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Xinhua Insight: Shrinking profits hobble wage increases

11-11-2012 01:14 BJT

by Xinhua writer Zhou Zhou

BEIJING, Nov. 10 (Xinhua) -- China vowed to bulge its people's wallet, but that's not an easy task as its enterprises struggled to make profits.

It came after Sany Heavy Industry Co. Ltd., a leading construction equipment maker and one of China's most successful private companies, announced a stock option incentives plan for its 2,533 core staff.

Sany President Xiang Wenbo tweeted the incentives plan at his Weibo, a Twitter-like social networking service in China, immediately grabbing an online accolade.

"Sany incentives are to help our staff to achieve success. Large shareholders are not included in the plan this time," Xiang tweeted.

It echoed the pledge made by Hu Jintao in his report to the 18th National Congress of the Communist Party of China (CPC) to double the per capita income of Chinese by 2020 while maintaining the economic momentum.

Sany Heavy (600031), listed in the Shanghai Stock Exchange, will take out 2.35 percent of its total stock capital as incentives.

However,the company's less-than-spectacular profits complicated the plan. Sany's net profits dropped nearly 60 percent to 114 million U.S. dollars in the third quarter of the year.

The stock options cannot be exercised unless the company's net profits grow by 10 percent annually over the next three years, the corporate press release said.

Sany's profits, like those of many companies, have largely come on the back of China's drive to build up a large amount of infrastructure.

It brought Liang Wengen, chair of the board of Sany Group, the mother company of Sany Heavy, one of the richest in China.

Liang was elected as one of the 27 CPC delegates to the 18th National Congress from the private sector, an emerging slate that is gaining more influence in the country.

With China's economy slowing down amid a global recession, however, private companies like Sany found it more difficult in making money.

Liang said in a press conference on Saturday, "Sany does have problems in achieving this year's target."

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