Introduction: Reform Stuck in a Deadlock

At the beginning of this year, a time-honored enterprise with a 136-year history launched the mixed-ownership reform. As a local state-controlled enterprise, its mixed-ownership reform plan was once shelved due to disputes with regulatory authorities over the "proportion of state-owned share withdrawal". Meanwhile, more than 300 senior employees with over 20 years of service collectively signed a petition against identity conversion, fearing the loss of their "iron rice bowls"; some inheritors of intangible cultural heritage (ICH) even protested by threatening to "resign and take their craftsmanship away", forcing the reform to be suspended.

I. Digging Deep into the Crux: Three Core Demands Sorted Out from 12 Symposiums

After the state-owned enterprise reform team of our institute intervened, instead of rushing to issue a plan, we went deep into the front line of the enterprise, held 12 consecutive employee symposiums, and recorded the concerns of senior employees, inheritors and management one by one. Finally, three core demands were sorted out:

• State-owned Assets Level: Ensure no loss of state-owned assets, and the withdrawal of state-owned shares must comply with regulatory red lines;
• Employee Level: After identity conversion, the accumulated seniority, retirement benefits and dividend rights shall not be impaired;
• Inheritance Level: ICH craftsmanship must be protected, and the improvement of traditional craftsmanship must be supervised by professionals.

II. Progressive Equity Restructuring: Three-step Plan to Resolve Conflicts

Based on the above demands, the team designed a set of "progressive equity restructuring" plan in combination with the Guidelines for the Operation of Mixed-ownership Reform of State-owned Enterprises, which is promoted steadily in three steps:

Step 1: Gradual Reduction of State-owned Shares to 34% - Reduce state-owned shares from 65% to 34% step by step, retaining the veto power over major matters;

• It not only meets the regulatory requirement of "no loss of state-owned assets", but also reserves space for the introduction of market mechanisms.

Step 2: Introduce Strategic Investors with an Investment of 420 Million Yuan

• Targetedly introduce strategic investors deeply engaged in the consumer goods sector, who obtain 41% equity with an investment of 420 million yuan;
• Simultaneously bind their channel resources and digital transformation capabilities to inject new momentum into the enterprise.