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The Dominance of Public Ownership in the Chinese Socialist Market Economy

There are many that seem to believe that China today is a capitalist country, and that ever since 1978, China took the capitalist road. The relative decline of state owned enterprises (SOEs) in China in comparison to the private sector is used as damning evidence in favor of this view.
I will take this article for example:
https://www.weforum.org/agenda/2019/05/why-chinas-state-owned-companies-still-have-a-key-role-to-play/
China’s private sector - which has been revving up since the global financial crisis - is now serving as the main driver of China’s economic growth. The combination of numbers 60/70/80/90 are frequently used to describe the private sector's contribution to the Chinese economy: they contribute 60% of China’s GDP, and are responsible for 70% of innovation, 80% of urban employment and provide 90% of new jobs. Private wealth is also responsible for 70% of investment and 90% of exports.
All of this is seemingly supported by official Chinese data AT FIRST GLANCE.
Taking a closer look, there may be problems in this combination of numbers. While China’s ownership structure has changed dramatically since reform began, claims that the private sector now dominates the economy may be exaggerated.
This comes from a misunderstanding of the use of the terms "state" and "nonstate" in Chinese official statistics.
https://www.heritage.org/testimony/chinese-state-owned-enterprises-and-us-china-economic-relations
The discussion of SOEs has been undermined by a fundamental error: the conflation of restructured, share-holding firms with the truly private sector. Share-holding SOEs are manifestly not private actors and assessments of the corporate sector that assume so are fatally flawed from the outset. The origin of this mistake is historical. As quasi-state entities emerged and proliferated, it was clear some sort of separate treatment was necessary and the concept of “non-state” was created. This was never intended to indicate “private”—quite the opposite: it was meant to signify that the creation of corporate forms quite different from SOEs could occur without privatization and its ideological pitfalls.
The meaning of “non-state” is very well understood by the Chinese government. The (sometimes willful) misunderstanding outside China rests on two shaky pillars. The first is a mis-rendering of “non-state”—where the PRC sees the opposite of state as non-state, many foreign observers see the opposite of state as “private” and simply re-label accordingly. The second is more sophisticated and based on the share-holding change.
Neither specification of share-holders nor sale of stock by itself does anything to alter state control. The large majority of firms listed on domestic stock markets are specifically designated as state-owned. The sale of small minority stakes on foreign exchanges could be construed as recasting mainstays such as CNPC (through its list vehicle PetroChina), China Mobile, and Chinalco as non-state entities of some form. However, they are still centrally directed SOEs, as explicitly indicated by the Chinese government.
Derek Scissors’s claim (the author of the article I am quoting) also has the support of empirical evidence as well.
https://www.businessinsider.com/heres-why-chinese-stocks-are-a-state-controlled-facade-2010-6
Even after the enactment of the non-tradable share reform in 2005, the free- float ratio of China A shares remains the lowest in Asia (Exhibit 27).
The State-owned Asset and Supervision and Administration Commission (SASAC) is the government entity charged with holding and administering the large state-owned positions. These shares were classified as non-tradable until 2005, when the non-tradable share reform gave share dividends to free-float shareholders in exchange for making the government-held shares tradable (but with certain constraints). Over time, we believe that the SASAC will continue to sell down these holdings on the margin, while keeping the bulk of the shares.
Thus the control and ownership that U.S. share ownership represents is completely different than what Chinese share ownership represents. Simply put, Chinese shares don't translate into effective ownership of their underlying companies.
https://books.google.com/books/about/Capitalism_with_Chinese_Characteristics.html?id=YBpih2Q1X9kC&source=kp_book_description
The OECD economists assign the entire output by legal-person shareholding firms to the private sector. Is this a reasonable approach? Getting this question right is critical. In 1998, legal-person shareholding firms accountedfor 40 percent (11.3/28.9) of the purported private sector. Excluding these firms would reduce the share of the private sector in industrial value-addedfrom 28.9 percent in 1998 to only 17.6 percent (i.e., 28.9 percent minus 11.3 percent). For 2005, the private sector exclusive of legal-person shareholding firms would be 39.8 percent rather than 71.2 percent (i.e., 71.2 percent minus 31.4 percent). This is another illustration of a common refrain in this book – getting the details right matters.
Legal-person shareholding refers to cross-shareholding by firms. Probably because of the connotations of this term, the OECD economists might have assumed that legal-person shareholding implies that China has a keiretsu arrangement similar to that in Japan where firms own each others’ stocks. The difference with Japan, however, is that in China much of the legal-person share capital originates in the state sector, via SOEs establishing or holding significant equity stakes in other firms. These firms then become affiliates or subsidiaries of the SOEs. The subsidiaries of the SOEs, on account of their final ownership, are still SOEs.

Another well-known SOE on the list classified by the OECD study as private is SAIC Motor Corporation Limited (SAIC Motor). In the NBS dataset, the state share of SAIC Motor’s share capital structure is 0 percent; it is 70 percent legal-person shareholding and 30 percent individual shareholding. So this firm qualifies as a private firm in the OECD definition. But SAIC Motor is not even remotely a private firm. SAIC Motor was established in 1997; its predecessor was Shanghai Gear Factory. In 1997, 30 percent of the share capital was issued on the Shanghai Stock Exchange and the rest of the share capital was held by Shanghai Automotive Industry Corporation (SAIC), which is 100 percent owned by the Shanghai government. Because the Shanghai government owns SAIC Motor via SAIC – a legal-person shareholder – the state share capital is reduced to zero; however, from a control perspective, there is little question about who controls this firm.
The example of SAIC Motor also illustrates the nature of the SOE reforms in the 1990s. Much of the reform effort had nothing to do with actually changing the owners of the firms but rather it was directed at securitizing the full but previously implicit equity holdings of the state in the SOEs. Although these reform measures copy the superficial forms of a capitalistic market economy, none of them has anything to do with its essence – transferring corporate control from government to private investors.
The high concentration of the ownership structure of the legal-person shareholding firms is another sign that these firms are not private at all. In the NBS dataset, SAIC Motor has the most dispersed shareholding structure among the legal-person shareholding firms because 30 percent of its shares are held by individual shareholders. (This is because the firm is listed.) In contrast, of 16,871 legal-person shareholding firms in the NBS dataset for 1998, 75 percent have zero individual share capital. The average individual share capital is only 3.7 percent. This is entirely expected given the heavily accounting nature of the SOE reforms. As evidence, 7,612 of these so-called legal-person shareholding firms are actually factories – they are simply production subsidiaries of other SOEs. This explains the extraordinary concentration of ownership and control of these firms.

A view focusing on the control-right problems of the SOEs ought to have led to the next logical step of contract reforms – management buyouts of the SOEs. But, in the early 1990s, the Chinese leaders reversed the policy on the grounds that the contract reforms did not work. Instead, they embraced an industrial policy approach that actually augmented the control rights of those SOEs that the government had decided to retain. In the 1980s, collective TVEs, such as Kelon, had state revenue rights but private control rights. In the 1990s, in the case of the large SOEs, the situation was completely reversed. Most of the large SOEs, which were listed on China’s two stock exchanges, had partial private revenue rights but complete state control rights.
Between 1990 and 2003, only 6.97 percent of the initial public offerings on the two Chinese stock exchanges were from private-sector companies. The rest were SOEs that issued minority shares but in which managerial control remained very clearly in state hands.27 Put differently, because many shareholding firms in China have private revenue rights but their control rights still rest with the government, they should be considered as state-controlled. According to a detailed study of more than 600 firms on the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE) in 1995, the three main groups of shareholders – state, legal persons, and individual shareholders – each controlled about 30 percent of the outstanding shares (Xu and Wang 1997). This stock split has remained more or less constant since then, although the government has plans to reduce the state shares. The control rights of these firms were overwhelmingly state. According to the same study, although individual shareholding constituted 30 percent of the outstanding shares, on average individual shareholders occupied less than 0.3 percent of the seats on the boards of 154 companies, whereas on average the state was over-represented on the boards. On average, the state retained 50 percent of the seats even though its equity shares amounted to 30 percent. There were no proxy voting procedures, thereby putting the individual shareholders in a disadvantageous position vis-a-vis the institutional investors such as the government agencies. This usurpation of rightful shareholder power is direct evidence that the state harbors no intention of relinquishing its control rights even over those firms that have explicitly private revenue rights.
What does this mean? The mixed ownership corporate enterprises that emerged in China in recent decades are still to a large extent controlled by the state and should be considered to be a part of the public sector. This has considerable implications for what is being discussed at hand. In Chinese statistics, the nonstate sector includes these mixed ownership firms. Thus by making the huge mistake of conflating "nonstate" with "private," analysts mistakenly place mixed ownership firms into the private sector. However, this can be corrected and we come up with the following conclusion instead.
https://www.eastasiaforum.org/2016/05/17/chinas-soe-sector-is-bigger-than-some-would-have-us-think/
The results of forcing such a choice are illustrative. With non-wholly state-funded LLCs included, the public share of fixed investment in the first quarter of 2016 is near 60 per cent. Data from 2013 show the public sector still accounting for only 30 per cent of total firms but roughly 55 per cent of assets, 45 per cent of revenue and 40 per cent of profits.

Those who claim private leadership can say that non-wholly state-funded LLCs are not the same as SOEs. The stronger point is that even some pure SOEs are qualitatively different than they were 20 years ago. But it is a large and mistaken jump from these correct observations to treating mixed or ‘non-state’ as equivalent to private, which Xinhua and many other observers frequently do. The non-traditional-SOE sector may account for 60 per cent of GDP; the private sector does not.
These numbers show that the public sector still maintains its dominance in its contribution GDP and investment.
However, the question still lingers whether contributions to GDP, investment, revenue, etc are accurate in making deductions about the ownership structures in an economy. Chinese economists propose that assets are the most important indicator to evaluate the status of any form of ownership, especially public ownership, in the national economy.
There is strong theoretical reasoning to prove this as well.
https://link.springer.com/book/10.1007/978-981-13-6895-0
Actually, to rely on assets to evaluate the dominant status of public ownership does not only meet the requirement of government policies, but is also deeply rooted in economic theories as well. Classical Marxian economists usually referred to the concept of “property right” when talking about ownership, i.e., the ownership of material production. For example, Marx, when making discussions on the basic features of the new, future society, spoke of the society as “collectively-owned, based on common ownership of the means of production”. Such a concept of ownership of the means of material production had been long in use, which was associated with the social background before the 1950s when various non-material means of production (such as various intangible assets, trademarks, marketing network, computer software and science and technologies) had not been common or important in social production. With technological advances and changes in the means of capitalist production, the various non-material modes became more and more important in the establishment of the capitalist relation of production. Therefore, the denotation and connotations of ownership became richer and richer. For example, some international enterprises originating in developed countries now make use of their advantages in product brands and supply chains to organize international production with little or no reliance on the share of capital investment in their hands; nor do they have to build any facility physically for material production. As a matter of fact, Marx seemed to have foreseen this as he sometimes talked about ownership with vague denotation and used such poorly-defined terms as “external conditions of labor”: “Any way to distribute consumer materials is just the distribution of the productive condition itself… Since the factors of production have to be distributed this way, the distribution of consumer materials has to go this way, too.” Here he did not mention the concept of means of production, but “productive condition” and “factors of production” that had an even wider range of connotations.
Using assets to evaluate the position of public ownership in the Chinese economy, we come to the conclusion that public ownership maintains its dominance.
Public ownership as the dominant form is supported by data. By the end of 2012, the total amount of the operating assets of China’s thrice industries was 487.53 trillion yuan (including the assets of individually-owned businesses), among which 53%, or 258.39 trillion yuan, was owned by the public sector. These data showed that, even with the strictest measurement, public ownership was still the dominant form of the national economy in China, and from the perspective of the ownership structure, the socialist nature of the Chinese society did not change; nor did the reforms change the color of the society. As a matter of fact, the socialist nature of our country also decides that the size of the nonoperating assets of the public sector is also considerable. When the nonoperating assets were included, the total amount of the assets of the Chinese society would be 518.13 trillion yuan (excluding the noncultivated undeveloped resource assets), among which the public owned 288.99 trillion yuan, or 55.78%. The national asset and its size are the externalized cost for efficiency improvement in the operational fields, in which the efficiency of enterprises relies heavily on such social support. Therefore, inspection on the ownership structure of the economy cannot ignore the nonoperating assets.
Now the question is, does this conclusion about the year 2012 apply currently to the year 2020? The answer is a yes.
In terms of the long-term trend, the dominant status of China’s public ownership is guaranteed. First, starting from 2009, the reforms on the ownership structure in China took a turn from rapid changes to fine adjustments. In the first phase (2004–2008), the proportion of public ownership, measured by asset, in the secondary and tertiary industries decreased from 62.73 to 55.48%, while the proportion of the nonpublic ownership increased from 37.27 to 44.52%. In the second phase (2009–2012), however, the proportion of public ownership decreased from 54.32 to 50.44%, and that of the nonpublic, from 45.68 to 49.56%. The numbers showed that the reforms on the ownership structure in China had progressed from wide-range and large-scale changes to a stable phase of fine adjustments. The assets of the public and nonpublic sectors have drawn to stabilization, which suggests that the dominating status of the public sector, measured by asset, will not change in the long-term trend, and the economic system that is based on the dominance of public ownership has been stabilized. Second, the strategic reorganization of SOEs and the public investment used in the state macro-adjustments will continue to accumulate new assets for the publicly-owned economy, which ensures the growth in quantity of both the publicly- and the non-publicly-owned economies. With public ownership as the dominant form, as long as the publicly-owned assets do not increase at a much slower speed than the non-publicly-owned, there is no question for public ownership to remain dominant.
If one needs more quantitative evidence to prove that ownership structure has been stable recently, one need not look further than the Chinese statistical yearbooks, which provide us continuous data on publicly owned assets (but note that this data only is on the industrial sector and leaves out the primary and tertiary sectors).
I made a spreadsheet here which has data from the Chinese statistical yearbooks on the ratio of state owned assets to total assets over time (from 2004 to 2018).
https://docs.google.com/spreadsheets/d/1eUUMr_sUJxo8ZCRwodsXAQVtjVgv4Vity2ACpe01cCA/edit?usp=sharing
The data obviously shows that, just as the authors of the book predicted, the ownership adjustments in the Chinese economy have been very small and have largely stabilized with no further retreat of the public sector occuring. Thus we can still conclude that the public sector still maintains its dominance in China.
The Chinese statistical yearbooks can be found here:
http://www.stats.gov.cn/english/Statisticaldata/AnnualData/
What I find interesting however is that the authors in the book I quoted from earlier come to the conclusion that the public sector makes up only 35% of output and 25% of employment in the secondary and tertiary industries, which may run counter to Derek Scissors’s claims about the larger contribution of the public sector in GDP, investment, etc. Whatever the case, the point still stands that by using assets as the main indicator, the Chinese public sector still maintains its dominance in the Chinese economy.
How does the position of the Chinese public sector compare to the capitalist countries?
https://www.springer.com/gp/book/9789811368943
First, the publicly-owned assets in China have a higher share. In the secondary and tertiary industries only in 2012, the publicly-owned economic assets reached 226 trillion yuan in China and, according to the study on China’s sovereign assets and liabilities by Li Yang, et al.,10 the non-operating assets (excluding state land resources) reached 30.7 trillion yuan in 2010. The two together accounted for 53.62% of the total assets of the secondary and tertiary industries. In contrast, in the national balance sheet of the U.K., the share of the public sectors is as low as negligible: before the global financial crisis, the net assets of the U.K.’s public departments accounted for 6% of its total assets while in 2010, the percentage was 0 (Appendix Table 24). Similarly, the U.S. owned a total of 2.7 trillion dollar assets according to the national balance sheet of 2011 published by the U.S. Department of the Treasury (Appendix Table 25) while the total assets owned by the U.S. residents and non-profit organizations reached 71 trillion dollars at the same times, giving the government assets a share of only 3.7% (Appendix Table 26). Canada has the same story in that its public sectors owned 2.4% of the total assets of its national economy in 2008 (Appendix Table 27). Germany, as the largest economy in Europe, was once considered to have one of the largest shares of SOEs, but the total assets of its state departments plunged in share, from 1.9% in 2007 to 0.1% in 2011 (Appendix Table 28), and all of its SOEs had a collective amount of assets that did not exceed 100 billion euro.11 Even when we took a round number of 100 billion, the total stateowned assets in Germany was still less than 1.3 trillion euro. The story is somewhat different for the catching-up countries such as Japan and South Korea in that they have relatively higher shares of publicly-owned assets. In Japan, for example, the total assets of public departments had a rapid decrease in share from 8.6% in 2007 to 2.6% in 2011 after the global financial crisis. Meanwhile, South Korea has always managed a high share of publicly-owned assets, which was 18.6% in 2011 (Appendix Table 29). Evidently, we have a much higher share of publicly-owned assets in China compared to capitalist countries, especially when compared to the public departments of the developed capitalist countries.
Even compared to the supposedly "mixed" or "state capitalist" economies of East Asia, publicly owned assets in China are a much larger share of the total than are present in Japan or South Korea, thus affirming the socialist (rather than “state capitalist”) nature of the Chinese economy.
One final question remains however: where is the Chinese economy headed in the next few decades?
The answer can be found in mixed ownership reform. Today, Chinese firms are reorganizing into mixed ownership firms where public sector and private sector firms are intermeshed and the divisions between them are blurred. One thing to note however is that the state will still maintain its dominance in these mixed ownership firms. This can be seen in the asset composition of mixed ownership firms.
https://www.tandfonline.com/doi/abs/10.1080/02529203.2014.999905
In the absence of precise data on the different ownership components of corporate enterprises, we can only disaggregate their public and non-public components internally. The data from Yang Xinming and Yang Xuechun’s measurement of the total assets of the mixed ownership economy in 2008 indicate that the public and the private component account for 65 and 35 percent of the total respectively. After calculating the paid-in capital structure from the 2004 census data, we find that the public and private components accounted for 63 and 37 percent of the total respectively, as shown in Table 8. We therefore estimate the proportion of public assets in the total mixed ownership economy to have been 63 percent in 2004-2007 and 65 percent in 2008 and beyond.

Secondly, as indicated in Table 7, the assets of the mixed ownership economy represented by corporate enterprises have been growing extremely fast and are the largest in terms of scale. In 2012, this sector’s assets accounted for 51.8 percent of total productive assets in secondary and tertiary industry, ahead of all other types of enterprises; moreover, the sector is one in which the state-owned economic component is dominant. These data and this analysis offer an empirical basis for the arrangements for deepening reform set out in the Decision of the Third Plenary Session of the 18th CCCPC, which notes that the mixed economy is an important means of realizing the basic economic system and is conducive to amplifying the role of state-owned capital and strengthening the dynamism, control and influence of the state-owned economy.
What the Chinese leadership seeks now is the mutual development of both the public and private sectors in mixed ownership enterprises instead of one sector developing at the expense of the other.
https://www.springer.com/gp/book/9789811368943
Public ownership that dominates the asset structure is very tolerant of the non-publicly-owned economy. The dominating status of the publicly-owned assets provides material support for and is fundamental to China’s socialist ownership, underlies realization of common prosperity, offers a carrier for social functions to operate and, at the same time, strongly propels the development of the non-publicly-owned economy. In fact, the dominating status of the non-publicly-owned economy in output, employment, and taxation is the premise of its existence and development. According to our estimation, among the secondary and tertiary industries in China in 2012, the proportions of added value of the non-publicly- and publicly-owned economies were 67.59 and 32.41%, respectively, and new employment, 75.20 and 24.80%, respectively. Meanwhile, the businesses in the primary industry, such as agriculture, forestry, animal husbandry, and fishery, are mostly comprised of family-based ones. Such development of both publicly- and non-publicly-owned economies with their respective status in asset size not matching their corresponding contributions is determined by their distinctive distributions across economic areas, and it also meets the demand of efficiency by the dominating market and by the external economics. Therefore, the domination in asset size by the publicly-owned economy together with the dominating contributions to output and employment made by the non-publicly-owned economy must stand side by side and march forward together. This is the foundation in practice for the “two unswervinglies” policy
In addition:
In addition, with further adjustments of the ownership structure, the dislocation of the domination in asset size of the public sector and the domination in economic contributions of the nonpublic sector will only be furthered. Actually, only with its rapid development can the nonpublic sector fulfill its role as an indispensable part to the socialist market economy, which will further drive SOEs to improve their efficiency so that mutual development will be achieved; and only with complete fusion of the two sectors brought by further improvement of the production efficiency and socialization of them can the primary stage of socialism has a chance to march to a higher stage.
In other words, the current mixed ownership reforms are setting up a huge building block for socialist China to step into a higher stage of socialism, bringing it closer to communism. So when you see articles like these from CGTN, please do not worry! Opening the “commanding heights” of the economy to private/foreign investment and competition is only a measure to further mixed ownership reforms and will not challenge the dominance of public ownership in the Chinese economy.
https://news.cgtn.com/news/2020-05-18/China-unveils-guideline-on-improving-the-socialist-market-economy-QB6Vn3GVbO/index.html
There is a lot more Marxist theoretical backing for mixed ownership reform, but considering the size of this post, the theory behind the mixed ownership reforms will probably have to be something to write for another post.
Anyway, I’ll still leave behind some readings that will be useful to understand the combination of the public sector and market and the intermeshment of the public and private sectors in the Chinese economy to those who are curious.
https://stalinsmoustache.files.wordpress.com/2020/06/chapter-4-chinas-socialist-market-economy-pre-publication.pdf
https://stalinsmoustache.files.wordpress.com/2020/04/not-some-other-ism-06-pre-publication.pdf
https://www.springer.com/gp/book/9789811327261 (chapter 1)
https://www.springer.com/gp/book/9789811368943 (start at page 183)
https://www.emerald.com/insight/content/doi/10.1108/CPE-10-2018-011/full/html
https://www.emerald.com/insight/content/doi/10.1108/CPE-04-2019-0006/full/html
https://philpapers.org/rec/BOEISA-2
I also HIGHLY RECOMMEND reading the articles in the following two journals (using scihub to get past the paywalls):
https://www.tandfonline.com/loi/rssc20
https://www.tandfonline.com/loi/rict20
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The Dominance of Public Ownership in the Chinese Socialist Market Economy

There are many that seem to believe that China today is a capitalist country, and that ever since 1978, China took the capitalist road. The relative decline of state owned enterprises (SOEs) in China in comparison to the private sector is used as damning evidence in favor of this view.
I will take this article for example:
https://www.weforum.org/agenda/2019/05/why-chinas-state-owned-companies-still-have-a-key-role-to-play/
China’s private sector - which has been revving up since the global financial crisis - is now serving as the main driver of China’s economic growth. The combination of numbers 60/70/80/90 are frequently used to describe the private sector's contribution to the Chinese economy: they contribute 60% of China’s GDP, and are responsible for 70% of innovation, 80% of urban employment and provide 90% of new jobs. Private wealth is also responsible for 70% of investment and 90% of exports.
All of this is seemingly supported by official Chinese data AT FIRST GLANCE.
Taking a closer look, there may be problems in this combination of numbers. While China’s ownership structure has changed dramatically since reform began, claims that the private sector now dominates the economy may be exaggerated.
This comes from a misunderstanding of the use of the terms "state" and "nonstate" in Chinese official statistics.
https://www.heritage.org/testimony/chinese-state-owned-enterprises-and-us-china-economic-relations
The discussion of SOEs has been undermined by a fundamental error: the conflation of restructured, share-holding firms with the truly private sector. Share-holding SOEs are manifestly not private actors and assessments of the corporate sector that assume so are fatally flawed from the outset. The origin of this mistake is historical. As quasi-state entities emerged and proliferated, it was clear some sort of separate treatment was necessary and the concept of “non-state” was created. This was never intended to indicate “private”—quite the opposite: it was meant to signify that the creation of corporate forms quite different from SOEs could occur without privatization and its ideological pitfalls.
The meaning of “non-state” is very well understood by the Chinese government. The (sometimes willful) misunderstanding outside China rests on two shaky pillars. The first is a mis-rendering of “non-state”—where the PRC sees the opposite of state as non-state, many foreign observers see the opposite of state as “private” and simply re-label accordingly. The second is more sophisticated and based on the share-holding change.
Neither specification of share-holders nor sale of stock by itself does anything to alter state control. The large majority of firms listed on domestic stock markets are specifically designated as state-owned. The sale of small minority stakes on foreign exchanges could be construed as recasting mainstays such as CNPC (through its list vehicle PetroChina), China Mobile, and Chinalco as non-state entities of some form. However, they are still centrally directed SOEs, as explicitly indicated by the Chinese government.
Derek Scissors’s claim (the author of the article I am quoting) also has the support of empirical evidence as well.
https://www.businessinsider.com/heres-why-chinese-stocks-are-a-state-controlled-facade-2010-6
Even after the enactment of the non-tradable share reform in 2005, the free- float ratio of China A shares remains the lowest in Asia (Exhibit 27).
The State-owned Asset and Supervision and Administration Commission (SASAC) is the government entity charged with holding and administering the large state-owned positions. These shares were classified as non-tradable until 2005, when the non-tradable share reform gave share dividends to free-float shareholders in exchange for making the government-held shares tradable (but with certain constraints). Over time, we believe that the SASAC will continue to sell down these holdings on the margin, while keeping the bulk of the shares.
Thus the control and ownership that U.S. share ownership represents is completely different than what Chinese share ownership represents. Simply put, Chinese shares don't translate into effective ownership of their underlying companies.
https://books.google.com/books/about/Capitalism_with_Chinese_Characteristics.html?id=YBpih2Q1X9kC&source=kp_book_description
The OECD economists assign the entire output by legal-person shareholding firms to the private sector. Is this a reasonable approach? Getting this question right is critical. In 1998, legal-person shareholding firms accountedfor 40 percent (11.3/28.9) of the purported private sector. Excluding these firms would reduce the share of the private sector in industrial value-addedfrom 28.9 percent in 1998 to only 17.6 percent (i.e., 28.9 percent minus 11.3 percent). For 2005, the private sector exclusive of legal-person shareholding firms would be 39.8 percent rather than 71.2 percent (i.e., 71.2 percent minus 31.4 percent). This is another illustration of a common refrain in this book – getting the details right matters.
Legal-person shareholding refers to cross-shareholding by firms. Probably because of the connotations of this term, the OECD economists might have assumed that legal-person shareholding implies that China has a keiretsu arrangement similar to that in Japan where firms own each others’ stocks. The difference with Japan, however, is that in China much of the legal-person share capital originates in the state sector, via SOEs establishing or holding significant equity stakes in other firms. These firms then become affiliates or subsidiaries of the SOEs. The subsidiaries of the SOEs, on account of their final ownership, are still SOEs.

Another well-known SOE on the list classified by the OECD study as private is SAIC Motor Corporation Limited (SAIC Motor). In the NBS dataset, the state share of SAIC Motor’s share capital structure is 0 percent; it is 70 percent legal-person shareholding and 30 percent individual shareholding. So this firm qualifies as a private firm in the OECD definition. But SAIC Motor is not even remotely a private firm. SAIC Motor was established in 1997; its predecessor was Shanghai Gear Factory. In 1997, 30 percent of the share capital was issued on the Shanghai Stock Exchange and the rest of the share capital was held by Shanghai Automotive Industry Corporation (SAIC), which is 100 percent owned by the Shanghai government. Because the Shanghai government owns SAIC Motor via SAIC – a legal-person shareholder – the state share capital is reduced to zero; however, from a control perspective, there is little question about who controls this firm.
The example of SAIC Motor also illustrates the nature of the SOE reforms in the 1990s. Much of the reform effort had nothing to do with actually changing the owners of the firms but rather it was directed at securitizing the full but previously implicit equity holdings of the state in the SOEs. Although these reform measures copy the superficial forms of a capitalistic market economy, none of them has anything to do with its essence – transferring corporate control from government to private investors.
The high concentration of the ownership structure of the legal-person shareholding firms is another sign that these firms are not private at all. In the NBS dataset, SAIC Motor has the most dispersed shareholding structure among the legal-person shareholding firms because 30 percent of its shares are held by individual shareholders. (This is because the firm is listed.) In contrast, of 16,871 legal-person shareholding firms in the NBS dataset for 1998, 75 percent have zero individual share capital. The average individual share capital is only 3.7 percent. This is entirely expected given the heavily accounting nature of the SOE reforms. As evidence, 7,612 of these so-called legal-person shareholding firms are actually factories – they are simply production subsidiaries of other SOEs. This explains the extraordinary concentration of ownership and control of these firms.

A view focusing on the control-right problems of the SOEs ought to have led to the next logical step of contract reforms – management buyouts of the SOEs. But, in the early 1990s, the Chinese leaders reversed the policy on the grounds that the contract reforms did not work. Instead, they embraced an industrial policy approach that actually augmented the control rights of those SOEs that the government had decided to retain. In the 1980s, collective TVEs, such as Kelon, had state revenue rights but private control rights. In the 1990s, in the case of the large SOEs, the situation was completely reversed. Most of the large SOEs, which were listed on China’s two stock exchanges, had partial private revenue rights but complete state control rights.
Between 1990 and 2003, only 6.97 percent of the initial public offerings on the two Chinese stock exchanges were from private-sector companies. The rest were SOEs that issued minority shares but in which managerial control remained very clearly in state hands.27 Put differently, because many shareholding firms in China have private revenue rights but their control rights still rest with the government, they should be considered as state-controlled. According to a detailed study of more than 600 firms on the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE) in 1995, the three main groups of shareholders – state, legal persons, and individual shareholders – each controlled about 30 percent of the outstanding shares (Xu and Wang 1997). This stock split has remained more or less constant since then, although the government has plans to reduce the state shares. The control rights of these firms were overwhelmingly state. According to the same study, although individual shareholding constituted 30 percent of the outstanding shares, on average individual shareholders occupied less than 0.3 percent of the seats on the boards of 154 companies, whereas on average the state was over-represented on the boards. On average, the state retained 50 percent of the seats even though its equity shares amounted to 30 percent. There were no proxy voting procedures, thereby putting the individual shareholders in a disadvantageous position vis-a-vis the institutional investors such as the government agencies. This usurpation of rightful shareholder power is direct evidence that the state harbors no intention of relinquishing its control rights even over those firms that have explicitly private revenue rights.
What does this mean? The mixed ownership corporate enterprises that emerged in China in recent decades are still to a large extent controlled by the state and should be considered to be a part of the public sector. This has considerable implications for what is being discussed at hand. In Chinese statistics, the nonstate sector includes these mixed ownership firms. Thus by making the huge mistake of conflating "nonstate" with "private," analysts mistakenly place mixed ownership firms into the private sector. However, this can be corrected and we come up with the following conclusion instead.
https://www.eastasiaforum.org/2016/05/17/chinas-soe-sector-is-bigger-than-some-would-have-us-think/
The results of forcing such a choice are illustrative. With non-wholly state-funded LLCs included, the public share of fixed investment in the first quarter of 2016 is near 60 per cent. Data from 2013 show the public sector still accounting for only 30 per cent of total firms but roughly 55 per cent of assets, 45 per cent of revenue and 40 per cent of profits.

Those who claim private leadership can say that non-wholly state-funded LLCs are not the same as SOEs. The stronger point is that even some pure SOEs are qualitatively different than they were 20 years ago. But it is a large and mistaken jump from these correct observations to treating mixed or ‘non-state’ as equivalent to private, which Xinhua and many other observers frequently do. The non-traditional-SOE sector may account for 60 per cent of GDP; the private sector does not.
These numbers show that the public sector still maintains its dominance in its contribution GDP and investment.
However, the question still lingers whether contributions to GDP, investment, revenue, etc are accurate in making deductions about the ownership structures in an economy. Chinese economists propose that assets are the most important indicator to evaluate the status of any form of ownership, especially public ownership, in the national economy.
There is strong theoretical reasoning to prove this as well.
https://link.springer.com/book/10.1007/978-981-13-6895-0
Actually, to rely on assets to evaluate the dominant status of public ownership does not only meet the requirement of government policies, but is also deeply rooted in economic theories as well. Classical Marxian economists usually referred to the concept of “property right” when talking about ownership, i.e., the ownership of material production. For example, Marx, when making discussions on the basic features of the new, future society, spoke of the society as “collectively-owned, based on common ownership of the means of production”. Such a concept of ownership of the means of material production had been long in use, which was associated with the social background before the 1950s when various non-material means of production (such as various intangible assets, trademarks, marketing network, computer software and science and technologies) had not been common or important in social production. With technological advances and changes in the means of capitalist production, the various non-material modes became more and more important in the establishment of the capitalist relation of production. Therefore, the denotation and connotations of ownership became richer and richer. For example, some international enterprises originating in developed countries now make use of their advantages in product brands and supply chains to organize international production with little or no reliance on the share of capital investment in their hands; nor do they have to build any facility physically for material production. As a matter of fact, Marx seemed to have foreseen this as he sometimes talked about ownership with vague denotation and used such poorly-defined terms as “external conditions of labor”: “Any way to distribute consumer materials is just the distribution of the productive condition itself… Since the factors of production have to be distributed this way, the distribution of consumer materials has to go this way, too.” Here he did not mention the concept of means of production, but “productive condition” and “factors of production” that had an even wider range of connotations.
Using assets to evaluate the position of public ownership in the Chinese economy, we come to the conclusion that public ownership maintains its dominance.
Public ownership as the dominant form is supported by data. By the end of 2012, the total amount of the operating assets of China’s thrice industries was 487.53 trillion yuan (including the assets of individually-owned businesses), among which 53%, or 258.39 trillion yuan, was owned by the public sector. These data showed that, even with the strictest measurement, public ownership was still the dominant form of the national economy in China, and from the perspective of the ownership structure, the socialist nature of the Chinese society did not change; nor did the reforms change the color of the society. As a matter of fact, the socialist nature of our country also decides that the size of the nonoperating assets of the public sector is also considerable. When the nonoperating assets were included, the total amount of the assets of the Chinese society would be 518.13 trillion yuan (excluding the noncultivated undeveloped resource assets), among which the public owned 288.99 trillion yuan, or 55.78%. The national asset and its size are the externalized cost for efficiency improvement in the operational fields, in which the efficiency of enterprises relies heavily on such social support. Therefore, inspection on the ownership structure of the economy cannot ignore the nonoperating assets.
Now the question is, does this conclusion about the year 2012 apply currently to the year 2020? The answer is a yes.
In terms of the long-term trend, the dominant status of China’s public ownership is guaranteed. First, starting from 2009, the reforms on the ownership structure in China took a turn from rapid changes to fine adjustments. In the first phase (2004–2008), the proportion of public ownership, measured by asset, in the secondary and tertiary industries decreased from 62.73 to 55.48%, while the proportion of the nonpublic ownership increased from 37.27 to 44.52%. In the second phase (2009–2012), however, the proportion of public ownership decreased from 54.32 to 50.44%, and that of the nonpublic, from 45.68 to 49.56%. The numbers showed that the reforms on the ownership structure in China had progressed from wide-range and large-scale changes to a stable phase of fine adjustments. The assets of the public and nonpublic sectors have drawn to stabilization, which suggests that the dominating status of the public sector, measured by asset, will not change in the long-term trend, and the economic system that is based on the dominance of public ownership has been stabilized. Second, the strategic reorganization of SOEs and the public investment used in the state macro-adjustments will continue to accumulate new assets for the publicly-owned economy, which ensures the growth in quantity of both the publicly- and the non-publicly-owned economies. With public ownership as the dominant form, as long as the publicly-owned assets do not increase at a much slower speed than the non-publicly-owned, there is no question for public ownership to remain dominant.
If one needs more quantitative evidence to prove that ownership structure has been stable recently, one need not look further than the Chinese statistical yearbooks, which provide us continuous data on publicly owned assets (but note that this data only is on the industrial sector and leaves out the primary and tertiary sectors).
I made a spreadsheet here which has data from the Chinese statistical yearbooks on the ratio of state owned assets to total assets over time (from 2004 to 2018).
https://docs.google.com/spreadsheets/d/1eUUMr_sUJxo8ZCRwodsXAQVtjVgv4Vity2ACpe01cCA/edit?usp=sharing
The data obviously shows that, just as the authors of the book predicted, the ownership adjustments in the Chinese economy have been very small and have largely stabilized with no further retreat of the public sector occuring. Thus we can still conclude that the public sector still maintains its dominance in China.
The Chinese statistical yearbooks can be found here:
http://www.stats.gov.cn/english/Statisticaldata/AnnualData/
What I find interesting however is that the authors in the book I quoted from earlier come to the conclusion that the public sector makes up only 35% of output and 25% of employment in the secondary and tertiary industries, which may run counter to Derek Scissors’s claims about the larger contribution of the public sector in GDP, investment, etc. Whatever the case, the point still stands that by using assets as the main indicator, the Chinese public sector still maintains its dominance in the Chinese economy.
How does the position of the Chinese public sector compare to the capitalist countries?
https://www.springer.com/gp/book/9789811368943
First, the publicly-owned assets in China have a higher share. In the secondary and tertiary industries only in 2012, the publicly-owned economic assets reached 226 trillion yuan in China and, according to the study on China’s sovereign assets and liabilities by Li Yang, et al.,10 the non-operating assets (excluding state land resources) reached 30.7 trillion yuan in 2010. The two together accounted for 53.62% of the total assets of the secondary and tertiary industries. In contrast, in the national balance sheet of the U.K., the share of the public sectors is as low as negligible: before the global financial crisis, the net assets of the U.K.’s public departments accounted for 6% of its total assets while in 2010, the percentage was 0 (Appendix Table 24). Similarly, the U.S. owned a total of 2.7 trillion dollar assets according to the national balance sheet of 2011 published by the U.S. Department of the Treasury (Appendix Table 25) while the total assets owned by the U.S. residents and non-profit organizations reached 71 trillion dollars at the same times, giving the government assets a share of only 3.7% (Appendix Table 26). Canada has the same story in that its public sectors owned 2.4% of the total assets of its national economy in 2008 (Appendix Table 27). Germany, as the largest economy in Europe, was once considered to have one of the largest shares of SOEs, but the total assets of its state departments plunged in share, from 1.9% in 2007 to 0.1% in 2011 (Appendix Table 28), and all of its SOEs had a collective amount of assets that did not exceed 100 billion euro.11 Even when we took a round number of 100 billion, the total stateowned assets in Germany was still less than 1.3 trillion euro. The story is somewhat different for the catching-up countries such as Japan and South Korea in that they have relatively higher shares of publicly-owned assets. In Japan, for example, the total assets of public departments had a rapid decrease in share from 8.6% in 2007 to 2.6% in 2011 after the global financial crisis. Meanwhile, South Korea has always managed a high share of publicly-owned assets, which was 18.6% in 2011 (Appendix Table 29). Evidently, we have a much higher share of publicly-owned assets in China compared to capitalist countries, especially when compared to the public departments of the developed capitalist countries.
Even compared to the supposedly "mixed" or "state capitalist" economies of East Asia, publicly owned assets in China are a much larger share of the total than are present in Japan or South Korea, thus affirming the socialist (rather than “state capitalist”) nature of the Chinese economy.
One final question remains however: where is the Chinese economy headed in the next few decades?
The answer can be found in mixed ownership reform. Today, Chinese firms are reorganizing into mixed ownership firms where public sector and private sector firms are intermeshed and the divisions between them are blurred. One thing to note however is that the state will still maintain its dominance in these mixed ownership firms. This can be seen in the asset composition of mixed ownership firms.
https://www.tandfonline.com/doi/abs/10.1080/02529203.2014.999905
In the absence of precise data on the different ownership components of corporate enterprises, we can only disaggregate their public and non-public components internally. The data from Yang Xinming and Yang Xuechun’s measurement of the total assets of the mixed ownership economy in 2008 indicate that the public and the private component account for 65 and 35 percent of the total respectively. After calculating the paid-in capital structure from the 2004 census data, we find that the public and private components accounted for 63 and 37 percent of the total respectively, as shown in Table 8. We therefore estimate the proportion of public assets in the total mixed ownership economy to have been 63 percent in 2004-2007 and 65 percent in 2008 and beyond.

Secondly, as indicated in Table 7, the assets of the mixed ownership economy represented by corporate enterprises have been growing extremely fast and are the largest in terms of scale. In 2012, this sector’s assets accounted for 51.8 percent of total productive assets in secondary and tertiary industry, ahead of all other types of enterprises; moreover, the sector is one in which the state-owned economic component is dominant. These data and this analysis offer an empirical basis for the arrangements for deepening reform set out in the Decision of the Third Plenary Session of the 18th CCCPC, which notes that the mixed economy is an important means of realizing the basic economic system and is conducive to amplifying the role of state-owned capital and strengthening the dynamism, control and influence of the state-owned economy.
What the Chinese leadership seeks now is the mutual development of both the public and private sectors in mixed ownership enterprises instead of one sector developing at the expense of the other.
https://www.springer.com/gp/book/9789811368943
Public ownership that dominates the asset structure is very tolerant of the non-publicly-owned economy. The dominating status of the publicly-owned assets provides material support for and is fundamental to China’s socialist ownership, underlies realization of common prosperity, offers a carrier for social functions to operate and, at the same time, strongly propels the development of the non-publicly-owned economy. In fact, the dominating status of the non-publicly-owned economy in output, employment, and taxation is the premise of its existence and development. According to our estimation, among the secondary and tertiary industries in China in 2012, the proportions of added value of the non-publicly- and publicly-owned economies were 67.59 and 32.41%, respectively, and new employment, 75.20 and 24.80%, respectively. Meanwhile, the businesses in the primary industry, such as agriculture, forestry, animal husbandry, and fishery, are mostly comprised of family-based ones. Such development of both publicly- and non-publicly-owned economies with their respective status in asset size not matching their corresponding contributions is determined by their distinctive distributions across economic areas, and it also meets the demand of efficiency by the dominating market and by the external economics. Therefore, the domination in asset size by the publicly-owned economy together with the dominating contributions to output and employment made by the non-publicly-owned economy must stand side by side and march forward together. This is the foundation in practice for the “two unswervinglies” policy
In addition:
In addition, with further adjustments of the ownership structure, the dislocation of the domination in asset size of the public sector and the domination in economic contributions of the nonpublic sector will only be furthered. Actually, only with its rapid development can the nonpublic sector fulfill its role as an indispensable part to the socialist market economy, which will further drive SOEs to improve their efficiency so that mutual development will be achieved; and only with complete fusion of the two sectors brought by further improvement of the production efficiency and socialization of them can the primary stage of socialism has a chance to march to a higher stage.
In other words, the current mixed ownership reforms are setting up a huge building block for socialist China to step into a higher stage of socialism, bringing it closer to communism. So when you see articles like these from CGTN, please do not worry! Opening the “commanding heights” of the economy to private/foreign investment and competition is only a measure to further mixed ownership reforms and will not challenge the dominance of public ownership in the Chinese economy.
https://news.cgtn.com/news/2020-05-18/China-unveils-guideline-on-improving-the-socialist-market-economy-QB6Vn3GVbO/index.html
There is a lot more Marxist theoretical backing for mixed ownership reform, but considering the size of this post, the theory behind the mixed ownership reforms will probably have to be something to write for another post.
Anyway, I’ll still leave behind some readings that will be useful to understand the combination of the public sector and market and the intermeshment of the public and private sectors in the Chinese economy to those who are curious.
https://stalinsmoustache.files.wordpress.com/2020/06/chapter-4-chinas-socialist-market-economy-pre-publication.pdf
https://stalinsmoustache.files.wordpress.com/2020/04/not-some-other-ism-06-pre-publication.pdf
https://www.springer.com/gp/book/9789811327261 (chapter 1)
https://www.springer.com/gp/book/9789811368943 (start at page 183)
https://www.emerald.com/insight/content/doi/10.1108/CPE-10-2018-011/full/html
https://www.emerald.com/insight/content/doi/10.1108/CPE-04-2019-0006/full/html
https://philpapers.org/rec/BOEISA-2
I also HIGHLY RECOMMEND reading the articles in the following two journals (using scihub to get past the paywalls):
https://www.tandfonline.com/loi/rssc20
https://www.tandfonline.com/loi/rict20
submitted by fortniteBot3000 to communism [link] [comments]

The Dominance of Public Ownership in the Chinese Socialist Market Economy

There are many that seem to believe that China today is a capitalist country, and that ever since 1978, China took the capitalist road. The relative decline of state owned enterprises (SOEs) in China in comparison to the private sector is used as damning evidence in favor of this view.
I will take this article for example:
https://www.weforum.org/agenda/2019/05/why-chinas-state-owned-companies-still-have-a-key-role-to-play/
China’s private sector - which has been revving up since the global financial crisis - is now serving as the main driver of China’s economic growth. The combination of numbers 60/70/80/90 are frequently used to describe the private sector's contribution to the Chinese economy: they contribute 60% of China’s GDP, and are responsible for 70% of innovation, 80% of urban employment and provide 90% of new jobs. Private wealth is also responsible for 70% of investment and 90% of exports.
All of this is seemingly supported by official Chinese data AT FIRST GLANCE.
Taking a closer look, there may be problems in this combination of numbers. While China’s ownership structure has changed dramatically since reform began, claims that the private sector now dominates the economy may be exaggerated.
This comes from a misunderstanding of the use of the terms "state" and "nonstate" in Chinese official statistics.
https://www.heritage.org/testimony/chinese-state-owned-enterprises-and-us-china-economic-relations
The discussion of SOEs has been undermined by a fundamental error: the conflation of restructured, share-holding firms with the truly private sector. Share-holding SOEs are manifestly not private actors and assessments of the corporate sector that assume so are fatally flawed from the outset. The origin of this mistake is historical. As quasi-state entities emerged and proliferated, it was clear some sort of separate treatment was necessary and the concept of “non-state” was created. This was never intended to indicate “private”—quite the opposite: it was meant to signify that the creation of corporate forms quite different from SOEs could occur without privatization and its ideological pitfalls.
The meaning of “non-state” is very well understood by the Chinese government. The (sometimes willful) misunderstanding outside China rests on two shaky pillars. The first is a mis-rendering of “non-state”—where the PRC sees the opposite of state as non-state, many foreign observers see the opposite of state as “private” and simply re-label accordingly. The second is more sophisticated and based on the share-holding change.
Neither specification of share-holders nor sale of stock by itself does anything to alter state control. The large majority of firms listed on domestic stock markets are specifically designated as state-owned. The sale of small minority stakes on foreign exchanges could be construed as recasting mainstays such as CNPC (through its list vehicle PetroChina), China Mobile, and Chinalco as non-state entities of some form. However, they are still centrally directed SOEs, as explicitly indicated by the Chinese government.
Derek Scissors’s claim (the author of the article I am quoting) also has the support of empirical evidence as well.
https://www.businessinsider.com/heres-why-chinese-stocks-are-a-state-controlled-facade-2010-6
Even after the enactment of the non-tradable share reform in 2005, the free- float ratio of China A shares remains the lowest in Asia (Exhibit 27).
The State-owned Asset and Supervision and Administration Commission (SASAC) is the government entity charged with holding and administering the large state-owned positions. These shares were classified as non-tradable until 2005, when the non-tradable share reform gave share dividends to free-float shareholders in exchange for making the government-held shares tradable (but with certain constraints). Over time, we believe that the SASAC will continue to sell down these holdings on the margin, while keeping the bulk of the shares.
Thus the control and ownership that U.S. share ownership represents is completely different than what Chinese share ownership represents. Simply put, Chinese shares don't translate into effective ownership of their underlying companies.
https://books.google.com/books/about/Capitalism_with_Chinese_Characteristics.html?id=YBpih2Q1X9kC&source=kp_book_description
The OECD economists assign the entire output by legal-person shareholding firms to the private sector. Is this a reasonable approach? Getting this question right is critical. In 1998, legal-person shareholding firms accountedfor 40 percent (11.3/28.9) of the purported private sector. Excluding these firms would reduce the share of the private sector in industrial value-addedfrom 28.9 percent in 1998 to only 17.6 percent (i.e., 28.9 percent minus 11.3 percent). For 2005, the private sector exclusive of legal-person shareholding firms would be 39.8 percent rather than 71.2 percent (i.e., 71.2 percent minus 31.4 percent). This is another illustration of a common refrain in this book – getting the details right matters.
Legal-person shareholding refers to cross-shareholding by firms. Probably because of the connotations of this term, the OECD economists might have assumed that legal-person shareholding implies that China has a keiretsu arrangement similar to that in Japan where firms own each others’ stocks. The difference with Japan, however, is that in China much of the legal-person share capital originates in the state sector, via SOEs establishing or holding significant equity stakes in other firms. These firms then become affiliates or subsidiaries of the SOEs. The subsidiaries of the SOEs, on account of their final ownership, are still SOEs.

Another well-known SOE on the list classified by the OECD study as private is SAIC Motor Corporation Limited (SAIC Motor). In the NBS dataset, the state share of SAIC Motor’s share capital structure is 0 percent; it is 70 percent legal-person shareholding and 30 percent individual shareholding. So this firm qualifies as a private firm in the OECD definition. But SAIC Motor is not even remotely a private firm. SAIC Motor was established in 1997; its predecessor was Shanghai Gear Factory. In 1997, 30 percent of the share capital was issued on the Shanghai Stock Exchange and the rest of the share capital was held by Shanghai Automotive Industry Corporation (SAIC), which is 100 percent owned by the Shanghai government. Because the Shanghai government owns SAIC Motor via SAIC – a legal-person shareholder – the state share capital is reduced to zero; however, from a control perspective, there is little question about who controls this firm.
The example of SAIC Motor also illustrates the nature of the SOE reforms in the 1990s. Much of the reform effort had nothing to do with actually changing the owners of the firms but rather it was directed at securitizing the full but previously implicit equity holdings of the state in the SOEs. Although these reform measures copy the superficial forms of a capitalistic market economy, none of them has anything to do with its essence – transferring corporate control from government to private investors.
The high concentration of the ownership structure of the legal-person shareholding firms is another sign that these firms are not private at all. In the NBS dataset, SAIC Motor has the most dispersed shareholding structure among the legal-person shareholding firms because 30 percent of its shares are held by individual shareholders. (This is because the firm is listed.) In contrast, of 16,871 legal-person shareholding firms in the NBS dataset for 1998, 75 percent have zero individual share capital. The average individual share capital is only 3.7 percent. This is entirely expected given the heavily accounting nature of the SOE reforms. As evidence, 7,612 of these so-called legal-person shareholding firms are actually factories – they are simply production subsidiaries of other SOEs. This explains the extraordinary concentration of ownership and control of these firms.

A view focusing on the control-right problems of the SOEs ought to have led to the next logical step of contract reforms – management buyouts of the SOEs. But, in the early 1990s, the Chinese leaders reversed the policy on the grounds that the contract reforms did not work. Instead, they embraced an industrial policy approach that actually augmented the control rights of those SOEs that the government had decided to retain. In the 1980s, collective TVEs, such as Kelon, had state revenue rights but private control rights. In the 1990s, in the case of the large SOEs, the situation was completely reversed. Most of the large SOEs, which were listed on China’s two stock exchanges, had partial private revenue rights but complete state control rights.
Between 1990 and 2003, only 6.97 percent of the initial public offerings on the two Chinese stock exchanges were from private-sector companies. The rest were SOEs that issued minority shares but in which managerial control remained very clearly in state hands.27 Put differently, because many shareholding firms in China have private revenue rights but their control rights still rest with the government, they should be considered as state-controlled. According to a detailed study of more than 600 firms on the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE) in 1995, the three main groups of shareholders – state, legal persons, and individual shareholders – each controlled about 30 percent of the outstanding shares (Xu and Wang 1997). This stock split has remained more or less constant since then, although the government has plans to reduce the state shares. The control rights of these firms were overwhelmingly state. According to the same study, although individual shareholding constituted 30 percent of the outstanding shares, on average individual shareholders occupied less than 0.3 percent of the seats on the boards of 154 companies, whereas on average the state was over-represented on the boards. On average, the state retained 50 percent of the seats even though its equity shares amounted to 30 percent. There were no proxy voting procedures, thereby putting the individual shareholders in a disadvantageous position vis-a-vis the institu- ` tional investors such as the government agencies. This usurpation of rightful shareholder power is direct evidence that the state harbors no intention of relinquishing its control rights even over those firms that have explicitly private revenue rights.
What does this mean? The mixed ownership corporate enterprises that emerged in China in recent decades are still to a large extent controlled by the state and should be considered to be a part of the public sector. This has considerable implications for what is being discussed at hand. In Chinese statistics, the nonstate sector includes these mixed ownership firms. Thus by making the huge mistake of conflating "nonstate" with "private," analysts mistakenly place mixed ownership firms into the private sector. However, this can be corrected and we come up with the following conclusion instead.
https://www.eastasiaforum.org/2016/05/17/chinas-soe-sector-is-bigger-than-some-would-have-us-think/
The results of forcing such a choice are illustrative. With non-wholly state-funded LLCs included, the public share of fixed investment in the first quarter of 2016 is near 60 per cent. Data from 2013 show the public sector still accounting for only 30 per cent of total firms but roughly 55 per cent of assets, 45 per cent of revenue and 40 per cent of profits.

Those who claim private leadership can say that non-wholly state-funded LLCs are not the same as SOEs. The stronger point is that even some pure SOEs are qualitatively different than they were 20 years ago. But it is a large and mistaken jump from these correct observations to treating mixed or ‘non-state’ as equivalent to private, which Xinhua and many other observers frequently do. The non-traditional-SOE sector may account for 60 per cent of GDP; the private sector does not.
These numbers show that the public sector still maintains its dominance in its contribution GDP and investment.
However, the question still lingers whether contributions to GDP, investment, revenue, etc are accurate in making deductions about the ownership structures in an economy. Chinese economists propose that assets are the most important indicator to evaluate the status of any form of ownership, especially public ownership, in the national economy.
There is strong theoretical reasoning to prove this as well.
https://link.springer.com/book/10.1007/978-981-13-6895-0
Actually, to rely on assets to evaluate the dominant status of public ownership does not only meet the requirement of government policies, but is also deeply rooted in economic theories as well. Classical Marxian economists usually referred to the concept of “property right” when talking about ownership, i.e., the ownership of material production. For example, Marx, when making discussions on the basic features of the new, future society, spoke of the society as “collectively-owned, based on common ownership of the means of production”. Such a concept of ownership of the means of material production had been long in use, which was associated with the social background before the 1950s when various non-material means of production (such as various intangible assets, trademarks, marketing network, computer software and science and technologies) had not been common or important in social production. With technological advances and changes in the means of capitalist production, the various non-material modes became more and more important in the establishment of the capitalist relation of production. Therefore, the denotation and connotations of ownership became richer and richer. For example, some international enterprises originating in developed countries now make use of their advantages in product brands and supply chains to organize international production with little or no reliance on the share of capital investment in their hands; nor do they have to build any facility physically for material production. As a matter of fact, Marx seemed to have foreseen this as he sometimes talked about ownership with vague denotation and used such poorly-defined terms as “external conditions of labor”: “Any way to distribute consumer materials is just the distribution of the productive condition itself… Since the factors of production have to be distributed this way, the distribution of consumer materials has to go this way, too.” Here he did not mention the concept of means of production, but “productive condition” and “factors of production” that had an even wider range of connotations.
Using assets to evaluate the position of public ownership in the Chinese economy, we come to the conclusion that public ownership maintains its dominance.
Public ownership as the dominant form is supported by data. By the end of 2012, the total amount of the operating assets of China’s thrice industries was 487.53 trillion yuan (including the assets of individually-owned businesses), among which 53%, or 258.39 trillion yuan, was owned by the public sector. These data showed that, even with the strictest measurement, public ownership was still the dominant form of the national economy in China, and from the perspective of the ownership structure, the socialist nature of the Chinese society did not change; nor did the reforms change the color of the society. As a matter of fact, the socialist nature of our country also decides that the size of the nonoperating assets of the public sector is also considerable. When the nonoperating assets were included, the total amount of the assets of the Chinese society would be 518.13 trillion yuan (excluding the noncultivated undeveloped resource assets), among which the public owned 288.99 trillion yuan, or 55.78%. The national asset and its size are the externalized cost for efficiency improvement in the operational fields, in which the efficiency of enterprises relies heavily on such social support. Therefore, inspection on the ownership structure of the economy cannot ignore the nonoperating assets.
Now the question is, does this conclusion about the year 2012 apply currently to the year 2020? The answer is a yes.
In terms of the long-term trend, the dominant status of China’s public ownership is guaranteed. First, starting from 2009, the reforms on the ownership structure in China took a turn from rapid changes to fine adjustments. In the first phase (2004–2008), the proportion of public ownership, measured by asset, in the secondary and tertiary industries decreased from 62.73 to 55.48%, while the proportion of the nonpublic ownership increased from 37.27 to 44.52%. In the second phase (2009–2012), however, the proportion of public ownership decreased from 54.32 to 50.44%, and that of the nonpublic, from 45.68 to 49.56%. The numbers showed that the reforms on the ownership structure in China had progressed from wide-range and large-scale changes to a stable phase of fine adjustments. The assets of the public and nonpublic sectors have drawn to stabilization, which suggests that the dominating status of the public sector, measured by asset, will not change in the long-term trend, and the economic system that is based on the dominance of public ownership has been stabilized. Second, the strategic reorganization of SOEs and the public investment used in the state macro-adjustments will continue to accumulate new assets for the publicly-owned economy, which ensures the growth in quantity of both the publicly- and the non-publicly-owned economies. With public ownership as the dominant form, as long as the publicly-owned assets do not increase at a much slower speed than the non-publicly-owned, there is no question for public ownership to remain dominant.
If one needs more quantitative evidence to prove that ownership structure has been stable recently, one need not look further than the Chinese statistical yearbooks, which provide us continuous data on publicly owned assets (but note that this data only is on the industrial sector and leaves out the primary and tertiary sectors).
I made a spreadsheet here which has data from the Chinese statistical yearbooks on the ratio of state owned assets to total assets over time (from 2004 to 2018).
https://docs.google.com/spreadsheets/d/1eUUMr_sUJxo8ZCRwodsXAQVtjVgv4Vity2ACpe01cCA/edit?usp=sharing
The data obviously shows that, just as the authors of the book predicted, the ownership adjustments in the Chinese economy have been very small and have largely stabilized with no further retreat of the public sector occuring. Thus we can still conclude that the public sector still maintains its dominance in China.
The Chinese statistical yearbooks can be found here:
http://www.stats.gov.cn/english/Statisticaldata/AnnualData/
What I find interesting however is that the authors in the book I quoted from earlier come to the conclusion that the public sector makes up only 35% of output and 25% of employment in the secondary and tertiary industries, which may run counter to Derek Scissors’s claims about the larger contribution of the public sector in GDP, investment, etc. Whatever the case, the point still stands that by using assets as the main indicator, the Chinese public sector still maintains its dominance in the Chinese economy.
How does the position of the Chinese public sector compare to the capitalist countries?
https://www.springer.com/gp/book/9789811368943
First, the publicly-owned assets in China have a higher share. In the secondary and tertiary industries only in 2012, the publicly-owned economic assets reached 226 trillion yuan in China and, according to the study on China’s sovereign assets and liabilities by Li Yang, et al.,10 the non-operating assets (excluding state land resources) reached 30.7 trillion yuan in 2010. The two together accounted for 53.62% of the total assets of the secondary and tertiary industries. In contrast, in the national balance sheet of the U.K., the share of the public sectors is as low as negligible: before the global financial crisis, the net assets of the U.K.’s public departments accounted for 6% of its total assets while in 2010, the percentage was 0 (Appendix Table 24). Similarly, the U.S. owned a total of 2.7 trillion dollar assets according to the national balance sheet of 2011 published by the U.S. Department of the Treasury (Appendix Table 25) while the total assets owned by the U.S. residents and non-profit organizations reached 71 trillion dollars at the same times, giving the government assets a share of only 3.7% (Appendix Table 26). Canada has the same story in that its public sectors owned 2.4% of the total assets of its national economy in 2008 (Appendix Table 27). Germany, as the largest economy in Europe, was once considered to have one of the largest shares of SOEs, but the total assets of its state departments plunged in share, from 1.9% in 2007 to 0.1% in 2011 (Appendix Table 28), and all of its SOEs had a collective amount of assets that did not exceed 100 billion euro.11 Even when we took a round number of 100 billion, the total stateowned assets in Germany was still less than 1.3 trillion euro. The story is somewhat different for the catching-up countries such as Japan and South Korea in that they have relatively higher shares of publicly-owned assets. In Japan, for example, the total assets of public departments had a rapid decrease in share from 8.6% in 2007 to 2.6% in 2011 after the global financial crisis. Meanwhile, South Korea has always managed a high share of publicly-owned assets, which was 18.6% in 2011 (Appendix Table 29). Evidently, we have a much higher share of publicly-owned assets in China compared to capitalist countries, especially when compared to the public departments of the developed capitalist countries.
Even compared to the supposedly "mixed" or "state capitalist" economies of East Asia, publicly owned assets in China are a much larger share of the total than are present in Japan or South Korea, thus affirming the socialist (rather than “state capitalist”) nature of the Chinese economy.
One final question remains however: where is the Chinese economy headed in the next few decades?
The answer can be found in mixed ownership reform. Today, Chinese firms are reorganizing into mixed ownership firms where public sector and private sector firms are intermeshed and the divisions between them are blurred. One thing to note however is that the state will still maintain its dominance in these mixed ownership firms. This can be seen in the asset composition of mixed ownership firms.
https://www.tandfonline.com/doi/abs/10.1080/02529203.2014.999905
In the absence of precise data on the different ownership components of corporate enterprises, we can only disaggregate their public and non-public components internally. The data from Yang Xinming and Yang Xuechun’s measurement of the total assets of the mixed ownership economy in 2008 indicate that the public and the private component account for 65 and 35 percent of the total respectively. After calculating the paid-in capital structure from the 2004 census data, we find that the public and private components accounted for 63 and 37 percent of the total respectively, as shown in Table 8. We therefore estimate the proportion of public assets in the total mixed ownership economy to have been 63 percent in 2004-2007 and 65 percent in 2008 and beyond.

Secondly, as indicated in Table 7, the assets of the mixed ownership economy represented by corporate enterprises have been growing extremely fast and are the largest in terms of scale. In 2012, this sector’s assets accounted for 51.8 percent of total productive assets in secondary and tertiary industry, ahead of all other types of enterprises; moreover, the sector is one in which the state-owned economic component is dominant. These data and this analysis offer an empirical basis for the arrangements for deepening reform set out in the Decision of the Third Plenary Session of the 18th CCCPC, which notes that the mixed economy is an important means of realizing the basic economic system and is conducive to amplifying the role of state-owned capital and strengthening the dynamism, control and influence of the state-owned economy.
What the Chinese leadership seeks now is the mutual development of both the public and private sectors in mixed ownership enterprises instead of one sector developing at the expense of the other.
https://www.springer.com/gp/book/9789811368943
Public ownership that dominates the asset structure is very tolerant of the non-publicly-owned economy. The dominating status of the publicly-owned assets provides material support for and is fundamental to China’s socialist ownership, underlies realization of common prosperity, offers a carrier for social functions to operate and, at the same time, strongly propels the development of the non-publicly-owned economy. In fact, the dominating status of the non-publicly-owned economy in output, employment, and taxation is the premise of its existence and development. According to our estimation, among the secondary and tertiary industries in China in 2012, the proportions of added value of the non-publicly- and publicly-owned economies were 67.59 and 32.41%, respectively, and new employment, 75.20 and 24.80%, respectively. Meanwhile, the businesses in the primary industry, such as agriculture, forestry, animal husbandry, and fishery, are mostly comprised of family-based ones. Such development of both publicly- and non-publicly-owned economies with their respective status in asset size not matching their corresponding contributions is determined by their distinctive distributions across economic areas, and it also meets the demand of efficiency by the dominating market and by the external economics. Therefore, the domination in asset size by the publicly-owned economy together with the dominating contributions to output and employment made by the non-publicly-owned economy must stand side by side and march forward together. This is the foundation in practice for the “two unswervinglies” policy
In addition:
In addition, with further adjustments of the ownership structure, the dislocation of the domination in asset size of the public sector and the domination in economic contributions of the nonpublic sector will only be furthered. Actually, only with its rapid development can the nonpublic sector fulfill its role as an indispensable part to the socialist market economy, which will further drive SOEs to improve their efficiency so that mutual development will be achieved; and only with complete fusion of the two sectors brought by further improvement of the production efficiency and socialization of them can the primary stage of socialism has a chance to march to a higher stage.
In other words, the current mixed ownership reforms are setting up a huge building block for socialist China to step into a higher stage of socialism, bringing it closer to communism. So when you see articles like these from CGTN, please do not worry! Opening the “commanding heights” of the economy to private/foreign investment and competition is only a measure to further mixed ownership reforms and will not challenge the dominance of public ownership in the Chinese economy.
https://news.cgtn.com/news/2020-05-18/China-unveils-guideline-on-improving-the-socialist-market-economy-QB6Vn3GVbO/index.html
There is a lot more Marxist theoretical backing for mixed ownership reform, but considering the size of this post, the theory behind the mixed ownership reforms will probably have to be something to write for another post.
Anyway, I’ll still leave behind some readings that will be useful to understand the combination of the public sector and market and the intermeshment of the public and private sectors in the Chinese economy to those who are curious.
https://stalinsmoustache.files.wordpress.com/2020/06/chapter-4-chinas-socialist-market-economy-pre-publication.pdf
https://stalinsmoustache.files.wordpress.com/2020/04/not-some-other-ism-06-pre-publication.pdf
https://www.springer.com/gp/book/9789811327261 (chapter 1)
https://www.springer.com/gp/book/9789811368943 (start at page 183)
https://www.emerald.com/insight/content/doi/10.1108/CPE-10-2018-011/full/html
https://www.emerald.com/insight/content/doi/10.1108/CPE-04-2019-0006/full/html
https://philpapers.org/rec/BOEISA-2
I also HIGHLY RECOMMEND reading the articles in the following two journals (using scihub to get past the paywalls):
https://www.tandfonline.com/loi/rssc20
https://www.tandfonline.com/loi/rict20
submitted by fortniteBot3000 to InformedTankie [link] [comments]

Reliable Ways To Make Money On The Internet

Become a freelancer
What is sometimes referred to as an irreverent hourly invoice is in reality a great way to earn money via the internet.
In the meantime, there are even many employers who do not mind if you carry out your work remotely. Don't have a skill that you can perform online and remotely?
You can learn to become a copywriter, but there are of course plenty of other specialties that lend themselves to freelancing: programmer, virtual assistant, web designer, accountant , and so on.
Become an online coach
If you are an expert in a certain transferable skill such as writing, productivity, but also a physical form of training or sport, consider transferring your knowledge to others through a coaching program or individual coaching sessions.
If you are a psychologist, therapist or addiction expert, you can also offer your service in this way. The difference between 'coach' and 'therapist' (both broadly speaking) is:
A coach helps a person to become better at a certain skill and does not always have qualifications in training itself outside the skill that is transferred. A therapist helps a person to deal with emotions, other people and situations (from the past) and is often formally trained and can demonstrate this.
The way in which you earn money as a coach or therapist is, for example, by:
€ 150 - € 1,500 per month as a copywriting coach for a weekly Skype meeting and giving and checking homework € 75 per Skype session of 60 minutes to be asked as a psychologist € 100 per month as a remote personal trainer and daily reminders send via Whatsapp or SMS and call weekly to discuss progress
You can offer your services via:
You can also offer your services in this way as a (business) consultant or advisor.
Earn commission (with affiliate marketing)
Webshops, travel organizations, insurers and many more parties pay your commission if you receive a quotation request or sale. Affiliate networks such as clickbank you quickly find partners in the relevant categories.
By the way, you don't need a website to get people to click on affiliate links. For example, you can review products or services on YouTube and encourage viewers to click through to the provider's site. Or create a list of email addresses and email an offer or review. The affiliate marketing revolution course takes a closer look at this.

Sell products with dropshipping
With dropshipping you are a trader with, for example, a webshop where orders come in. As soon as an order arrives, it is (automatically) passed on to the supplier who takes care of the handling and shipping of the product. If contact with the customer is required, the supplier often arranges this, but this depends on the appointment you made as a dropshipper with the supplier.
The customer pays the dropshipper and the dropshipper pays the supplier.
A big advantage of dropshipping is that you do not have to make any investments yourself and you do not have to have any stock. Therefore, there is little risk. Your only job is actually to bring in new customers.
What is the difference between affiliate marketing and dropshipping?
Dropshipping is similar to, but different from, affiliate marketing. The big difference is that in affiliate marketing you send the customer to the supplier and therefore do not receive contact details or payment from the customer. However, you do not have to pay the supplier and you will be paid in commission for every customer that you forward. Affiliate marketing is therefore even more accessible, because you will never have anything to do with the customer.

Play online poker
No Limit Texas Hold'em
My first big (well, it was a lot) online money I made with poker. No Limit Texas Hold'em poker is a game that is often seen as a game of chance and certainly has a chance element, but is actually a skill game. If you are better than the players at the price level you are playing on and keep playing well, for example with the help of certain support programs, then you can make a lot of profit from it.
For example, I played on Pokerstars and used PokerOffice as statistics software and TableNinja for hotkeys.
However, there are 3 main reasons why I recommend you not to pursue a career as an online poker player.
Read more in this article >>>

Become a daytrader
Day traders are people who buy stocks or options during the day and try to sell them at a profit before the end of the day.
They do this via a trading platform of their stockbroker, a specialized trading software company or via a platform that they have developed for this themselves.
To do this successfully they need multiple monitors and a very fast internet connection to immediately see and seize opportunities that pass by.
How do they make money?
The most common strategy is for these traders to grab a stock, index (a specific part of the stock market) or currency that is volatile enough. This means that the price fluctuates quite a bit and that chances are that if you buy when an object is at its lowest point in its usual fluctuation, it will quickly peak again. There is of course no guarantee for that, but there are mathematical models with which you can calculate the probability that a share will reach a certain price within a certain period. If according to such a model the investment is favorable, then you buy that object (share, currency, index, etc.). You sell this as soon as the price has gone up again.
Day traders do not do this with large price shifts, but really with small percentages, but on a large scale. For example, they may invest € 10,000 and earn € 100 one day because the share has increased in value by 1% that day. However, traders often go long or short with a particular object, which allows them to leverage. This means that they enter, for example, a 5: 1 payout structure for the increase in value (long) or decrease (short) of a certain share. If this prediction is correct and they cash out, the € 10,000 they have invested is considered to be € 50,000. That is the leverage effect. The disadvantage of this is that if the price of the object falls below or above (depending on whether you go long or short), you lose your entire investment.
Are you considering becoming a day trader?
Think again.
“10% of the day traders are successful. You could say that other 90% pays for that 10% ”
You need a lot of knowledge, discipline and analytical skills to trade profitably. You should also be able to completely leave your emotions and ego out. As soon as you start trading emotionally, you will lose, just like with poker. Many people overestimate themselves and their own skills. You may get away with that in other fields, but not in day trading. You will sooner or later be the spool. If you want to know more about investing, check out this link

Build your own software
This option is not for everyone and is by far the hardest way to make money online, especially if you are just starting out and have no technical skills. Also, this is often an expensive option and one that involves (and continues to bring) a lot of work.
That said, it may be one of the most lucrative options. Here are some examples of companies (that often started as sole proprietorships) that have released successful software in the internet marketing market:
  1. https://ahrefs.com/ (SEO tool for backlink and competition analysis, $ 99 p / m /)
  2. https://www.leadpages.net/ (Landingpage builder $ 25 p / m)
  3. https://moz.com/ (SEO tool for eg backlink analysis $ 99 p / m)
  4. https://www.crazyegg.com/ (Website analysis tool $ 99 p / m)
  5. https://www.semrush.com/ (SEO tool for competition analysis $ 99.95 p / m)
As you can see, 4 of these 5 examples are priced at $ 99 per month. This is not a coincidence. This is a very nice earnings model because you can accurately predict how much money will come in the next month. You know, in the worst case scenario, you will lose 5% of your customers per month (there are models for this) and that if you have 10,000 paying users, you will receive about $ 1 million in cash the next month.
If you offer software against a monthly revenue model, then you only need to focus on improving 2 figures:
  1. the churn rate: how many people stop their membership per month?
  2. the number of new customers you acquire per month
Make sure your churn is as low as possible through a good onboarding process. This means that you do everything to ensure that your customers actually use your software and get value from it. Only in this way will they remain members in the long term.

Publish books
Writing or having books written and then publishing them means that you earn passive income : you invest your time once and afterwards you can become dormant, so to speak. On this page you can read how André went from $ 200 to almost $ 1000 per month in ebook royalties within six months. Stores where you can publish ebooks include those from iBooks, Barnes & Noble and Bol.com and Amazon Kindle Store.
Create an online course
To create a video course you will need:
  1. Camera Gear
  2. A good microphone
  3. Video editing software I can really recommend this microphone from RØDE Microphones
  4. Adequate lights / natural light
  5. Learning environment to use the videos
  6. A planning
  7. Very valuable content to share

Membership site
Positive Psychology Program
In my personal experience, having a membership site is the finest revenue model there is. I have probably made money in more than 50 different ways during my life (no, not that way, dirty butt) until I finally ended up creating a membership site: Positive Psychology Program.
Now that I get recurring income from it, just like with the revenue model of the software, it is a matter of bringing in more people and ensuring that they stay as long as possible. My business partner builds our information product and ensures that existing members commit to us and I ensure that as many new members as possible are added. This is how we guarantee the growth of our business.
A very common way to create value is to offer information products in an online environment (built with, for example, Wishlist or Woocommerce subscriptions if you work with WordPress).
Then consider:
submitted by galeanders to Howwemakemoneyonline [link] [comments]

Sold my 6 months old website for €105k

Hi all,
I enjoy this subreddit, it thought me a lot of things, and I felt like maybe I can somehow contribute to the community by sharing my story. A few weeks ago, I sold my website for 105k€, and this post is related to that. I don't reveal the website, niche or products. But it is one of the most difficult niches in internet marketing. Here are the proofs: https://prnt.sc/rjas21 - https://prnt.sc/rjaso2
Finances in summary:

MONTH EXPENSES INCOME
SEPTEMBER €4020 -
OCTOBER €2519 -
NOVEMBER €3012 €191
DECEMBER €219 €3658
JANUARY €2313 €4750
FEBRUARY €2521 €1333
TOTAL: €13414 €9932
About myself and the beginnings
I'm a Turkish guy who is living in Riga, Latvia since 2016. I started to work in the digital marketing industry as a content manager back then, where I was responsible for the content management of over 300 affiliate websites. So I was working for a giant affiliate company. I learned almost all the basics there, SEO, content, keywords, etc. After a year, I started to work for another company as a marketing manager where I was responsible for content, emails, campaigns and CRM. After a year my boss told me that they would like to create an affiliate site and if I'd be interested in working with them and take the lead with developers, content structure, strategy, etc. I really like building websites, so I accepted it and started to work in two positions. I have studied foreign languages in the university, so I've got lots of friends who could write articles in English, they only needed to learn the terminology and SEO writing part, and we began to write content for the website. Anyway, as a side business, I started to use my own connections and get more content job for my friends, and I was also making income. We sort of became popular, people started to refer us to others, and we started to get more content inquiries. So I decided to hire more people to work for us. From writing, we started to provide with also visual contents such as infographics, illustration, logos. After a couple of months also translations and backlinks... so I was actually making more money with my side business than I was making in the company I work full time.
I always wanted to create a project that totally belongs to me. I was never able to in 3 years despite the fact I was working in digital marketing because either I did not have time or the money to fund it. I have spoken to a colleague of mine about an idea of an affiliate site and that I have got an excellent team so we can outsource everything for cheaper, and he said he would be more than happy to invest in this type of project and asked how much would it cost. I said 3.000€ for the beginning ((in the first month we spent €4k, so it didn't go as good as planned)) then we would see if more needed or not. So we started... I have taken responsibility for the content, SEO and design of the website. He was doing sales and marketing by outreaching product owners.
First month
We started in September 2019. I got a brand new domain, siteground hosting with a dedicated IP, ordered a logo from an illustrator and started to get the English content, and order translations to German and Spanish. I did not keep track of word count.
46 clicks from Google in the first month: https://prnt.sc/rjahlv
and we spend €4,020 for the domain, hosting, tools, backlinks, contents and translations.
Second month
104 clicks from google for the second month: https://prnt.sc/rjaigy
we spent €2519 only on content.
total invested within two months: €6519
The third month
we spent €1838 on for contents, tools and backlinks.
362 clicks on from Google in the third month: https://prnt.sc/rjajtt
and we got the first commission, the site made 191€ in the third month.
total spent: €8357
total earnings: €191
Fourth month
we spent only €219 on content, and then I founded my own digital marketing agency, I did not have so much time to focus on the website as I was busy with managing the writers and doing SEO for my clients, and we exceeded our budget way too much. So I wanted to monitor the stats a little bit.
1.41k clicks from Google in the fourth month: https://prnt.sc/rjaktr
the site made €3,658. We got a sponsor and a few ad placements and sold a link. Almost €1,500 came from the sponsor, the rest through affiliate commissions.
Total spent: €8576
total earnings: €3849
In December, someone offered 50k€ for the website which we did not sell because my partner was against it, and the revenue was increasing as well as the traffic.
Fifth Month
we spent €2,313 in total and launched two more websites.
3.23k clicks from Google in the fifth month: https://prnt.sc/rjamzk
the site made €4,750 including ad placement, affiliate commissions.
total spent: €10889
total earnings: €6162
Sixth Month
For some reason the traffic started to decrease in January, we have got some technical issues that I realised a bit late. I changed the hosting from siteground to WPX. I had to hire some developers to check it out which they were super untalented... at the end, I fixed it myself, so it was a total failure in terms of expenses and time.
We lost almost 1k users in February.
1.93k clicks from Google in the sixth month: https://prnt.sc/rjaphg
We spent €2,521 in February.
The site made €1,333 in this month.
total spent: €13410
total earnings: €7495
We always got compliments about the website. I am also hanging in industry-related forums, and people were showing interest. I decided to put it on sale as the traffic was going down, meanwhile, my agency was going very well and I wanted to focus on the agency, and thinking that if we could sell it for 6 figures, I could start my dream affiliate project without thinking about funding.
In the forum, I did not ask for any price for the website, just shared all the stats in the advertisement and asked for bids. A few emails, skype calls and at the end, I've got an offer of 105k€ from a very big media group. They have come to Latvia to meet us so we could discuss everything in detail. We had a very good day together, and we decided to close the deal with them. Contracts, paperwork and legal stuff took almost three weeks, and we are hired by the same guys who bought the website for the management and contents.
Right now I'm running two more websites, that is making no money at the moment. We made a collaboration with a UK media company, we are going to launch a website with them.
and I have hired developers for the dream site I was always thinking of. Leading them for the development phase and making content & competitor research.
I think that there is no reason to be unsuccessful if you work hard. I was reading source codes of my competitors until 4-5 am and going to my full-time job. It was not easy to get these results for a relatively new website. According to my experiences, if you provide your users with honest content that is well researched, invest a little bit in quality backlinks and follow the basics of SEO, you can also make it.
So just start people, give it a shot!
submitted by megetski to juststart [link] [comments]

The Perversion of Critical Theory: Nadia Bolz-Weber

This particular concept is leading many astray and we must confront it everywhere it pops up. Having endured my University’s Critical indoctrination program for the past 3.5 years, I decided to write something up about it and how this relates to our faith, enjoy. (5-minute read)

Many issues in the modern Church that we talk about (the attack on masculinity, biblical roles etc) stem from something called Critical Theory. So I thought it would be better to rebuke false teachers such as Nadia Bolz-Weber by exposing their worldly philosophical framework first, then we will see clearly to reject their theology, deceptive practises and thus, clear its outworking from our Churches.

Critical Theory and Bolz-Weber
Critical Theory is a social theory that critiques and changes society by targeting its power structures and the concepts that hold these together. Critical Theory and the principles within it can really be applied to anything, and it absolutely wreaks havoc when applied to Christianity.
“You will know them by their fruits” (Matthew 7:15-20)
Here are some of the fruits of Critical Theory and its adherents:
All of these have something major in common, they are united in their rebellion against an established authority. That authority may be different in each case, for feminism the authority is the patriarchy. In the case of the sexual revolution – purity and marriage. But the really devastating rebellion is this: rebellion against the authority of established truth.
Postmodernism is most blatantly affiliated with this rebellion, and many people are unknowingly affected by its core thesis in some way. The thesis: ‘the truth is what you think it is’ which basically translates to: ‘The truth is what feels good to you’. (Sounds pretty similar to Judges 21:25 huh)
You can see this thesis at work in the life of Bolz-Weber.
Here is a teacher who is rebelling against 2000 years of widely accepted Christian thought. Indeed, she referred to the life work of Augustine of Hippo as a ‘dump’, and Paul’s writings as ‘snotty opinions’. Bolz-Weber is trying to dismantle established Christian thought surrounding sex via a sexual reformation based on the arguments of Martin Luther.
Where does her authority to say and do such things come from? Herself and her own ‘spiritual revelation’. After an abortion and divorce, she got back with an old boyfriend and essentially said that “the sex was so good it made me question the relationship between sex and religion”.
Martin Luther right now.

How Critical Theory affects our Evangelism
The philosophy behind this error is not just exclusive to Bolz-Weber. It is being widely proliferated in many different Christian denominations. The Catholic organisation I am indirectly employed by has adopted a ‘be your best self’ humanistic psychology. The leader said in a recent zoom meeting that we are not preaching the gospel, but encouraging students to embrace ‘who they are’ -> whether that be atheist, Muslim etc.
This is in line with the vision of human flourishing: a recent heretical teaching that has its roots in Critical Theory as applied to the Great Commission. Christians have always been for helping the poor and needy but due to ‘new interpretations’ of Jesus’ words, in the year 2020 the Great Commission has been translated to helping everyone flourish in their lives on earth.
“For what does it profit a man to gain the whole world and forfeit his soul?” (Mark 8:36)
Whether you are flourishing in life or not, you need to repent in the name of Jesus. This is not just a once-off deal, but a continuous commitment to walk by faith and follow Jesus’ commands.
Pointing people towards this is the number 1 way that we help them, other than attending to their basic needs. So when we neglect to point people toward the ONLY way for their salvation, we are like the servant given a single talent who then buried it in the ground. Critical Theory justifies disobedience.

How Critical Theory affects our Christianity
Critical Theory lends itself to something CS Lewis referred to as ‘Chronological snobbery’. That is, the view that by virtue of its recentness, any position is more authoritative than old and established positions.
When teachers bring us new interpretations of scripture we cannot merely quote scripture back at them, their argument lies in their interpretation, their interpretation lies in their worldview/doctrine. These new claims must be weighed against Biblical canon as a whole. That means they must be weighed against established worldview/doctrine. That is, established interpretations based on Authorial intent – not what some feminist suddenly thinks Paul really meant in Ephesians 5.
The primary objective of the enemy is to undo the work of Jesus Christ, and what did Jesus Christ come to do? To destroy the work of the devil: sin. (‘I have come that they may have life’).
One of the most important things Critical Theory does to Christianity is undercut the Gospels power by attacking the concept of sin. It does this by either saying something isn’t a sin (changing established doctrine) or it downplays the gravity of sin. Nadia Bolz-Weber and many other ‘Christians’ do so in a matter that is utterly disgraceful, bringing the gospel into disrepute and trampling on the cross.
‘How do we know what sin is?’ Bible + right interpretation. ‘We know the Bible is reliable, but how do we know what the right interpretation is?’ Authoritative figures + Authorial intent. ‘I get Authorial intent, but how do we know which authoritative figures are Godly?’ By their fruits. ‘What’s the main fruit to look for?’ Whether or not they teach repentance via the cross. Repentance that leads to forgiveness, and forgiveness that leads to life evidenced by righteousness.

Critical Theory applied to Faith alone
Critical Theory has absolutely destroyed Faith alone, and the newly defined concept enables many modern heresies. Faith alone now apparently justifies (among many things) Vagina sculptures, homosexuality, abortion, idleness, and a dead and useless belief. Further, it is the single biggest point of confusion and division within Christianity. Those ‘Christian’ women sleeping around that we all complain about? ‘Don't judge bro, they are just as holy as you.’ How the devil has deceived us!
There is no salvation without faith. Likewise, there is no faith without repentance. No repentance without confession of sin. No confession without admitting that we have a sinful heart (and indeed that sin exists in the first place).
True and transformative faith will lead to righteousness (evidenced by fruits and good works) and a renouncement of the world and its desires. So let’s not get bogged down once again in the faith vs works non-debate. Open your eyes. Without action your faith is dead!
In the words of Martin Luther himself:
“Saving faith is a living, creative, active and powerful thing, this faith. Faith cannot help doing good works constantly. It doesn’t stop to ask if good works ought to be done, but before anyone asks, it already has done them and continues to do them without ceasing. Anyone who does not do good works in this manner is an unbeliever...Thus, it is just as impossible to separate faith and works as it is to separate heat and light from fire!”

If we confess our sins, he is faithful and just and will forgive us our sins and purify us from all unrighteousness.” (1 John 1:9)
“Whoever conceals their sins does not prosper, but the one who confesses and renounces them finds mercy.” (Proverbs 28:13)
“Neither do I condemn you; go and sin no more.” (John 8:11)
And of course, Jesus’ first public announcement:
“The time is fulfilled, and the kingdom of God is at hand. Repent, and believe in the gospel.” (Mark 1:15)

Hopefully this has provided you with some insight into the framework that our opposition uses, and how this has crept into our faith at a theological level and thus affected many brothers and sisters. Wherever you’re at, be encouraged, admonished, awakened, but for the love of God: grow. (2 Peter 1:5-11).

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Endo International (ENDP) Biotech Stonk @ Penny Stock Price!

Endo International (ENDP) Announces U.S. FDA Approves Qwo, the First Injectable Treatment for Cellulite

Endo International plc (NASDAQ: ENDP) today announced that it received U.S. Food and Drug Administration (FDA) approval of Qwo™ (collagenase clostridium histolyticum-aaes) for the treatment of moderate to severe cellulite in the buttocks of adult women. QWO is the first FDA-approved injectable treatment for cellulite.
Experience the interactive Multichannel News Release here: https://www.multivu.com/players/English/8729551-endo-international-fda-approval/
"Today's FDA approval of QWO is a key achievement in the continued execution of Endo's long-term strategy, especially as it relates to building our portfolio and capabilities for the future," said Blaise Coleman, President and Chief Executive Officer of Endo. "As Endo embarks on an exciting new journey into medical aesthetics, we look forward to bringing this innovative treatment to market through our Endo Aesthetics organization."
While cellulite is known to be a multifactorial condition, a primary contributing factor is the fibrous connective tissue, called the "fibrous septae," which connect the skin perpendicularly to the fascia below.2,3 These fibrous septae tether the skin, drawing it downward and leading to a mattress-like appearance, commonly referred to as "dimpling."4,5 When injected into the treatment area, QWO is thought to release the fibrous septae enzymatically by specifically targeting Types 1 and 3 collagen, which may result in smoothing of the skin and an improved appearance of cellulite.1
"Endo recognized a significant unmet need for an effective and non-invasive injectable treatment for cellulite, which led us to conduct the largest clinical trials in the history of cellulite investigation in the United States," said Matthew Davis, M.D., R.Ph., Senior Vice President and Chief Medical Officer of Endo. "Supported by rigorous research, testing and development processes, we are proud to have received FDA approval of the first injectable treatment for cellulite in the buttocks and we look forward to delivering QWO to the aesthetics community and their adult female patients."
Side effects of QWO included injection site bruising, pain, areas of hardness and itching in the treatment area. Please see Important Safety Information below for more details.
"QWO could be a game-changer for many women with cellulite," said Anne Chapas, M.D., a board-certified dermatologist at Union Square Laser Dermatology in New York City. "I am thrilled there will now be an FDA-approved injectable treatment option proven to address a root cause of cellulite. What is exciting about QWO is that it is a cutting-edge cellulite treatment, without the cutting."
QWO is expected to be available throughout the United States at aesthetic healthcare practitioner's offices starting in Spring 2021. Physicians and consumers are encouraged to visit www.QWO.com and sign up for updates on product availability.
WHAT IS QWO™?
QWO is a prescription medicine used to treat moderate to severe cellulite in the buttocks of adult women.
IMPORTANT SAFETY INFORMATION
Do not receive QWO if you: are allergic to collagenase or to any of the ingredients in QWO, or have an active infection at the treatment area.
QWO may cause serious side effects, including:
Before receiving QWO, tell your healthcare provider if you:
Tell your healthcare provider about all the medicines you take, including prescription and over-the-counter medicines, vitamins and herbal supplements. Especially tell your healthcare provider if you take a medicine that prevents the clotting of your blood (antiplatelet or anticoagulant).
The most common side effects of QWO include: injection site bruising, pain, areas of hardness, itching, redness, discoloration, swelling and warmth in the treatment area.
These are not all the possible side effects of QWO. Call your healthcare provider for medical advice about side effects. You are encouraged to report side effects of prescription drugs to the FDA at www.fda.gov/medwatch or 1-800-FDA-1088.
Click for Full Prescribing Information, including Patient Information for QWO.
About Cellulite Cellulite is a localized alteration in the contour of the skin that has been reported in over 90 percent of post-pubertal females and affects women of all races and ethnicities.6,7 The presence of cellulite is associated with changes in dermal thickness and in the fat cells and connective tissue below the skin.8 A primary factor in the cause of the condition is the collagen containing septae which attach the skin to the underlying fascia layers.2,3 The septae tether the skin which, with additional contributing protrusions of subcutaneous fat, causes the surface dimpling characteristic of cellulite.4,5 These fibrous septae are oriented differently with varying thickness in females than in males, which informs our understanding of cellulite as a gender-related condition.9 Cellulite clinically presents on the buttocks, thighs, lower abdomen and arms.6
It is known that cellulite is different from generalized obesity.10 In generalized obesity, adipocytes undergo hypertrophy and hyperplasia that is not limited to the pelvis, thighs, and abdomen.7 In areas of cellulite, characteristic large, metabolically stable adipocytes have physiologic and biochemical properties that differ from adipose tissue located elsewhere.11 An anatomical study in 2019 found that women have increased fat lobule height compared with men, which may also contribute to the mattress-like appearance seen as a result of the tension of the fibrous septae.9,11 Weight gain can make cellulite more noticeable, but cellulite may be present even in thin subjects.10
About Endo Aesthetics™ LLC Endo Aesthetics is embarking on a mission devoted to pushing the boundaries of aesthetic artistry. Driven by world-class research and development, Endo Aesthetics is advancing solutions to address unmet needs beginning with the first FDA-approved injectable treatment for cellulite in the buttocks. Headquartered in Malvern, PA, Endo Aesthetics is an affiliate of Endo International plc (NASDAQ: ENDP). Learn more at www.endoaesthetics.com.
About Endo International plc Endo International plc (NASDAQ: ENDP) is a highly-focused specialty branded and generics pharmaceutical company delivering quality medicines to patients in need through excellence in development, manufacturing and commercialization. Endo has global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, PA. Learn more at www.endo.com.
Forward Looking Statements This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Canadian securities legislation, including, but not limited to, the statements by Mr. Coleman and Drs. Davis and Chapas, as well as other statements regarding research and development outcomes, efficacy, adverse reactions, market and product potential and product availability. Statements including words such as "believes," "expects," "anticipates," "intends," "estimates," "plan," "will," "may," "look forward," "intend," "guidance," "future" or similar expressions are forward-looking statements. Because these statements reflect Endo's current views, expectations and beliefs concerning future events, they involve risks and uncertainties. Although Endo believes that these forward-looking statements and information are based upon reasonable assumptions and expectations, readers should not place undue reliance on them, or any other forward-looking statements or information in this news release. Investors should note that many factors, as more fully described in the documents filed by Endo with the Securities and Exchange Commission and with securities regulators in Canada on the System for Electronic Document Analysis and Retrieval, including under the caption "Risk Factors" in Endo's Form 10-K, Form 10-Q and Form 8-K filings, and as otherwise enumerated herein or therein, could affect Endo's future results and could cause Endo's actual results to differ materially from those expressed in forward-looking statements contained in this communication. The forward-looking statements in this press release are qualified by these risk factors. Endo assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required under applicable securities laws.
References:
  1. Qwo™ package insert. Malvern, PA: Endo Aesthetics LLC
  2. Zhang YZ, et al. Appl Environ Microbiol. 2015;81(18):6098-6107.
  3. Rossi AM, Katz BE. Dermatol Clin. 2014;32(1):51-59.
  4. Edkins TJ, et al. Clin Vaccine Immunol. 2012;19(4):562-569.
  5. Kaplan FT. Drugs Today (Barc). 2011;47(9):653-667.
  6. Hexsel DM, et al. Side-by-side comparison of areas with and without cellulite depressions using magnetic resonance imaging. Dermatol Surg. 2009;35(10):1471-7.
  7. Khan MH, et al. Treatment of cellulite: Part I. Pathophysiology. J Am Acad Dermatol. 2010;62:361-70.
  8. Querleux B, et al. Anatomy and physiology of subcutaneous adipose tissue by in vivo magnetic resonance imaging and spectroscopy: Relationships with sex and presence of cellulite. Skin Res Technol. 2002;8(2):118-24.
  9. Rudolph C, et al. Structural gender-dimorphism and the biomechanics of the gluteal subcutaneous tissue – Implications for the pathophysiology of cellulite. Plast Reconstr Surg. 2019;143(4):1077-86.
  10. Avram MM. Cellulite: a review of its physiology and treatment. J Cosmet Laser Ther. 2005;7:1-5.
  11. Pierard GE, et al. Cellulite: from standing fat herniation to hypodermal stretch marks. Am J Dermatopathol. 2000;22(1):34-7.
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A step-by-step guide of how I would build a SaaS company right now - part 2

This is part 2 of 5.
Part 1
LET'S DO THIS!
Big thank you to everyone that upvoted and commented on the last post.
I’m pumped, this is part 2 of 5 for those keeping track at home.
  1. Start with your revenue and monetization plan (are you targeting a sector that has money and can/will pay - Part 1)
  2. Align yourself with others in your space (cheapest way to get traction/credibility)
  3. Work on road mapping your product to align with what complements your partnerships (cheapest distribution)
  4. Work on building a marketing strategy that can help expose and align your brand while strengthening its recognition with your partners (will this make us both look good)
  5. Build customer advocates along the way, tell their stories (lead with examples)
Early traction, everyone wants it, very few people know how to do it effectively. Hell I’ve seen it all, run all the experiments, all the tests and I can tell you from experience if you have the patience, slow, steady, and surgical is the way to grow. Especially in the beginning.
In part one we spent a lot of time asking some basic fundamental business questions. Including, an exercise in the importance of being able to niche down.
We’re going to expand on the niching down because it’s how you gain clarity and find people to align yourself with early on.
The goal of this will be to understand:
  1. How to niche down
  2. How to use this to target a market and recognize opportunity
  3. How to position within that market
  4. How to give yourself the biggest chance of success
I’ve chosen to outline these in all our steps for niching down.
You’re going to see these steps move from research to market evaluation to list building stopping just short of outreach. We’ll touch on this in part 3.
Last week I took a call where someone told me their target market is males 25-45 that like sports.
This is the most important part of your entire business. I’m serious.
Let’s rock through this together so we can get you super focused and know where and how to spend your time and money.
(The below was laid out in part 1 and was the layered niching exercise)
LEVEL 1: We’re a helpdesk product.
How to niche down
The big question is “for who”?
So you’ve picked the type of product you are building and a use case, the problem is there are lots of people like you out there and this doesn’t tell me much about your market, it’s too broad.
How to use this to target a market and recognize opportunity
Because this is so broad, it’s impossible to actually target a market and without being able to do that, it’s not possible to recognize opportunities, there’s just too many of them.
How to position within that market
Competition is good and bad, but it’s always better to be a big fish in a little pond, the best way to reduce the size of your pond is to niche down as much as possible while still understanding a large enough TAM (total addressable market).
How to give yourself the biggest chance of success
No wasted effort. Every idea, concept, must have a small goal attached to it.
It’s too expensive to try to be everything for everyone and when you take this approach you end up failing at doing any one thing well enough for people to switch.
Let’s build on this.
LEVEL 2: We’re a helpdesk product for eCommerce companies.
How to niche down
Pick an industry or trend that is on the rise - look towards a shift or something that relates to changes people are making in their daily routine.
In this case we picked eCommerce because it’s on track to hit over $7 Trillion worldwide this year and has steadily been increasing across all brands. So we have an industry with a large enough economic driver to let us start niching down.
How to use this to target a market and recognize opportunity
We now buy things online that we never would have thought to do so even just a few years ago. Amazon is selling Tiny Homes now, seriously, if you can buy it, odds are you can do it online. There are massive opportunities to bring goods and services to people through convenient online shopping. And with that increase they will all need a help desk platform to provide the best experience for their customers.
Customers today don’t want to speak with people, they want answers quickly and easily. It’s all about reducing friction.
How to position within that market
Narrow down within the market. eCommerce is a good starting point, there are different industries, subsets, and categories. Go narrower. Start thinking about where the friction exists in the industry and for what subsets.
How to give yourself the biggest chance of success
In the beginning, it’s going to be an uphill battle, picking the right trending industry will give you the best chance of success. Something that is rising up to the right in popularity is way easier to sell into than a trend that is declining.
Know your competitive landscape.
Everyone has a competitor, whether direct, partial, or mildly related. Spend a lot of time on understanding this and knowing that your product is part of a very large landscape or landscape of potential competitors. Any one of the existing partial or mildly related competitors may be building something to more directly compete with you down the road.
Practical advice
Most companies stop here and hope for the best.
Unfortunately, this isn’t a go to market plan or a sustainable business model.
There’s an important bit worth mentioning here as it will become a theme of this entire post.
Great products enhance workflows through features, the focus isn’t on the product but what the product enables people to do. Success in the software business is all about understanding existing workflows and simplifying the experience.
As you do this exercise to niche down ask yourself:
What does the current workflow look like?
What are they currently using?
How are they currently using it?
Where are the gaps?
What are the best practices for creating workflows?
Always seek to understand how your product works in a workflow - what role it plays, how it best optimizes - this is the data play referred to in Part 1.
What are the things that matter most to people in the eCommerce space?
That’s a lot of questions with even more answers, when you peel everything back it becomes very clear that it’s not possible to answer all of them without going deeper.
Too many people to talk to, too many industries, too much everything.
Let’s take a different approach - how I got to Shopify in the next niche down.
No successful new SaaS company today launches without an integration.
So let’s find an eCommerce platform to integrate with.
We have to look for a stable player that has an app store and is a market leader.
As a starting point, my goal is to be a help desk for ecommerce companies.
  1. I need a list of all eCommerce platforms
  2. I need to understand which help desks they already integrate with
  3. I need to understand what people like and don’t like about them
  4. I need to find out which platform is going to be the best fit for my product
There are lots of sources for this and even more articles, google and read.
If you’re looking for numbers though and data, use BuiltWith and run a search on the platforms after you have your list to figure out which is the most popular.
Ok so we have our list of eCommerce platforms, we’ve analyzed the data, made sure they tick all the boxes and we’ve run our reports and found that Shopify powers 1.2 million stores.
Let’s lock it in as our next step in niching down.
LEVEL 3: We’re a helpdesk product for eCommerce companies using Shopify.
How to niche down
It’s more than just market size. Going with a market leader is always a safe bet but it also provides the most competition. Sometimes going with a smaller platform that doesn’t get all the attention is a worthwhile research project.
How to use this to target a market and recognize opportunity
There are two sides of the opportunity and this is something that I didn’t touch on in the original niching down. Shopify and BuiltWith categorize the types of stores that are on the platform, so you can niche down to a certain type of store, for example just cosmetics or just apparel.
The other side of the opportunity is putting together your list of companies currently operating in the ecosystem.
How to position within that market
Smart people are really good at collecting data and interpreting it.
Let’s get some data.
  1. Go to the shopify app store
  2. Type in “Support”
  3. Click paid on the left margin and click the “Support Category”
  4. Use something like Simple Scraper ( a great chrome plugin, no affiliation)
  5. Get your scrape on, this shows 87
  6. Time to get busy - categorize them
  7. Pick the ones most similar to your offerings
  8. Click on them, look at their reviews - all of them on shopify Scrape them
  9. Go to G2 and Capterra and look through all those reviews as well
  10. Put them all in a spreadsheet, read them all, highlight those that stand out
  11. Find the ones that are popular, others that have features people like etc.
  12. Document, and integrate the baseline features into a trello board on your product roadmap
  13. Take all the bad reviews and complaints - look for gaps that you can fill
How to give yourself the biggest chance of success
So take a look above, we went from a bunch of questions to being able to do a ton of market research to do product research and understand the current market offerings and where we might be able to gain some ground and offer something people might be interested in and ARE PAYING FOR.
How do you stand out?
You need to have a workflow that is 10x better than a current competitor in the market with a strong roadmap that lays out how you intend on optimizing this workflow. Features are built to augment the workflow and simplify the work of your clients employees, less work, more data, better understanding.
Ok so we’ve narrowed it down to eCommerce and Shopify and we have a list of other products that are currently playing in the space. We’re now looking at workflow - let’s figure this bit out.
LEVEL 4: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation.
How to niche down
Add another variable - it doesn’t have to be Shipstation, but it’s a good example as for eCommerce you’re likely shipping products places. By adding another variable, we’re shrinking our population to target.
How to use this to target a market and recognize opportunity
The biggest problem for all companies these days is combining different one off services and getting them to play nicely together. Stand alone products usually outclass all in one products as stated above because the focus is better. This is generally always going to be where you can find a gap in the market as the integrating of products is an afterthought rather than something contemplated in the very beginning.
How do you decide on the technologies you want to work with?
How to position within that market
Don’t guess. Understand the workflow of an eCommerce company and how it relates to support. For instance, most support tickets relate to order status, tracking, and returns. These all involve the store, transaction, the service desk, and the shipping carrier. Look for ways to streamline the experience for the service rep - for instance if refunds require approval, build a system that allows for all those tickets to be queued up with an easy interface for approvals or different color tagging to allow for them to be easily sorted by type.
By focusing on two technologies you can start by creating a better visual collaboration between tools to improve overall experience.
How to give yourself the biggest chance of success
Stack the deck in your favor.
Focus on where you can drive early alignment between your product offering and the audiences of your now two products. When you reach out to both companies especially the smaller ones like a Shipstation, you can collect more information about who they are catering to, volumes etc.
Most companies have a partner program - look into connecting with the lead.
When the time is right you might even get a shoutout on their social or blog or you can decide to co-publish some research report together. Lots of options.
Let’s double down on what being niche allows us to do:
  1. Know our audience
  2. Research with purpose
  3. Personalize outreach with early feelers
  4. Better understand a realistic TAM (total addressable market)
  5. Understand overlap between products
  6. Early alignment with bigger names
This whole topic is about alignment, alignment with partners, customers, and your product.
We have a list of potential customers now, but we need to segment them down further.
LEVEL 5: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus.
How to niche down
Why less than 100 skus?
This means they are small enough to try a new product. It also means you can see what works and what doesn’t work on a potentially smaller store. When you’re managing a store with more than 100 skus, things get a little complicated, it’s an arbitrary number but changing internal processes and workflows when you get to that level means that your staff is coming from a place of having used a system before that could handle the volume and trying out something newer or unproven is a tall order.
This process can be applied to anything, if your product does better project management look for people that run less than 20 projects at a time or projects that are less than 6 months, whatever it may be. We’re starting small.
Always default to the path of least resistance. Work smarter, not harder.
How to use this to target a market and recognize opportunity
I’m sure this could be automated, but in lieu of it being automated, you should start by manually figuring this out for yourself.
That list you have from BuiltWith that has urls, yeah we’re going to use that one.
Put the websites in the spreadsheet you downloaded, then create a new column and add “products” to the url - so you have the website in cell A, the word “products” in cell B then in blank cell C write “=CONCATENATE(A:B)” congratulations now you have cell C that will take you straight to the product page to see how many skus they have.
Update this hack doesn’t work on all shopify websites like I had hoped and after some research it seems like this is a bit of a struggle point for others as well.
I’m sure someone could write a script to scrape this information.
Go find an intern or hire someone to do all the lookups for you or find someone to write a script to automate the results - remember always work smart.
Run this and you’ll come up with your go to target list.
How to position within that market
The best helpdesk for stores on Shopify using shipstation with less than 100 skus - all of a sudden this starts to sound like something someone would almost search for. That’s the point.
We’re working our way down where it becomes a simple checklist if someone was searching for things.
Shopify - check
Shipstation - check
Built for smaller stores - check
How to give yourself the biggest chance of success
Remember you’re not building a product for everyone yet, your goal is to dominate a niche. You can always expand from there.
So we’re about half way through and we have figured out our potential partners and now we’re working on narrowing down this customer list. Before we dive in and start reaching out we need to really understand who we’re targeting and we need to start small.
Let’s narrow this down even further.
LEVEL 6: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue.
How to niche down
Why the less than $10 million in annual revenue? The only reason I would say this in the beginning is that they won’t have as much traffic and ticket volume, they make for better early clients, you can learn a lot more from their use cases and improve the product without worrying about something going wrong and a larger client really getting mad and churning. You also usually have greater access to work with their staff to improve your product.
How to use this to target a market and recognize opportunity
Unless you’re currently on the front lines, you need to find some early providers of feedback that are on the front lines. In essence, this is the starting point of a community and information play.
There aren’t a lot of data points available about companies in the early stages. People always have questions and there are limited resources in the early days, even across similar companies.
(Just look at reddit there are tons of repeat answers and questions.)
Someone answering tickets all day is the last person that wants to provide feedback, as much as they would like their job made easier, they don’t have the time.
How to position within that market
“But I need a big logo to let people know that I’m real.” You don’t, not in the beginning. All you need is a few good customers that are open to lending you the feedback you need to get better. A lot of smaller brands do a good job of branding, play the long game, find brands that are growing and try to get in early - grow with them.
Logo hunting has its place but you need to find product market fit before you can really make that happen.
By now you have probably figured out that whenever possible you should automate things. The way you do this is through data collection.
Using logic, math, and a spreadsheet you can do enough to be dangerous.
Use a service to figure out what their unique traffic is, take a look at their products and assume that their cart value is around 2-4 products per order then take the conversion rates by industry - you can find these online they are openly listed.
Your sheet will look something like this:
Company, Traffic, Conversion Percentage, Order Value, Sales Percentage, Revenue
eCommerce blended average is 2.2% - go use a spreadsheet and some formulas and bam you now have the revenue numbers. We’re not looking for exacts here, but more generally a good estimate.
I’ve actually run these numbers, if the products are sold through other channels, Amazon, retail, etc, then a rough estimate would be around ~33% of the revenue will come from the ecommerce store.
Factor in a range based on the size of the brand and it’s channels this should give you a rough estimate of the revenue even if they don’t publish it.
How to give yourself the biggest chance of success
Provide value - the most overhyped phrase but still true - the question then becomes, with something as subjective as “value” rather than just create, instead ask and create. This part is coming up, we’re almost ready to turn this on.
We’ve started to move from who are partners are to who are our potential customers. This is on purpose - my stance is that your first customers are really your partners and you should work on aligning yourself with those that are the best fit for your product.
You want your first clients to buy into your vision and invest the time to help shape it.
Ok on to the next -
LEVEL 7: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people.
How to niche down
So now we’re getting into the easier stuff - this is just a simple LinkedIn Search - small teams are usually before the real deep process point, they are also really good at providing feedback on tools that can actually help them out.
How to use this to target a market and recognize opportunity
If you have less than 5 people on a team, it’s a small enough number to target the entire team - multi prong approach to product awareness.
For customer support they are often the least paid and they have the most stressful jobs - it’s an all around shitty position to be in, so if you can provide them joy, you’re going to make fans quick. Also, they aren’t usually sold into, they are rarely asked their opinion, etc.
How to position within that market
Give them a voice. The same goes for any lower level positions as well by the way. When people are getting started in their careers they are looking to hear about the jobs people have even at the lower levels but the resources just aren’t there. Even for more senior roles, it’s hard to get a beat on what the current status is of their projects, people don’t like sharing - I still don’t know why.
We’re seeing communities around Sales popup SalesHacker, sales, Bravado etc. We don’t see as many for other roles, there is a wide open space in this. I don’t see any places for people to better understand customer support/success which is THE ONLY INBOUND TOUCHPOINT WITH CUSTOMERS POST SALE.
How to give yourself the biggest chance of success
This is part of the philosophy and psychology of understanding human dynamics. Find a persona that you can relate to immediately and build your product around fixing their problems, be obsessed with this.
They get paid nothing, but they’d like less tickets, how do you reduce that ticket count, how do you bring other parts of the business that they may need to have access to more prominently in your support system so they don’t have to have multiple windows open. How do you build something to maximize their efficiency?
Better yet, how do you tag someone in the CRM and flag it over to the sales system to see if they purchase more product as a result of a good interaction with support - this is how you turn a cost center into a revenue generator. This is a killer feature that I’m not aware of out of the box.
This could unlock a commission structure and reward system for what is arguably becoming a dealbreaker for most companies.
Which is a great segway to the next drill down - you should be starting to see how this all really blends together if done correctly.
LEVEL 8: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes.
How to niche down
They have to be looking to automate their process or improve their workflow. When people find a tech stack that works, oftentimes new technology doesn’t stick around very long, we’re all creatures of habit.
How to use this to target a market and recognize opportunity
You’re only looking for people that are talking about processes or a company that has something related to the pride they take with their process - you can check out BuiltWith and see a list of products they have tried over the last 18 months.
When a company is testing a bunch of different products it means they are looking for a better process. This is your sweet spot.
How to position within that market
You’ve seen me sprinkle “workflow” into this post. This is pretty much a preview of Part 3 and the importance of product design.
Your product must improve someone’s existing workflow. If it doesn’t it’s not a viable product.
There are two parts to this, does your product improve an existing workflow AND how easy can your product be inserted into that workflow?
Remember, this is their business and they need to make a transition as smoothly as possible with as little disruption as possible. This goes for any product you’re selling. Change is hard.
Understanding a company’s process really is everything.
If people aren’t looking to automate or improve their process, there’s a good chance you should change your approach immediately and work towards more of an education campaign and double down on what it would take to let people quickly switch over from an existing platform. Focus on reducing friction.
How to give yourself the biggest chance of success
Looking for people that are interested, not those we need to educate early on.
Data migration and implementation is one of the main reasons people don’t want to switch or entertain new products. There is always a fear of lost productivity.
Everyone is looking to automate right now, but the price has to be right, and that includes not the subscription amount, but the training, the migration, the new workflows, the time to adopt, the willingness to adopt, etc.
During almost any transition, the company will be paying for two systems at the same time during that handoff. This is rough, not enough companies actually address this in a meaningful way.
The argument is that a pure SaaS play doesn’t exist or shouldn’t exist for an early stage company, there should always be a service and consulting component. Hold everyone’s hand, understand their problems and make them feel like you’re building a product just for them.
Ok we’re almost there -
LEVEL 9: We’re a helpdesk product for eCommerce companies using Shopify and Shipstation that have less than 100 skus and do less than $10 million in annual revenue with support teams less than 5 people who are looking to automate their processes who are currently using Zendesk.
How to niche down
Let’s spearfish.
Zendesk - great platform - but has its limits that only show up based on workflows. Zendesk will work great until you have a workflow that incorporates other tools - then it starts to struggle.
This is true of most large legacy platforms. As legacy platforms moved up market to Enterprise for revenue reasons, they usually forget about smaller teams. Instead relying on dev house partners to do customizations.
This is where industry experience really comes into play - knowing the goals of a company or team, their workflows, and where you can create a better solution for those with those workflows for things that the legacy platforms prefer to source out to their dev house partners.
How to use this to target a market and recognize opportunity
Your calls can now go from generic to focused with questions that can hone in on workflows and gaps. For example, Zendesk’s UX/UI sucks for partner integrations, we’ve seen companies like Kustomer, Gorgias, and others become more popular because of a better UX/UI that supports the whole customer experience and journey. This is a fundamental switch in approach.
From one of our earlier research steps we found 87 companies that people were using for support with shopify, we have them in a spreadsheet, we then could take those and put all the competitors in builtwith to run some reports to understand market penetration (you can do this with number of reviews as well by the way if you’re lazy - don’t be lazy).
Download your list - populate your CRM - you now know what people are using, how long they’ve been using them.
Narrow down your list to the top 20 clients - yes only 20.
Even if you have 100 clients or a thousand clients at this point, this process works for every single Sales rep you have - and I’m going on a 95% chance none of them are doing this stuff. And if you tell me they are, I know from the amount of generic ass emails I get regularly spewed out to me they aren’t doing it well and I guarantee you money is being left on the table. (Topic for another day)
How to position within that market
You know what software they are using, you know their tech stack, your goal is to figure out their workflow. If you don’t know, ask. You should understand the general business workflows for the industry - again industry knowledge is required.
Engage them with conversation and find out. Base your questions on conversations you’ve had with other people in the space and be a source of information about how other people are doing it.
The above is completely able to be put into a human measurable process, one based on quality over quantity, relationships over transactions, and geared towards long term growth.
Be about the things that other platforms are not. Focus on changing the narrative from cost center to revenue generator.
The helpdesk for Shopify and Shipstation customers looking to streamline their processes and free up their support teams to become revenue generators in an organic and measurable fashion.
How to give yourself the biggest chance of success
It’s all about workflows, data, and automation.
Niche down, learn from the inside out, follow the trends and work on being able to tie back data to creating more revenue no matter what your product does and you’ll be able to start conversations with people actively looking to create more optimized workflows.
Focusing on a legacy product and small businesses usually allows you to find a sweet spot, they don’t find value in all the features because they won’t use them all. But they do want the more advanced features like automation and workflow help. These are usually cost prohibitive in the platform.
This is why you focus on workflow over features, you’ll never catch up with the big guys in terms of features, but there are always ways to compete on workflows, because everyone has their own independent goals around them. There aren’t standards, only best practices.
Side note - there are entire companies that are hired to implement systems like Zendesk and build integrations on top of it and it’s a market leader. The same goes for any market leader.
LEVEL 10ish: You can add location to the end of our narrowing down. A company physically local to you (at least this was the case prior to COVID-19) can allow for an in person visit which has been massive in building trust with early clients. Makes it easier to have a conversation as well.
That’s it. Go through this process, substitute your values, keep drilling down and recognize opportunity along the way. When you do it correctly you’ll see massive improvements for your initial outreach.
Emails go from:
We’re a new helpdesk company.
To:
We’re a new helpdesk company for customers that use Shopify and Shipstation. We help agile support teams that are looking to better automate their workflows. Our integrations also allows your support team’s interactions to be directly tied into future revenue generation.
___________
I can tell you from experience I’m visiting the url for the second email even if I’m not looking to make a change.
This is a good place to stop, we hit question 2 of 5 and we’re almost at the halfway point.
If you have more specific questions about this part just drop them in the comments and I'll respond to them.
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