SOE Reform: FAW Group Inspires Entrepreneurship and Innovation

China FAW Group Corporation (FAW), launched in 1956, manufactured China's first truck, its first sedan and its first limousine.

The company has established five major production bases in Northeast, North, East, South and Southwest China in the past more than 60 years. It has independently created brands such as Hongqi, Jiefang and Bestune, and participated in production of vehicles under joint ventures with companies like Volkswagen, Audi and Toyota.

In recent years, FAW has solidly pushed forward the three-year state-owned enterprise (SOE) reform action in accordance with the instruction of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

By continuously strengthening the tenure system and contract management, the market-oriented awareness of the management staffers has been enhanced and the vitality of employees'  innovation and creation has been increased.

The improvement has brought a surge in FAW's marketing for three consecutive years. Sales of its Hongqi automobiles reached 200,000 in 2020, 42 times those in 2017.

Based on strategic remodeling and organizational restructuring, FAW rearranged employees at all positions and publicly recruited senior managers in 31 subsidiaries in 2017. All senior managers were asked to sign commitment letters of market-oriented management. Their performance in the next three years decides whether they will stay in their positions.

Between 2018 and 2019, in order to further stimulate the reform of SOEs, the company selected several pilot subsidiaries in fields of vehicles, parts and financial assets to recruit market-oriented employees at principal and managerial levels.

In 2020, the company built an evaluation model and assessed performance of each employee according to more than 15,000 pieces of information. Outstanding staffers are to keep working in their positions or be offered promotions.

FAW also set different goals according to various strategic positioning and development stages of its subsidiaries and established a regular tracking and evaluation mechanism for performance indicators for each subsidiary. Scores are given to according to the subs' operating performance. A similar scoring mechanism is used in employee evaluation.

(Executive editor: Niu Yilin)