[차이나인사이트] Why Chinese IT companies are scouting party secretaries with billions of annual salaries

China Anbang Insurance was once a private insurance company with assets of 2 trillion yuan (about 340 trillion won). It has also brought a new wave to the industry through vigorous overseas expansion and innovative short-term insurance product sales. But now the company is in the liquidation process. Deng Xiaoping’s maternal granddaughter, former chairman Wu Xiaohui, was arrested on charges of embezzlement in 2018, and the fall began. It doesn’t just disappear. The Chinese financial authorities set up a state-owned multilateral insurance company that will take over the assets and liabilities of Anbang Insurance in 2019. It is a form in which the state takes over the home. These days, the case of’anbang’ in the Chinese IT industry is being talked about. It is because of concern that Alibaba is stepping on the train in the home.

Ma Yun, the founder of Alibaba, who is said to be synonymous with success myth, but the aftermath of’crime’ against communist power was harsh. Ma Yun disappeared from the official statue at the end of last November after fiercely criticizing the backwardness of China’s finance, saying, “Chinese banks cannot go beyond the level of a pawn shop.” Even the idea of ​​a new recruit’s story goes on. ‘Global Big Shot’, which established the world’s best unicorn Ant group, is now experiencing a devastating frustration of a lifetime.

Alibaba is a privately owned company founded in 1999 by Ma Yun, an English teacher, with 18 friends. It was listed on the New York Stock Exchange in 2015 and has a global equity structure. If such a global company does not match the policy of the Communist Party, it is inevitable to be helpless. The Ma Yun incident shows the party-business relationship in China.

How is the Communist Party controlling private enterprises?

‘I pick a party clerk.’

Portal company Baidu (百度) published a job advertisement at the end of 2018 stating that it elects a “party committee secretary” within the company. Annual salary of 560,000 yuan. This is an amount that is close to 100 million won in our money. Qualifications were limited to “a person with a university degree or higher education who has been in charge of government affairs for at least two years as a communist party member,” and also includes a clause stating that “those who have worked in the government or large corporations are given preferential treatment”.

The clerk of the party is the position that’supervises the party-related affairs within the organization’. It is not directly related to company management. Nevertheless, what was the reason for trying to scout with a salary of 100 million?

Because I was in a hurry. 2018 was the year of Xi Jinping’s second term in office. At that time, Xi Jinping focused on’Dang construction’. The purpose is to enhance the party’s leadership capacity and strengthen the organization. The immediate communist party stipulates:

“Wherever there are party members, you must build a party organization. If three or more party members are gathered, a party branch can be established, 50 members can establish a party general branch, and 100 or more members can establish a party committee.”

It was pointed out that the IT industry is the place where this provision is not observed the most. At that time, 93.2% of state-owned enterprises, which amounted to about 150,000, built an in-house party organization, but 2.73 million privately owned enterprises, etc. had a ratio of less than 70%. Private IT companies with weak’party sex’ were given a disgrace to “build a party organization.” Companies were bound to be nervous. I had to look good to the party. It needed a’lobbyist’ to lead the relationship with the party smoothly. This is the reason Baidu announced the recruitment of the party secretary with an annual salary of 100 million. Didi Chuxing, an internet car sharing company, also posted a public announcement for the party secretary with similar conditions at the same time. For Xiaomi, Chief Executive Officer Lei Jun (雷軍) directly took charge of the party organization’s activities.

What does the clerk at work do?

There are five major roles of the Party Committee within the company as defined at the moment. ▶Accomplishment of this route and policy ▶Company compliance guidance and supervision ▶Employee unity ▶Protection of legal rights and interests of companies and craftsmen ▶Healthy development of companies The Communist Party digs into private enterprises and monitors whether they are following the party’s lines. The main business activities are reported to the party in detail. It can also put pressure on the CEO. Employees must also follow the CEO’s instructions and watch the party committee. There is a separate power system from the company organization. Of course, the party committee within a company is not hostile to the company or its management. The local branch does not seem to exist in most private companies. There are many places that play a positive role in corporate activities, such as taking the lead in raising the company by itself. However, the existence of another command system within the company is inevitably a burden for entrepreneurs.

Private enterprises are the leading players in today’s Chinese economy. Private enterprises create 60% of gross domestic product (GDP) and 80% of jobs. It is also a leading player in the Internet revolution. However, no matter how excellent they are, they are fate that cannot escape the palm of the Buddha, that is, the party.

Foreign investment companies are no different. The local branch, general branch, and party committee are established. In terms of employee scale, the largest foreign-invested company in China is Foxconn. It has approximately 1 million employees. According to Chinese media reports, there are 1030 party branches established here, 229 party chapters, and 16 top party committees by business unit. 30,000 active party members are active. As of the end of 2016, out of 106,000 foreign-invested companies, 70% of the party organizations were established. It would have been higher now. There are party organizations in Samsung’s semiconductor factory and Hyundai Motor’s assembly line. Thus, foreign-invested companies have a relationship with the Communist Party.

Party and state have a rich relationship

China is a country of the’Party-State’ system. The party takes over all power of the state. It has three volumes (legislative, judicial, and administrative) as well as the media. Even in the terminal tissues of the country, party tissues are stretched like nerve cells. That framework is also being applied to private companies.

Experts liken the party-state relationship in China as between father and son. It was the establishment itself. The Communist Party was founded in China in 1921. The country that the party established in 1949 through a revolution is now the People’s Republic of China. If the party is the father, then the state is the son. Just as a father raises a son, the party controls all the institutions of the state. So, the People’s Liberation Army is still the Party’s army. It is the in-school party committee that decides the direction for the major development of the prestigious Tsinghua University. Depending on what the Communist Party thinks, the country moves in tandem.

Private enterprises cannot be an exception to the system. Private IT companies also seem to have a free corporate environment, but when you go inside, the party’s power comes into play. That is why it is said that companies in China, whether privately owned or global, are the palm of the Buddha (Communist Party). Such is the relationship between China’s politics and economy, power and business.

Han Woo-duk, CEO of China Lab