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Results: Overall By category By country By sector Best managed companies in Asia 2013: Full category listing |
Concerns about the corporate governance of Chinese companies are not new, particularly where foreign investors are concerned. Many of the basic tenets of good corporate governance are well established for western companies, but have been more difficult to spin into the fabric of Chinese commerce. That said, in China, and elsewhere in Asia, for all the well-documented problems surrounding lack of transparency and accountability of leadership, several of the largest companies are displaying a growing appreciation of just how vital good corporate practices can be. These corporate governance successes are, however, more an exception than a rule and progress is needed on a broader scale.
According to Fitch Ratings, information flow and difficulties contacting Chinese companies after bond deals close is dampening investment appetite from international investors. Worries about financial disclosure and corporate governance also abound.
Fitch says that while it expects investment interest to remain strong in 2013, these shortcomings might dampen global investors’ interest in Chinese corporate debt, even as Chinese corporate appetite for international debt issuance continues to grow through 2013.
Investors surveyed by Fitch in New York, Los Angeles, Hong Kong and Singapore expressed frustration that the level of communication from many Chinese corporate treasury teams was extremely poor compared with other bond-issuing multinationals.
Specifically, Fitch says investors highlighted investments they had made in first-time or non-frequent issuers where, after the bond deals wrap up, information flow had been sparse and their calls to the company for updates had not been returned.
Investors were unable to determine whether this resulted from a lack of understanding of international bond investor requirements versus those of private wealth investors, force of habit from having had readily available bank funding historically, or some other factor that has yet to be determined.
At the same time, the level of interest from global investors in emerging Asia, and Chinese corporate bonds in particular, was much greater, and across a broader corporate spectrum, than evidenced in Fitch’s discussions with investors 12 months ago.
Short-seller reports remain at the forefront of investors’ minds, as does the public debate between the US SEC and US-listed Chinese companies’ auditors. Although short-selling research reports continue to be a risk for the reputation of Chinese corporates and their access to liquidity, investors did not necessarily view them as wholly negative.
Several took a partly positive stance toward the short-sellers, believing them to be an effective tool to help force some Chinese corporates to improve the quality and frequency of their disclosure.
Xiaochu Wang, chairman of China Telecom, believes that the firm is set apart from the competition in terms of corporate governance due to a convincing and coherent strategy coupled with superior execution by staff and a strong commitment to high transparency.
“We have an investor relations department dedicated to providing investors and the public with the necessary information and services in a timely manner, in particular leveraging the company’s website,” he tells Euromoney. “For the annual results, interim results and important transactions entered into by the company, the senior management will present and explain directly to investors and the public through investor briefings, press conferences, global investor telephone conferences and investor roadshows.
“The company will promptly make announcements of any important agreements we make as well as any big business development. The company also voluntarily discloses quarterly results and monthly operating key performance indicators to keep investors and the public apprised of our latest developments.”
Senior managers at the company are held accountable for any mistakes. All staff, including senior managers, are subject to a comprehensive performance evaluation system and their remuneration and promotion is linked to their performance.
Social responsibility is a central focus of the firm. “Being the key national telecommunications operator in China, we always strive to fulfil our social responsibilities, which are crucial to our long-term sustainable development,” Wang explains. “We are dedicated to operating our business with integrity and in compliance with the laws and regulations. We strive to delight our customers with compelling services and deliver decent returns to our shareholders. We provide our talents with good training and opportunities to advance their career and realize their earnings potential.”
He adds: “We advocate fair and orderly competition as well as win-win cooperation along the value chain to foster overall industry development. We aim to leverage our sustained development to contribute to the country’s economic development, environmental protection and construction of a harmonious society.”
Wang is optimistic that management at other Chinese enterprises is improving. “Over the years, I have seen robust advancement of the management of other companies in China in general,” he says.
