BEIJING Legend has taken over the management of China Academy of Science computing institute, an indication that China has made a significant step to transform its moribund government entities into energetic enterprises. It is believed to be one of the first cases in China of allowing a government-level research institute to be run by an enterprise. After the power transfer, the institute will have the autonomy of operation and staff promotion similar to that enjoyed by an enterprise but will also have to bear its own profits and losses. However, it will not be able to dismiss staff. 'We are offering the staff a clay rice bowl with more fish and meat, in addition to the iron rice bowl,' said Liu Chuanzhi, chairman of Legend Holdings, the Hong Kong-listed offshoot of Beijing Legend. The importance of the power transfer is that it will encourage research institutes to merge with the market economy and lead to the greater commercialisation of scientific achievement. 'In the US and European countries, research units are usually supported by enterprises,' Mr Liu said. He said the research units served enterprises which would provide sales channels and even market information. However, Mr Liu, who is also a director of the institute, anticipated problems ahead. 'The major block will be to change the concept of the staff, as the institute has been established for almost 40 years.' The institute was formed in 1956 as China's first research institute on computer science. About 10 years ago, a group of scientists from the institute established Beijing Legend with 200,000 yuan (about HK$183,200) although the group cannot be counted as a private enterprise as it is still owned by the government. Mr Liu said the institute would focus on the 'Three Golden Projects', which called for the upgrading of information systems in the banking and financial sectors, the custom departments and between cities. Meanwhile, China's Ministry of Electronics Industry has identified five enterprises for special support. Besides Beijing Legend, the candidates include a cathode-ray tube maker in Sichuan, a television maker in Shaanxi, a broadcasting equipment maker in Shanghai and Hong Kong listing prospect Panda Electronics. Mr Liu said the ministry had proposed to the State Council a favourable procurement policy, encouraging government departments to buy locally-made electronics products. The ministry also suggested tariff cuts on imported electronic components. It is the ministry's aim to establish a national electronics industry to challenge the increasingly fierce competition from foreign manufacturers. Mr Liu said Legend Holdings would spend $100 million on three major expansion projects this year. The company will establish more printed circuit board (PCB) factories, co-operating with a Hong Kong company for research on chip sets.