Bo Xilai

Dalian fast-food venture leaves a bad taste

PUBLISHED : Monday, 12 July, 1993, 12:00am
UPDATED : Monday, 12 July, 1993, 12:00am

A BITTER property dispute has come to a head in the northeastern city of Dalian, where municipal workers have razed the premises of a Sino-US fast-food joint venture.

The American side of Dalian Western Food had for months resisted the city's order to vacate the two-storey building, claiming that under the terms of the joint-venture agreement signed in 1990, it was entitled to use that building for 20 years.

The American representative, Alan Cheng, left the premises last Wednesday only after being told that he was about to be forcibly removed, according to a source familiar with the case.

That same evening, the building was torn down.

Until its destruction, Dalian Western Food had been the sole remaining occupant of the 2,600 sq metre site in central Dalian.

More than 120 families and 28 enterprises in the vicinity already had been relocated to clear the ground for a Hongkong-backed, 38-storey office and apartment complex.

The fast-food joint venture, which began operating in June last year, and had employed more than 60 people, first received the relocation order last September.

By October, the confrontational tone had been set. While the American side took its grievances to officials at various levels of both governments, Dalian city officials cut off its electricity, gas and water.

Dalian Western Food, has claimed a conflict of interest because one of the three partners in the US$30 million skyscraper project is a subsidiary of the Dalian Housing Bureau, the same city government office which ordered the company to vacate.

An unspecified Hongkong company holds a 40 per cent stake in the new development.

After complaining to the US embassy in Beijing, the Chinese embassy in Washington, Dalian mayor Bo Xilai, and several US congressmen, Dalian Western Food succeeded in little more than having its utilities restored.

The Dalian Housing Bureau could not be reached for comment on the dispute. An official at the commercial interests section of the US embassy said he was familiar with the case but declined to discuss it.

Negotiations then began over the amount of compensation to be paid to Dalian Western Food for its forced relocation, with the American side asking as much as US$2 million and Dalian offering two million yuan (officially HK$2.69 million).

With those negotiations still underway, the Tianlun Building company, builders of the office tower, filed a civil suit against Dalian Western Food for ''long-term, unreasonable refusal to move'', claiming 1.16 million yuan in damages.

On July 1, the civil court notified Dalian Western Food that its accounts were to be sealed, and that the building had to be vacated within five days.

Separate court proceedings are due to begin this week to determine the final compensation.

The ill-fated joint venture faces other outstanding disputes but, according to the informed source, it is the American side's view that these are completely separate and have had no bearing on the relocation row.

One issue concerns the American side's failure to provide its 90 per cent share of the $800,000 in registered capital as specified in the original joint-venture agreement.

Another is Dalian Western Food's failure to pay a 400,000 yuan land-use fee for its premises.

Given the present state of the joint venture, and of those premises, it would appear unlikely that either of those sums will be paid in the near future.