Under various factors, the downward pressure on China's economy continues to increase, and its trend is gradually entering the economic winter. Anbound expects that if the current trend continues, the Chinese economy is likely to struggle to maintain the 6% growth rate in 2019. How then, should China deal with the current problem? Anbound's chief researcher Chan Kung once provided a logical idea that can invigorate the private economy, promote investment and consumption, drive the stock market and the housing market, expand market space, as well as utilize the market space to promote reforms, adjust systems, and gradually achieve the strategic goals. To realize this logical idea, the key is to work for the "consortium economy", organize private enterprises, and strengthen their self-management, tax cuts, credit management, markets, supply chains, policies, and even entrepreneurs' lifestyle solutions.
Is it difficult for China to develop the consortium economy? The answer is both yes and no. The difficult part lies in letting the decision-makers understand the matter and have their support. It is necessary for policymakers and executors to recognize the importance of developing the consortium economy in the Chinese economy and identify models for agglomerating social capital and aggregating social resources through the consortium economy. After the decision makers reach an agreement, it would then be easier to realize the consortium economy. It is only necessary to issue a document from the central government. Therefore, the key is to recognize the importance of developing a consortium economy.
Concerning the importance of the consortium economy, one can think of a recent incident. In just six years, Gionee went from being one of the top mobile phone companies to being bankrupted and restructured, from having the revenue of more than RMB 30 billion to insolvency, with alleged debt up to RMB 28.1 billion. The rapid decline of Gionee is said to be the gambling habit of its chairman Liu Lirong. It is said that Liu could directly take out more than one billion or even billions of RMB from the chief financial officer for gambling. What is even more interesting is that the collapse of Gionee involves other companies, with at least 10 listed companies being affected.
Although there are many problems with private entrepreneurs in China, they are capable of doing something and have their own ability and advantages. In the current stage of development in China, private entrepreneurs are a group of talented people with important values. What happens to Gionee today reminds Chan Kung of a previous policy suggestion that the private economy should engage in a consortium economy. Chan Kung explained that the advantage of the consortium economy is that there would be an organization that will not allow private entrepreneurs to do wrong. The example of Gionee's Liu Lirong shows that the problem involves with a number of companies and institutions if there is a consortium organization, these entrepreneurs who are actually talents would not stoop so low.
The "consortium" we refer to is an important form of industrial capital agglomeration from the capital perspective. From the business perspective, the consortium economy is actually an industrial organization. Since it is an organization, it can be managed and fully trusted politically. Hence, in between the state-owned enterprises and the private sectors, there can be an intermediate level between the government and the market. This kind of industrial organization can be agglomerated and form a consortium, and its scale can be rather large. With a larger scale, there would be competition, and they would be more trustworthy in obtaining bank credit. An industrial organization like a consortium plays a role of coordination and management; located in an intermediate level, it partially replaces the government's direct market-oriented responsibilities. In fact, it is far more connected to the ground than the government, and it knows more about the market than the government. From the perspective of business people, the "consortium" can also be understood as a business community with a certain organizational structure. For entrepreneurs, the consortium can form certain "soft constraints" on its entrepreneur members.
The development experience of countries such as Japan and South Korea shows that the "consortium economy" is a successful economic organization development model for East Asia, and it can successfully enter the international market and become a competitive part of global multinational companies. The consortium can also play an important role in assisting family businesses to realize the transformation of the modern enterprise system. "Consortium economy" points out a development path for the future development of the family business and the succession of the family, and can also help to solve the succession problems faced by private enterprises. It is common in Japan and South Korea that business and finance are integrated. This consortium economy, which combines real economy and finance, stabilizes liquidity through internal mutual support and avoids the massive collapse of the real economy. This model can serve as a good example for China in solving the financing difficulties faced by private enterprises.
After 40 years of reform and opening up, China's private economy has made considerable progress. However, China's private enterprises are still quite young from the perspective of time frame, and they are at an early stage of development. With the development and evolution of the consortium, they will also bring new contributions to the development of the market economy in this new era. In the face of downward pressure on the Chinese economic development, when Chinese companies are in a wait-and-see state due to poor market expectations, if the private enterprises and entrepreneurs can be promoted to develop the consortium economy, this will provide a good option for China's private economic development.
Final Analysis Conclusion:
"Consortium economy" provides a good model for the development of China's private economy. As an aggregation of capital, a consortium has incomparable advantages than other legal entities, and it has an edge in solving many problems currently faced by the private economy. As an entrepreneurial community, entrepreneurs will move from managing their own matters to work towards organized and coordinated development and will play a constructive role in the Chinese economic downturn.
