The main reason for the low profits of Chinese enterprises?

What is enterprise profit: enterprise profit is the financial results of production and operation of the enterprise in a certain period of time, including operating profit, investment income and net non-operating income and expenditure. It is a general term for industrial profit and business profit in the presence of interest, which is quantitatively the difference between average profit and interest.

1. The balance of the average profit made by the operation of functional capital using borrowed capital, after deduction of interest, is called the business profit;

2. The business profit is a part of the average profit, and is a special transformed form of surplus-value;

3. On the surface of the society, the business profit is the remuneration for the labor of the functional capitalist, and the interest is produced by the capital itself.

The operating profit of an enterprise is the amount of operating income minus operating costs and expenses (including production costs, administrative expenses, selling expenses and financial expenses), minus the amount of tax payable on operating income. Enterprise after-tax profit is generally distributed in the following order: first, to make up for the enterprise's losses in previous years; second, to withdraw the legal surplus reserve; third, to withdraw public welfare; fourth, to distribute profits to owners.　Factors affecting corporate profits are mainly four:

Product prices

Product unit cost

Product sales volume

Product fixed costs

The change of any one of these factors will cause changes in corporate profits, and even make a business from profit to loss, but also make a business to turn around the loss to profit. So, how to know the key factors affecting corporate profits? Enterprise decision makers how to make the right decision in the fierce changes in the external environment, with the help of sensitivity analysis, business managers can have a clear understanding of such issues. The relationship between economic efficiency and corporate profit: economic efficiency is the proportionate relationship between the enterprise's gross domestic product and the cost of production, expressed by the formula:

Economic efficiency = gross domestic product / cost of production

Corporate profit is the difference between the gross domestic product and the cost of production, expressed by the formula:

Profit = gross domestic product - cost of production

Corporate profit of the Increase (or decrease) whether it means an increase (or decrease) in the economic efficiency of enterprises, must be specifically analyzed:

(1), in the case of production costs (i.e., the consumption of resources in the production process) remains unchanged, an increase (decrease) in profits means an increase in the economic efficiency of enterprises, and the magnitude of the increase in the two (decrease) is the same.

(2), if the total amount of profit remains unchanged, the cost of production increases (decreases) means that the economic efficiency is reduced (or increased) the rate of decrease (increase) is the same.

(3), if the cost and profit increase (decrease) in the same magnitude, the economic efficiency remains unchanged.

(4), the increase (or decrease) in costs exceeds the increase in profits, then the economic efficiency is reduced (increased).

It can be seen that the increase (decrease) in profits of an enterprise cannot be simply equated with the increase (decrease) in the economic efficiency of the enterprise. Main Sources of Profits of Socialist Enterprises: There are three main sources of profits of socialist enterprises: effective macro-management, micro-management of enterprises, and technological factors.

One, effective macro-management, means that the government, through adequate investigation and research, formulates reasonable policies for social and economic development, gives enterprises reasonable space for development, and guides them to develop on a reasonable and legal track to create profits.

A socialist country is bound to have macro-management, which is not for the minority, but for the majority; not for the short-term interests of the minority, but for the long-term interests of the majority. Such macro-management is bound to have a concrete impact on the development orientation, development momentum and development results of enterprises. Macro management is the specific performance of the state introduced a variety of policies. The real enterprise, is very concerned about the policy dynamics. Policy dynamics on enterprise development has a direct effect, influence. This force is the external power of the enterprise, which in turn plays a role in the production activities of the enterprise, and into the enterprise to create value and profit, in the socialist countries, although the policy is not directly involved in the management of the enterprise, but, that is only a form. In a truly socialist country, policy and enterprise are one and the same, in general their interests are the same, they are the same body of interests ****, especially the policies formulated by the government to serve the enterprise is the basic requirement of the socialist country. Government policy from the outside to enhance the effectiveness of enterprise development, reduce the enterprise unnecessary management costs and even losses. Government workers as the enterprise's macro manager, their labor through the enterprise to impose effective macro management, the value of their labor added to the enterprise's value creation activities. The value created by the labor of government workers needs to be partially reflected in the value created by the enterprise. Effective macroeconomic management will only result in the effective development of most firms, so that most firms will profit from the market. So that profit has the value of the labor of the macro managers transformed, with their contribution.

Two, effective micro-management, that is, the management imposed by business managers on the enterprise. It includes two aspects of the situation, one is the management labor of the enterprise managers, and the second is the contribution of non-management positions of the workers for the management of the enterprise. Both aspects of labor are to be added to the value creation process of the enterprise, and both are to be transformed into the value created by the enterprise and expressed through the profits created by the enterprise. In the enterprise management work, in the management position of the managers of the enterprise management is obvious, and non-management positions of ordinary workers for the enterprise to contribute to the management of the value but often do not pay attention to and recognize, this is a major mistake in economic theory. From the reality, there is no excellent enterprise is completely by the manager alone to contribute to the management of labor and value, but must be all occupations involved in enterprise management, so that all workers for the development of the enterprise to contribute to the management of wisdom and knowledge, to contribute to the rationalization of their proposals. Haier every year to all workers to collect enterprise development proposals, these proposals are knowledge and wisdom, is able to join the process of creating value in the enterprise, is able to transform into the value of enterprise creation.

Third, the technology factor. Certain advanced technology can improve the productivity of the enterprise, for the enterprise to strive for more priority development opportunities. For example, when the enterprise production of products in the market cycle in the upturn, the enterprise can not change other production conditions, through technological transformation, improve the technical level of production equipment to improve production efficiency, so that the production equipment in the unit of time to produce more products to, through the expansion of production to expand the market share, thus increasing the profitability of the enterprise. This increase in profits has the value of the technology contained in the transformation into factors.