Shanghai Coline Cocoa Products will be auctioned by liquidators next week, making it the first wholly foreign-owned company to publicly go under the hammer in China. The auction is expected to draw keen interest, with a growing number of chocolate makers eager to expand into China's vast market following its entry to the World Trade Organisation. Shanghai Coline went into liquidation because of inefficient management and its failure to repay creditors' loans, mainland media quoted officials in charge of the liquidation as saying. Shanghai Coline was formed in 1993 by a joint venture between a Malaysian-owned chocolate firm and a mainland company based in Shanghai Jinshan county. Registered capital at the time was US$24 million. However, the chocolate maker was sold to a Hong Kong-based company in 1996, making it a wholly foreign-owned company, according to Shanghai-based eastday.com. Under foreign ownership, Shanghai Coline became a major chocolate maker in China producing the quality chocolate brands 'Coline' and 'Cemoi'. In October last year, Shanghai's Jinshan District Court announced that Shanghai Coline had been declared bankrupt after failing to repay creditors' loans. More than 300 million yuan (about HK$283.5 million) of assets would be sold next Thursday, the mainland Web site quoted Lin Yiping, spokesman for Shanghai Auction Corp as saying. The assets include a site covering 76,371 square metres, several houses of 34,000 sq metres, a production line for coca beans, two chocolate production lines and other facilities. Mr Lin said: 'The entire factory seems clean and new. It looks as if it's well ready for production.' However, the new factory was one of the reasons for the company's failure as the company had surplus production facilities, eastday.com quoted Mr Lin as saying. The liquidation group comprises the Bank of China, the German Commerzbank and a number of Chinese suppliers, according to AFP. The auction was open to eligible domestic and foreign enterprises and Mr Li said he expected to see a successful event. A number of enterprises in China and abroad have expressed initial interests, according to Government officials. China's first bankruptcy law mainly targeted at domestic firms was passed more than a decade ago. But the Government has kept a lid on the number of firms forced out of business, partly to ensure social stability. Following its accession to the WTO, China is working out a new bankruptcy law for foreign-invested companies and private firms as well as state-owned enterprises.
