Wednesday, April 20, 2011

From Corporate Perspective to See Government Strategy Implementation

After read this week’s article titled “From Strategy to Implementation: Seeking Alignment”, I think about a project I completed in my last summer intern. Our project is researched on the investment opportunity of China social housing. We need to analysis the whole process of social housing policy and gave a forecast of its impact to the capital market. China’s Vice Premier Li has taken charge of social housing, doubling that year’s target and aiming for 15.4 million units by 2012, which will contribute 2-3% of GDP. This is a very aggressive goal for government, and our job is to analysis the possibility of the completion of this policy.

During this research process, I found a big problem is the evaluation of the policy implementation, including the capital, people, resources, incentives, structure, supportive activities and cultures. And all of these factors are essential to the result of the strategy. First thing is the capital. After reviewed previous local government revenue and centre government support, the problem came out. Actually, from our deep analysis of the financial condition of local and centre government, the money would not be a problem. But it is a problem because this money should be used on social housing. According to our analysis, the main revenue source of majority provinces comes from land sold to real estate developers. Since this policy, the local government faces a very intense situation to generate future revenue since they not only cannot sell land anymore but also need to subsidize the social housing construction. Hence, it leads to another main factor of strategy implementation---incentives. The local government, the main implement entity, lack of incentive to implement the social housing policy. How to incentive the local government became another problem of our project. We found the key factor to decide this policy is the officer of the province. And the incentive of these officers is the performance evaluation from centre government. So far, the performance evaluation of local officer is based on the measurement of GDP. If the central government wants to enhance social development, like education, medicine and social housing. They need add the social development performance evaluation into these local officers’s performance evaluation. Hence, the officers have to build social housing for their future promotion.

Besides the incentive policy, the other supportive activities are also very necessary. For example, the public transportation needs to add line near the social housing or expand their network to social housing community, since majority social housing built in the suburban. All of these implementation factors have huge impact on the final result of this policy. Overall, a successful strategy is depending on the right direction and series supportive strategy implementation. And these factors need to link to each other.

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