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Institutions & Mechanisms

Committed to exploring a development path for private enterprises, the Company has introduced a unique operating model of independent innovation and built a well-organized economic community guided by The Code of Business Conduct of CEFC China formulated on the basis of laws and business contractual commitments. The parent company CEFC China is collectively owned and will not be divided. It adopts a society-oriented asset management model that prevents internal conflict and power struggles commonly seen in private companies.

 

Prioritizing sound strategic development in the long run, CEFC China adopts an accountability system for general managers under the leadership of the Board of Directors, a three-in-one management model that integrates entrepreneurship, Confucianism and military-style management, a “one company, two systems” model of distribution and a performance-based evaluation system centered on independent accounting for each department within the CEFC group. Through an operating system that combines the headquarters’ strategic and financial control with partnership systems at the subsidiaries, it has put in place a 3-tier authorization and a 3-tier partnership system, continuously promoting core business, talent professionalism, asset securitization and refined management.

 

One Company, Two Systems: As a private collective company, CEFC China adopts a “one company, two systems” development model. The indivisible equity of the parent company and the society-oriented management of its assets ensure consistent growth of its core competitiveness and sustainable development by preventing internal conflict and power struggles commonly seen in private companies. Meanwhile, through a partnership system with its level-two subsidiary companies, CEFC China puts in place a three-tier legal representatives system and a three-tier partnership system, practices team ownership and incentive distribution, so as to sustain its strong development momentum and build a well-organized economic community.

 

Three Relationships: CEFC China adopts a “three-in-one” management model integrating “entrepreneurship, Confucianism, and military-style management”. In this model, business owners are each entity’s partners, directors and chairman of the board; business managers (senior-level managers) implement strategies; professional managers (entry-level managers), acquire expertise and management skills, and follow instructions and regulations. Professional managers demonstrating excellence may be promoted to business managers, who in turn may be promoted to business owners (board directors). The model provides a continuous career development path, thus contributing to the growth of the Company’s talent pool.

 

Strategic and Financial Control & Partnership System: CEFC China adopts an operation system that combines the headquarters’ strategic and financial control with partnership systems at the subsidiaries. The headquarters perform centralized management of financing, investment, human resources and financial affairs with an effective risk prevention mechanism put in place, while multiple partnership systems have been formed for industry-specific investments, project operations and trade operations, with contractual incentives tapping into the initiative and creativity of professionals in all areas. This helps ensure the Company’s sound and rapid development.

 

Three-Tier Meeting System and Three-Tier Legal Representatives: Under the leadership of the Board of Directors, CEFC China’s corporate governance reinforces the accountability of the general managers of each entity, with the Board of Directors Meeting constituting tier-1 (top level) followed by the Supervisory Board Meeting (tier-2) and the General Manager’s Meeting (tier-3). The key is to regulate and supervise through a strategic and financial control model.

 

The three-tier legal representatives system is the detailed implementation of the strategic and financial control by the headquarters and the partnership systems: the headquarters act as the controlling platform (Tier-1, top level), level-one subsidiaries as the investment platform (Tier-2) and partner companies as the partnership platform (Tier-3), effectively combining the headquarters’ control with the partnership systems.

 

- Three-tier Authorization: The pluralistic and effective three-tier authorization system has further leveraged the flexible operation of private enterprises by integrating its unique management system with the company’s daily work, which fully demonstrates its advantage in managerial concept. Under this management approach, prior reasonable authorization should be made in accordance with the company’s regulations and standards as the first tier. While a project is in progress, special authorization for strategic budgeting may be granted to each Board of Directors, forming the second tier. Upon completion of the project, incentive authorization is granted on the basis of performance as the third tier.

 

Performance-Evaluation System: Each subsidiary and department is given independent key performance indicators for organizational or personal performance assessments, taking account of both efficiency and risk control, to enhance the Company’s ability to pool and allocate resources.

 

With the innovative theory of balancing the “Three Relationships” at its core, a series of systems including collective consultation, the staff representative conference, representatives of staff interests, joint meeting of staff-friendly enterprises, the staff fund, staff democratic meeting and staff community have been set up to create a free and favorable environment for fair competition and professional growth.


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