SOEs facing serious challenges: official

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China's central government-administered State-owned ­enterprises (SOEs) still face challenges, including difficulties in the domestic economy and management problems, even though they posted stable growth in net profits for the first half, a government official said Wednesday.

"The contradiction between weak demand and overcapacity in some sectors including coal, steel and shipbuilding still has not seen any obvious reduction. And some of them are likely to ­suffer losses in the long term," Huang Shuhe, vice chairman of the State-owned Assets Supervision and Administration Commission (SASAC), was quoted as saying by the Xinhua News Agency.

The SOEs also have some inner management problems. For instance, costs were equivalent to 95.6 percent of the total sales revenue of the SOEs in the first half, said Huang.

SASAC also released a notice Wednesday ­saying that it started an investigation on August 15 into salaries for SOE employees.

The average salary at centrally administered SOEs in 2011 was 4.2 times the amount paid at private companies, according to a survey released by news portal NetEase last year.

Huang also noted that the investment scale of some SOEs was too large, and that some of them had expanded into too many sectors, resulting in low efficiency.

"The SOEs have the responsibility to focus on their major businesses to improve their core competitiveness," Lu Dongbin, a professor at the School of Business at Renmin University of China, told the Global Times Wednesday.

In 2010, SASAC required 78 centrally administered SOEs to shut down their interests in the real estate sector and focus on their core businesses. But the watchdog has not released details of how many SOEs have withdrawn from the ­sector so far.

In addition to the domestic problems, the ­international business environment for SOEs will be more complicated in the second half. "Some factors, such as withdrawal from quantitative easing by the US and more international trade barriers" could impact the businesses of the SOEs, Huang noted.

• Profits of China's SOEs pick up
• Half of major SOEs' profits set to be made from abroad
• China's SOEs H1 profits up 7%
• SOE profits rise at faster speed in first 5 months
• China's SOEs face poor profit prospects

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