Most of the nine strategic investors have participated by establishing or controlling investment management companies and fund management companies. For instance, Concerto Co. Ltd., Foreland Agents Ltd. and Shenzhen PICC Tencent Munsun Energy Investment Fund L.P. are propped up by well-known enterprises RT Mart, Haier and Tencent, respectively.

Chai Zhiming, Deputy General Manager of Sinopec Marketing, said the company will cooperate with the nine strategic investors to expand into new businesses including convenience stores, auto services, online-to-offline (O2O) services, financial services, environmental protection products and advertising. Its gas stations will be built into "lifestyle stations," designed to meet customers' everyday needs.

Sinopec will cooperate with RT Mart in convenience stores, join forces with Tencent in mobile payment, media promotion, O2O business, maps and navigation services, user loyalty programs and big data applications, and collaborate with Haier in interactive marketing, logistics and oil sale.

According to a press release from the company, Sinopec Marketing aims to provide comprehensive and integrated services in order to build the trust of consumers and satisfy the needs of the general public in its new incarnation as a lifestyle service provider.

An example

Wu Ruchuan, President of China Beijing Equity Exchange, said the mixed ownership reform can be realized in three ways: transferring ownership of part of state-owned properties to private capital, introducing private investors and establishing new companies. He claimed introducing private investors should represent the first choice for mixed ownership reform in the future.

Previously, some state-owned enterprises (SOEs) in Shanghai and Guangdong Province commenced pilot mixed ownership reforms, but the central SOEs in industries related to economic lifelines failed to make any significant breakthroughs in this respect.

In this instance, however, Sinopec has embarked on its course of mixed ownership reform in a manner that enjoys the broad support of industrial insiders.

"Mixed ownership reform represents only a means, but not the end. In the future we will strive to further improve our corporate governance structure," said Lu.

This is also a measure necessary for protecting the interests of investors. According to a Sinopec press release, upon completion of the transaction, Sinopec will work with its investment partners to improve Sinopec Marketing's corporate governance mechanisms guided by the principles of professionalism and market-orientation.

A diversified board of directors is to be established, consisting of three representative directors from private capital, three independent directors and one director who is an employee of Sinopec, in addition to four directors designated by Sinopec Corp.

Although Sinopec controls 70 percent of the stake in Sinopec Marketing, non-Sinopec representatives hold the majority of the board of directors.

A remuneration and appraisal committee, a risk and strategy committee and an audit committee will also be established under the board of directors in accordance with the applicable laws and regulations.

Sinopec will also facilitate Sinopec Marketing in optimizing its management structure and establishing a specific performance appraisal system in order to develop a market-oriented, contract-guided and position-based human resources management mechanism, a market-oriented compensation system and a long-term incentive-based mechanism, according to a Sinopec press release.

Zhao Chen, an analyst of the oil and gas industries with Orient Securities Co. Ltd., said that the end goal of Sinopec's introduction of private investors is to improve its corporate governance structure and build the company into a competitive one, which is similar to the aims of the reform of state-owned banks.

"Years ago, by introducing foreign strategic investors, Chinese banks individually established a modern corporate governance structure and improved their asset management, bringing about considerable returns for their investors," said Zhao.

But compared with the conditions encountered years ago, China's market environment has been remarkably improved, laying better foundations for the mixed ownership reform. Most of the investors Sinopec have introduced are domestically based, which can better protect the national interest.

"Sinopec is considered to have provided a model for the new round of mixed ownership reform for SOEs," said Zhao, who stated the company's method of introducing investors can be duplicated, which is of great overall significance to the reform of SOEs.

"If SOEs and private investors can cooperate effectively, this round of SOE reform may bring benefits even greater than those created by the previous reform of the banking industry," Zhao said.

Email us at: wangjun@bjreview.com