Zhao Linzhong:Witness 40 years of historical changes and narrate the course of“ideological emancipation”

“Forty years of reform and opening up has brought about historic changes for the Chinese state.Behind this upside-down change is the deep-seated emancipation of the mind. I feel that ideological emancipation is neither that I liberate you nor that you liberate me, but self-liberation instead. The power and source of this liberation are enormous and endless.”

“I have lived through four decades of reform and opening up, and I can be considered as a witness to it over the past 40 years. Looking back on the path our Furun Holding Group have taken, I realize the charm of ideological emancipation.”

Furun Holding Group, formerly known as Staterun Zhuji Knitting Factory, was founded at the beginning of the reform and opening up in the 1980s. In a small alley in Shangjiangdong, several second-hand circular knitting machines donated by Taiwan compatriots and the 100,000 yuan allocated by the county’s industrial bureau are all the possessions of the knitting factory. In 1986, the organization sent me to Zhuji Knitting Factory. At that time, the knitting factory was outdated in equipment, backward in products, and beset with difficulties. In the spring breeze of reform and opening up and with “Mu Tuo” courage of Zhuji people who consider that “to starve is not as good as to break the law”, we started the journey of reform and development. But at that time, there were a lot of rules and regulations in state-owned enterprises, and we will be inevitably timid in doing things. Just as the doyen Feng Gensheng said, “it is difficult to take actions when the right time comes”. Judging from my experience in the “second light industry system”, if I do not emancipate myself ideologically and do not have a little bit spirit of reform, it is difficult for me to get through the close siege.

When it comes to emancipating the mind, stateowned enterprises had three sentences at that time,and in my own view, we could not cling to outdated customs and need to have changes. The first sentence is “no matter how big the worker’s affair is, it does not matter; no matter how small the enterprise’s affair is,it matters a lot.” It sounds a good point, but I don’t totally agree with it, I propose “no matter how small the worker’s affair is, it is also a big deal; a big enterprise affair is a big matter, and a small enterprise affair is a small matter”.

The second sentence is “the enterprise gets the most shares, the collective gets the moderate number of shares and the individual gets the least shares.” It sounds quite reasonable, but looking at the situation of the knitting factory, and I separately figure out the account and change the sentence into “the individual gets the most shares, the collective gets the moderate number of shares and the state gets the least shares”.In 2003, I attended National People’s Congress and Chinese People’s Political Consultative Conference,and when a state leader went to Zhejiang delegation to participate in the review, I also mentioned this sentence in my report. At that time, the delegates and the leaders present were shocked when they heard this, and immediately burst into laughter and initiated discussion. They thought, how could Zhao Linzhong say that? At this moment, a leader said, “Take it easy, listen to Comrade Linzhong’s explanation first”. I drew an analogy: when the distribution of benefits among the three is based on a percentage system, the state gets 32%, the collective gets 33%, and the individual gets 35%. We are a state-owned enterprise, and then 33 % for the collective is also state-owned, so the state still gets 65% in total. Stateowned enterprises are too “inflexible”, they should lean towards individuals a little and mobilize their enthusiasm so that the country can truly take the lion’s share. After listening to my explanation, I only heard the leader say, Comrade Linzhong, you’ve really made a good point!

I also reversed another sentence. It is usually said that “the small river is full if there is water in the big river and the small river is dry if there is no water in the big river”, but from my perspective, “the big river is full if there is water in the small river and the big river is dry if there is no water in the small river”.

No one dares to say these words that sound a little “reactionary” at the beginning of reform and opening up without a relaxed political environment, and in fact, they are a concept of reform. Through the reform,the knitting factory stopped suffering losses and began to make profits.Later, it established Zhuji’s second Sino-foreign joint venture and bought Zhuji’s top-grade crown car.

In the early 1990s, Comrade Deng Xiaoping published the famous South Tour Speech, proposing “Three Favorables”, encouraging people to dare to try, dare to venture, and do not argue. This is really a story of spring! I clearly remember that the party members and cadres of our knitting factory brought their own stools and gathered together to study and speak in the old office rebuilt with a warehouse in Shiziling, and they felt that their hearts were suddenly lit up.

At this time, Zhuji already had private enterprises. I thought, now that the contract system was no longer fresh, it might as well be changed into the “public-private partnership” mode, which was technological upgrading and public offering mode between the contract system and the joint stock system and made the workshop director have some assets as well.For instance, there are 1 million state-owned assets in the workshop, you invest tens of thousands or hundreds of thousands of yuan to simulate the operation of the joint stock system. When the workshop has profits, it will distribute dividends according to the proportion, and the losses will also be borne according to the proportion. As a result, the workshop director will have both pressure and enthusiasm. “Public-private partnership” was not allowed at that time, we did it without arguing or saying anything. Fortunately, the effect was quite good because the state-owned assets have increased in value.

Since 1992, under the unified arrangement of relevant departments, we have taken over and merged more than 20 enterprises like a hurricane. These enterprises should all have difficulties of one sort or another under the circumstances at that time. They were basically labor-intensive enterprises with many employees and heavy historical burden. Since we took over the enterprises, the situation had improved somewhat and the transition went on smoothly. The key was to change the mind and transform the mechanism. We didn't have any brand advantages or financial strength,and can only make an issue from the aspects of mechanism, management and culture to pull the changes in various links.

In 1996, the Party Committee of Furun Group summed up a series of practices focused on ideological and political work over the years to form the “Regulations on Regular Ideological and Political Work”,covering eight aspects of Party building groups, employees’ production labor, work and study, and family life, etc., a total of 60 specific regulations. It has truly solved the following problems: there’s someone that asks about staff’s feelings, there’s someone that helps in emergencies, there’s someone that cares about birth,senility, illness and death, there’s someone that listens to voices and advice, there’s someone that acclaims the progress of achievements, and there's someone that fights against unhealthy practices and evil phenomena,and there’s someone that praises good people and good deeds, and employees affectionately call it “Six Articles”. Over more than 20 years since the enactment of the “Regulations”, eight amendments have been made, the “Needy Employees’ Foundation” established simultaneously in 1996 has donated more than 120,000 times, helped more than 13,000 employees in need, and has assistance funds of more than 18 million yuan...

In 1994, we established a joint-stock company.After three years’ operation, it became the first listed company in Zhuji in June 1997. After listing, it still suffered great pressure, and it was not that easy to use the money of share holders. I said at that time that we could only be happy for three seconds. We referred to the model of listed companies to carry out “simulated stock system”. That is, simulate the production unit as a joint stock company, state-owned assets and listed companies take up a portion of the shares and the backbones contribute some money to jointly buy new equipment to carry out technological upgrading,we call it “technological upgrading and public offering”. Based on this trial, from 2003 onwards, we fully upgraded the system, and we internally called it a “new system”, and some scholars called it a “new stateowned enterprise”.

Letting go of the establishment of incentive and restraint mechanisms can continuously stimulate the company’s independent technological innovation capability and brand development capability. While the reform conditions were not yet very mature, the “if the state-owned brand does not fail, the mechanism must be changed” we put forward tallies with “diversification of investment subjects has made joint-stock system the main form of realization of public ownership”proposed at the Party’s Sixteenth National Congress of the CPC and Third Plenary Session of the 16th Central Committee of the CPC. Although a few enterprises still had difficulties, the overall effect and stamina were still relatively good. Therefore, I often say that emancipating the mind is not a matter of subjective imagination or whims, nor is it a matter of random thinking, but instead, we should proceed from objective reality to solve problems and find a path suitable for ourselves. In the meanwhile, we should treat it dialectically. For example, development is of overriding importance, but hard development does not necessarily make sense.

Since the 90s of the last century, the state-owned enterprise reform has been launched nationwide, and the local government has also issued several instructions for restructuring within a time limit. However, due to the special history and current situation of the group (the foundations of the merged enterprises are uneven, the number of employees is large, and the number of redundant personnel is large, etc.), we have established the guiding ideology of “soft landing, slow turning.” Internal units have their own initiative, and can carry out the restructuring of “Three Thoroughs”in advance according to regulations in the principle of “unified policy and classified implementation”; the replacement of employees’ identities in state-owned and collective enterprises should precede the replacement of property rights, make a smooth transition, exchange space with time, fully consider the understanding and reception of the reform by employees or management teams, and gradually push forward the reform step by step,take small steps and keep on moving. Proceeding from reality, do anything that is favorable to the stable development of enterprises and the liberation of productive forces. Seize the momentum and push forward reforms by seizing opportunities and taking advantage of other’s power.

Since the group has a heavy historical burden and limited effective assets, its industries are mostly traditional commercial and textile industries,and besides, its market competitiveness is weak, it is difficult to complete the enterprise restructuring of “Three Thoroughs” without finding a certain combination point. In 2006, the local government implemented the transformation of the old city, involving the vast majority of the group's commercial enterprises. We put forward the “restructuring plan for commercial enterprises in combination with the reconstruction of the old city”and completed the enterprise restructuring of “Three Thoroughs” of commercial enterprises in August 2007; at the beginning of 2010, the local government listed the demolition of the group’s chemical fertilizer plant and the overall relocation of the silk spinning plant as its key tasks. We proposed to the municipal government to boost the construction of group restructuring in combination with the relocation and resettlement, and finally, the holding unit of property rights, namely, the city’s State-owned Assets Supervision and Administration Commission formulated the “Restructuring Plan for Furun Holding Group Co., Ltd.” until the completion of group restructuring on December 22, 2011. In the process of restructuring, we consciously accepted the leadership of the local Party Committee and government, and the management team clearly defined its own boundary, “no offside, no omission”.

The reform of property right system, especially the group’s reform of property right system at the corresponding level, is a deep water area for reform. In the process of reform, we strictly follow the specifications and sunshine operation is the biggest politics in the process of restructuring; conscientiously study and comprehend the policies and regulations on state-owned assets supervision and management of the state and local governments at all levels, reappraise the stocks and assets of enterprises, carry out financial auditing,asset evaluation, expert evaluation, transaction management, protect creditors’ interests according to law and safeguard the legitimate rights and interests of employees, etc. in strictly accordance with the restructuring norms, including the restructuring plan developed by the holding unit of state-owned property rights of restructured enterprises. Especially in the sharing of reform achievements by all the employees. all those involved in the interests of the employees should follow the principle of “strictly following the policies if there are policies, and depending on the advantages of the employees”, fully guarantee the legitimate rights and interests of the employees, fully absorb the voluntary and equal participation of the employees in the joint stock setting of companies to be taken over, set no upper limit on the number of shares held by the employees in principle, and equality of opportunity reflects the most important fairness to the employees.Due to its standardization, openness and fairness, the restructuring was carried out in a clean and upright atmosphere, and thus won the advocacy and support of the vast majority of employees. As a result, the restructuring not merely proceeded smoothly and stably,but could always stand up to the test of history.

On December 22nd, 2011, the group completed the division of restructured assets, and changed from a wholly state-owned industrial and commercial registration to Zhuji Huifeng Investment Co., Ltd. respectively held by employees and management teams and a limited liability company with 81% shares by Stateowned Assets Supervision Administration Office and 19% shares by the city’s Assets Supervision and Administration Office. Thus, Furun Holding Group Co.,Ltd. completed the enterprise restructuring required by “Double Replacements” and “Three Thoroughs”.Although it has been restructured into a shareholding enterprise of state-owned capital, our Party Committee has always been firmly committed to the concept of “no matter how the brand is replaced,how the system is changed, and how the mechanism is transformed, the fighting capacity of the Party organization cannot be weakened, and the idea of relying on employees to run enterprises and running enterprises so that employees have a dependency cannot be changed.”

For historical and institutional reasons, although it is difficult for us to compare with outstanding private enterprises in terms of economic aggregate, profits and taxes, etc., looking back on the thirty years of Furun,by deepening the reform, this local small state-owned enterprise, under the specific background, is not annihilated, but instead, it has also achieved certain development and made certain contribution to the local economic construction and social development. For instance, in 1999, while the government was lack of the funds for construction, it invested all the funds for allotment of shares in Zhudong Highway, which practically improved the traffic and environment of the towns and villages along the route.

“After living through 40 years of reform and opening up, I personally feel that: emancipating the mind is worth of ten thousand golds; emancipating the mind has infinite charm. Standing in the new period and new starting point, we can only keep on learning and emancipate our minds continuously, and besides, we must not only open up but also let go, and emancipate the mind under the premise of “Three Favorables” and “being loyal to the cause of the Party, loyal to the state-owned assets, loyal to the cause of Furun, handling affairs conscientiously, dealing with affairs fairly, operating with integrity, and working hard and diligently” advocated by our group.

Reform and development are eternal themes, emancipating the mind has not ended indefinitely, and there is a long way to go for Furun’s reform, development and stability. Under the general background of the new round of ideological emancipation and reform and opening up, we must be a permanently dutiful and harmonious enterprise in accordance with the spirit of the 19th National Congress of the Communist Party of China and General Secretary Xi Jinping’s requirements for the new era of socialism with Chinese characteristics.