FOR as little as one yuan (about 93 HK cents), you could be the proud owner of an ex-state-owned enterprise in China's northeastern Liaoning province. Fifty companies are being sold, complete with debts and liabilities, by Shenyang government as a way of clearing the ailing state firms from its books. Companies whose value was assessed at nil or in the red are being put on the block for just one yuan in the hope of tempting either local or foreign investors into a deal. The bargain-basement sale is one of a series of measures being used to deal with bankrupt state firms across the country. In Beijing and Guangzhou, local governments put a number of state firms up for auction. In other provinces, management and workers have been encouraged to buy out their companies. A number of mergers are also being planned as a way of streamlining the state sector. In the Shenyang sale, Xinhua reported that buyers of the defunct firms would be eligible for breaks on settlements with employees, debts and taxes. The local government, which described the sale as 'unprecedentedly favourable', said buyers would not have to repay bank loans for at least two years and could expect other creditors to be flexible. Despite such sweeteners, interest from foreign companies has been limited. Cole Capener, a partner with Baker and Mackenzie specialising in mainland business, said he had been the only overseas representative at a state-run auction in Beijing last year. 'The interest of foreign investors has yet to be stimulated,' he said. He said auctions and sales were not the most attractive way for foreign investors to get involved. Those that were interested in developing in the mainland would research their market and select the company they wanted to invest in. Detailed information on the companies involved in the sales was hard to come by, he said, and it was not always clear what conditions would be imposed by the government. But interest is growing in the state sector. 'There has never been a greater opportunity to acquire state-owned enterprises that have good potential for the future,' Coopers and Lybrand partner Frank Lyn said. Others have also reported an increase in interest from buyers outside the mainland. Director at Price Waterhouse John Mitchell said there were a number of European firms looking into the purchase of state-owned enterprises. He said those with a firm, local market for their goods - such as a steel manufacturer - would be the best prospects. 'The hope is they can get something relatively cheap that has some form of infrastructure,' he said. 'Particularly if they have the customers and the way of getting the products to the customers.' But overseas investors were wary about being saddled with the problems of over-staffing and having to maintain commitments to former employees through pensions and retirement funds. In Shenyang, where the city's mayor estimated earlier this month that nearly 29 per cent of the local workforce had been laid off, the government is keen to see the workforce taken on with the business. Mr Mitchell said moves such as the recent one-yuan sales were often a way for the government to test the water on new privatisation methods. 'My feeling is that they have been run as pilots to see what the response would be,' Mr Mitchell said. While multinationals have been cautious about the prospects of the mainland's state sector, Mr Lyn reported that a number of Chinese nationals working in Hong Kong were eager to step in. Their knowledge of the mainland and its business practices gave them a better chance of assessing the value of the state-owned enterprises. 'There are a lot of very resourceful, very entrepreneurial people [in Hong Kong] who used to reside north of the border,' he said. 'They are the ones who understand how the system works.' He said their knowledge of the situation enabled them to judge quickly the value of a firm without the lengthy and costly procedures of due diligence. Once they had identified a suitable company, they then sought investors for the project. 'There's an opening there for more investment-banking type activities,' Mr Capener said.