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Mark O'Neill

Interested in buying a woollen textile mill in the Shanxi city of Taiyuan for 50 million yuan (about HK$46.53 million), or even less if you hire some of the workers?  Or a paper mill in the same city which comes with 47 hectares of land?  These concerns are just two of seven companies looking for a buyer, with the Beijing Economic Development & Investment Co, part of the state-owned Capital Group (Beijing Shoudu Chuangye Jituan), acting as middleman.

 General manager Ma Li is not too optimistic.

 There were many sellers and not enough buyers, Ms Ma said.

 'I fear the companies are too small to interest foreign conglomerates,' she said.

 'If we can get enough interested parties, we will auction the seven.'  It has become a buyer's market since the Communist Party's 15th Congress in September gave the green light to the sell-off of state companies by removing the last ideological obstacles.

 Thousands of state and collective companies are up for sale.

 Several cities had already set up Asset Trading Exchanges to buy and sell such companies, with those in Shanghai and Chengdu the most active.

  Beijing set up such an exchange at the end of 1996 but turnover has been slow.

 The transfer and sale of state assets, with all the social and political implications, remains a sensitive issue for many bureaucrats in Beijing as the country's political centre.

 The seven firms Ms Ma is offering, the two in Taiyuan and five in Beijing, have all stopped production.

 The paper mill stopped in 1995 because it could no longer support its 2,000 active and retired workers, despite having equipment able to produce paper of currency quality.

 The woollen mill could no longer compete in one of the country's most overcrowded sectors.

 Ms Ma said the buyer would have no responsibility for the workforce of any of the seven plants.

 The local governments would look after them, using some of the money from the sales, she said.

 The price would be cheaper the more workers the buyer decided to take on, she said.

 Buying such assets could be the cheapest way into the mainland market, more cost effective than setting up a joint venture with an existing firm, she said.

 The five offered concerns in Beijing are: a car plant; a food company; a chicken farm; a diesel engine components factory; and the office building and warehouse of a grain company.

 The government is encouraging bankruptcies as well as mergers and acquisitions to dispose of non-profitable state assets.

 In the first nine months of last year, in 111 experimental cities, 389 firms were declared bankrupt with assets of 14.8 billion yuan, while 623 firms were merged with assets of 49.9 billion yuan, official figures showed.

 These closures, however, involved the laying off of about 1.13 million workers.

 The sell-off is plagued by malpractices, especially by senior officials of these firms who use the opportunities to enrich themselves at the expense of the state, by selling off the assets or land too cheaply and shifting the assets to new companies which they control.



Closed firms up for grabs