A statue of a Crusader, with sword, shield and a big European nose, guards a courtyard of buildings with mock Greek columns and medieval crests, in southwest Beijing. This used to be a toy factory but has become one of the properties of Million Land House, which took over the plant in June, in the first purchase of a state company by a private firm in Beijing. A production line cranking out steel soldiers and battleships has been replaced by an office building, a branch of the Industrial and Commercial Bank, fast-food shops and a restaurant selling Korean-style roast beef with a 40 per cent reduction to celebrate Macau's return. In the southern mainland, private firms have been taking over state outfits for more than 10 years, even if the purchaser has sometimes disguised itself to avoid questions about the 'loss' of state assets. In conservative Beijing, under the nose of thousands of inquisitive officials, Million Land House's takeover was the first such deal and remains the only one. Its main business is real estate and it also operates a hamburger chain. 'We underestimated the challenge and difficulty,' said Chen Zhenbai, chief assistant to the company's chief executive. 'We knew the factory had few assets other than its land. 'We planned to keep it going, but discovered that there is almost no market for its toys made of iron. This is because it is illegal to sell them as toys as they are not safe for children. Only collectors buy them. 'Its record annual turnover was only four million yuan [about HK$3.7 million] and this year it will be two million. So we decided to stop the production and are looking for new products.' What Million Land House bought was a typical medium-size state firm, or what local people call the 'three olds - old workers, old technology and old equipment'. Ju You Industrial was set up in 1956 to make toys out of iron. By the time of the takeover, it had 510 retired workers and 320 active ones, 130 of them laid off, with 70 per cent of them women and an average age of over 40. It had five factory sites, totalling 13,000 square metres. It was in desperate financial condition - it had not paid the medical bills of its workers for eight years, was in arrears with wages and pensions and had debts whose servicing costs at least five million yuan a year. Million Land House inherited these liabilities, which will oblige it to pay a total of 100 million yuan over the next 20 years. It has also had to spend 30 million yuan to clean up the mess left in the five sites, to make them usable for its own fast-food business or as space that could be rented out for office or commercial use. Its best asset is the land - but Million Land House has bought only the right to use it, with the ownership remaining with the state. If sold, most of the profit would go in a land-transfer tax. It gave the 830 workers what is in today's mainland a very generous offer. It took over their pension and medical liabilities and offered the active workers the choice of a job, paying at least the Beijing average wage of 1,025 yuan a month, or 400 yuan a month allowance if they chose to stay at home. Workers of other state firms that close receive between nothing and a lump sum based on their years of service and must live on this for the rest of their lives. One Beijing man who worked for 27 years in an electronics firm, for example, was given 45,000 yuan, out of which he has to buy his own medical insurance and pension. Mr Chen said the offer, with terms better than for their existing staff, was made out of political as well as economic considerations. 'Since it was the first takeover in Beijing, it would negatively affect future ones if there were a problem. But the staff from the state plant work very enthusiastically, probably because they were bored after being idle for so long and are happy to have a job to do,' he said. The Crusader site is all rented out, which will enable the firm to get back its 30 million yuan investment within a few years. It is near Beijing's new west station and on a main road in the Xuanwu district, once one of the poorest in Beijing but now moving up-market. 'We have no regrets,' Mr Chen said.