Noticeable progress has been made recently in Chinese companies in the areas of capital structure, management and employee incentivisation.
It is has long been said – with some justification – that aligning interests between stakeholders in China was almost impossible. Consequently the majority holder, historically the government in most instances, would dictate expansion plans based on broader economic objectives rather than narrower shareholder return motivations.
Management and employees, typically low-paid by both absolute and international standards, would engage in improper transactions through which their own benefit was clearly greater than that of the enterprise. Finally, minority shareholders simply invited along for the ride were faced with the difficult job of deciding who to trust.