In recent years, analysts have observed that electricity prices in China have been increased multiple times since 2011, while coal prices have dropped significantly. This shift has allowed many home appliance companies to turn losses into profits, resulting in strong performance evaluations.
For 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 a major focus for the industry. Since 2004, the SASAC has conducted both annual assessments of enterprise leaders and three-year term evaluations. The results of this year’s assessment have drawn particular attention.
On August 3, the SASAC official website released “The Third Term Evaluation Results of Central Enterprise Leaders and the 2012 Business Performance Review.†Out of the companies evaluated, 45 were listed as A-level performers for the 2010–2012 period, and 44 received A-level ratings for the 2012 annual assessment.
From 2010 to 2012, when comparing the SASAC’s performance evaluations, it was noted that among the top five power groups, only Guodian Group and Huaneng Group made the list in both 2010 and 2011. However, in 2012, all five major power groups were rated as A-level companies.
Approximately 40% of central SOEs achieved A-level performance, according to Xinhua News Agency. With 113 central enterprises supervised by the SASAC, 44 A-rated companies account for about 40% of the total.
An unnamed researcher from the Chinese Academy of Social Sciences mentioned that the SASAC's performance evaluation system for enterprise leaders began in 2004. At the time, Li Rongrong, then director of the SASAC, emphasized the need to keep enterprise leaders "awake" so they could sleep well—highlighting the pressure and expectations placed on them.
The performance evaluation system was formalized in October 2003 with the release of the Interim Measures for the Assessment of the Operational Performance of Central Enterprise Leaders. These measures aimed to ensure the protection of state assets, implement maintenance and appreciation responsibilities, and create effective incentive and restraint mechanisms.
Annual performance assessments include basic indicators like total profit and economic value added, as well as classification indicators tailored to each company’s industry and operational challenges. The final scores determine whether an enterprise leader receives an A, B, C, D, or E rating, with most targets set at the C level.
According to the Academy of Social Sciences sources, the SASAC’s performance appraisal system is designed to maintain and increase the value of state-owned assets by monitoring enterprise leaders’ performance.
Notably, all five major power groups were included in the A-level list for 2012, marking a significant shift. Analysts attributed this to factors such as electricity price increases in 2011, lower coal prices in 2012, and improved cost control. For example, Guodian Power, a key subsidiary of China Guodian Corporation, saw a 38.44% increase in net profit in 2012, driven by new energy development and tariff adjustments.
Similarly, Huadian Power experienced a massive 1690% increase in net profit due to higher on-grid tariffs and increased power generation. Datang Power also reported a 109.82% rise in net profit, highlighting the overall turnaround in the power sector.
In contrast, the three major airlines—China National Aviation, China Eastern Airlines, and China Southern Airlines—were excluded from the A-level list in 2012. Despite being A-rated in previous years, their performance declined due to factors such as global economic weakness, rising fuel costs, and competition from high-speed rail. Their financial results reflected these challenges, with some companies reporting significant losses.
However, all three airlines were still shortlisted for the A-level term evaluation (2010–2012). According to the SASAC’s assessment formula, performance is not solely based on profit but also considers broader factors such as industry conditions and leadership decisions.
This comprehensive approach ensures that enterprise leaders are evaluated holistically, balancing profitability with strategic management and external challenges. As a result, even in difficult economic environments, some leaders can still achieve A-level ratings based on their overall performance and resilience.
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