Strong opposition by workers in state factories in Chongqing is preventing takeovers by private companies, despite strong support from the municipal government. The city, on the upper reaches of the Yangtze river and with a population of 30 million including rural residents, has thousands of money-losing state companies that the government is eager to dispose of. As of the end of May, private firms in the city had bought 180 state companies and leased or contracted more than 2,100, with assets amounting to more than 100 million yuan (about HK$93.06 million), the China Business Times reported yesterday. These included medium-size plants making woollen blankets, radios and synthetic fibres. Also up for sale was the 30-year-old Chongqing Steel Ball plant, which used to be a market leader but went bankrupt in January last year after running up debts of 76 million yuan in the previous six years. A private firm, the Kuayue Group, offered 62 million yuan for the plant but ran into strong opposition from its 900 employees who were fearful of working for a private firm. It took months of meeting with the workers and support from the municipal government, which agreed to take a share of the equity, before the takeover was complete. Kuayue cut the workforce to 300 and trimmed the management team, which has succeeded in turning the factory round and putting it into the black. A Kuayue official said that he could not have imagined how difficult it was to complete the takeover, comparing it to fighting a war. It marks the first time in Chongqing that a company has been jointly owned by a private firm and a state one. But other private companies were not so fortunate. The Longxin Group had to give up a takeover of a machinery plant after worker opposition and Huilida Electronics Group abandoned talks with several state firms and instead built a greenfield factory in a suburb. State workers dislike the private sector because it does not offer them the lifetime employment and health, pension and housing benefits they have been accustomed to. Many prefer to stay in a bankrupt state firm, believing the state will be forced to provide for them, rather than gamble on the private sector. The report quoted Chongqing Mayor Pu Haiqing saying that he strongly supported the takeover of state companies by healthy private firms, provided there was proper evaluation of their assets and the state did not lose out in the takeover. This was an important part of the economic recovery of this city, he said.