by the SASAC, meaning that the 44 A-rated companies account for roughly 40% of all central enterprises.
An unnamed researcher from the Chinese Academy of Social Sciences mentioned that the SASAC's performance evaluation system for central SOE leaders began in 2004. At the time, Li Rongrong, then director of the SASAC, emphasized the importance of making enterprise leaders "not sleep well" to ensure they perform effectively. The system was formalized in October 2003 with the promulgation of the Interim Measures for the Assessment of the Operational Performance of the Responsible Persons of Central Enterprises.
These measures aim to fulfill the duties of state asset contributors, protect owner rights, and implement the responsibility for maintaining and increasing the value of state assets. The performance assessment includes basic indicators like total profit and economic value added, along with classification indicators tailored to each company’s industry characteristics and operational challenges.
The evaluation results are divided into five levels: A, B, C, D, and E. Most target values, except for economic value added, are set at the C level. According to the researcher, the primary goal of the SASAC is to maintain and increase the value of state assets through a structured performance appraisal system.
Notably, all five major power groups were included in the A-level list for 2012, marking a significant turnaround for the sector. Analysts attributed this success to factors such as electricity price increases in 2011, a drop in coal prices in 2012, and improved cost management. For example, China Guodian Corporation saw its subsidiary Guodian Power achieve strong net profit growth, which directly contributed to the group's overall performance.
Similarly, Huaneng Group and Datang Power also reported substantial improvements in their financial results. In contrast, the three major aviation companies—China National Aviation, China Eastern Airlines, and China Southern Airlines—were notably absent from the A-level list in 2012. Despite being included in the A-level for the 2010–2012 term, their performance declined due to external factors such as global economic weakness, rising fuel costs, and competition from high-speed rail.
While the annual performance evaluation considers macroeconomic conditions and industry trends, it also takes into account the overall management and strategic decisions of the enterprise leaders. As a result, even though the aviation companies faced challenges, their long-term performance and industry context may have influenced their evaluations.
Overall, the performance evaluation system serves as a comprehensive tool to assess the effectiveness of central SOE leaders, balancing profitability with broader operational and strategic considerations.
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