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SCMP Reporter

Hong Kong companies have entered into negotiations to buy 32 failing state-owned enterprises based in Guangzhou.

 The discussions follow a state assets fair organised last month by the Hong Kong Trade Development Council (HKTDC) and the Guangzhou Municipal Government designed to introduce SAR firms to small and medium-sized enterprises in need of restructuring.

 'This is obviously a very successful effort,' said Kitty Tam, director for the HKTDC's Guangzhou office.

 'Discussions for almost one-third of the companies brought forward are progressing.

 'They are viable companies,' Ms Tam said.

  Ms Tam said the council, together with the Guangzhou municipality, had vetted the state firms to ensure their value.

 'Many continue to manufacture, while others possess important raw material sources and distribution networks,' she said.

 Any SAR companies purchasing state assets would retain the right to licences, brand names, trademarks, land, capital and raw materials, Ms Tam said.

 Difficult issues such as valuing state assets and laying off state workers are being negotiated.

 They include flexibility in determining the asset values as well as the factoring in of losses and debts during asset valuation procedures.

 Potential buyers are not obliged to retain staff, although firms would be encouraged to employ or resettle workers in return for municipal tax concessions.

 Of the 32 companies, nine are involved in food production and distribution and a further nine are engaged in the manufacture of textiles. Light industrial, electronics and rubber producers are also on the sales block.



SAR companies in talks on purchase of ailing state firms