Professor Colin Mayer“So the underlying question is: is it possible for China to get the best of both worlds [Western and Asian] in terms of reform going forward? And for the most part, I am going to answer: ‘Yes, I think it is'” – Professor Colin Mayer
Colin Mayer, world-renowned expert in corporate governance, delivered a thought-provoking talk to Asia Scotland Institute in Glasgow.
In a wide-ranging presentation, the professor of management studies at Said Business School, University of Oxford, discussed corporate governance reform around the globe and the lessons therein for China and other parts of Asia.
“What is going on in Asia is really very substantial, very dramatic, very important for the whole of the world,” Professor Mayer said.
Prof Mayer began by looking back at the financial crisis that rocked Asia 18 years ago. Crony capitalism was blamed and many Asian economies were urged to change their ways and adopt the North American and European model of doing things.
But then came the global financial crisis of 2008 when it became apparent that the West too had its fair share of crony capitalism. As a result ambitious, Prof Mayer said, Asian economies now face something of a conundrum.
Can China achieve its goal?
China, for example, is moving away from state-owned enterprises which are seen as too large, bureaucratic and inefficient. But at the same time it is reluctant to follow the Western model because of the perception that it bring with it inequality, divisiveness and a failure to pursue social good.
China must “experiment with different types of models for state-owned enterprises with mixed ownership, state and privately owned companies, different board structures”, Prof Mayer said. And it must “encourage experiments, as it is doing, at the level of municipalities and provinces [and] encourage them to use different types of government structures”.
Colin pointed to three examples that might serve as examples of good practice:
- Singapore-based investment company Temasek, which manages the assets of the Singaporean government by making “decisions based on commercial principles with the aim of delivering sustainable value over the long term… they foster an ownership culture which aligns employer and shareholder interest.”
- Dutch pension fund PGGM, which invests in a small number of companies and holds substantial positions in them for long periods of time. The companies PGGM chooses all have what are know as “environmental sustainable governance polices”.
- An interesting innovation in the United States called the public benefit corporation, where publicly listed companies, such as Ben & Jerry’s, state “what their social purpose is alongside their commercial objectives… and if they fail to achieve those objectives then the investors can sue the boards for failing to uphold those public purposes”.
Will China be successful in achieving its goal? Can it achieve the efficiency and innovation of private ownership while retaining the social goals and long-term approach of public ownership?
“For the most part,” Prof Mayer concluded, “I am going to answer: Yes.”
Scroll down to watch a video of Prof Mayer’s presentation
Our thanks go to the Confucius Institute at the University of Glasgow for kindly supporting this event
Colin is the Peter Moores Professor of Management Studies at the Saïd Business School, University of Oxford