A subsidiary of Hong Kong-listed Beijing Enterprises Holdings has paid US$9.9 million for a 50 per cent stake in McDonald's Guangzhou operations. Beijing Sanyuan Food Products bought the stake previously held by bankrupt Guangdong International Trust and Investment Corp (Gitic). The deal was formally approved by Gitic's liquidation committee and Guangdong's Economic and Trade Committee after 10 months of negotiations. 'The price is reasonable and will pay back all of Gitic's investment [in its joint venture with McDonald's],' said liquidation committee vice-chairman Yang Qingshan, who pointed out the sale had been approved by Gitic's creditors. McDonald's regional manager for southern China Eric Foo welcomed the deal. Yet when asked if McDonald's would not have preferred a local partner more familiar with the Guangzhou market than Beijing-based Sanyuan, he said the company did not have the final say about who stepped in for its bankrupt joint-venture partner. 'The decision to a large extent was a decision for the liquidation committee in terms of the price and other conditions,' Mr Foo said. 'The way we run our business in China is based on government requirements.' In the wake of Gitic's bankruptcy it was reported that McDonald's was interested in buying out the stake itself. But Beijing Sanyuan is by no means a stranger. It was McDonald's first joint-venture partner in China. In 1990, the two companies formed Beijing Sanyuan McDonald's Food Products to operate the fast-food giant's operations in Beijing. 'The venture was profitable in its third year of operations and has already recouped its original investment,' Beijing Sanyuan's chairman Xing Chunhua said. 'Beijing McDonald's reached profitability with 30 stores and today operates 70. In Guangzhou, there are already 40 McDonald's outlets, so there is no reason why the Guangzhou joint venture cannot be profitable as well,' he said. Mr Foo said Gitic's bankruptcy had not materially affected the operations of McDonald's Guangzhou outlets. 'As far as the business goes, the equity structure of the joint venture does not really affect the way we run our business in the short term,' he said. In October, Gitic's liquidation committee raised 114 million yuan (about HK$106.78 million) by auctioning off its stakes in Guangdong Power, Wanjiale Electrical Appliances and Xingfu Enterprises. A month later Gitic's creditors received their first debt payment.