Sichuan Changhong Electric, a major mainland colour television manufacturer, is pushing for a management buyout but government officials are dragging their feet, according to local media. Senior management of the company have been trying to reduce the state's share from 53 per cent to about 20 per cent in a bid to strengthen competitiveness in the hotly contested market, the 21st Century Business Herald said. The newspaper, which has earned a reputation for solid business reporting, said that government officials had responded to management proposals with a counter plan to give stock options to senior managers. It did not say how much control managers might gain under the government plan. 'Such ideas are being considered,' said Liu Haizhong, a company official speaking from corporate headquarters in Mianyang, Sichuan province. 'But so far no action has been taken. The government's intentions are the key to this,' he said. Mr Liu declined to elaborate. Analysts said opposition was likely from Beijing and that recently aborted plans to sell off state shares could be a factor. 'The opposition could be tied to the state share sell-off plan,' said Qian Jun, an analyst at United Securities in Shanghai. China has halted a plan to sell down state shares as part of a strategy to calm investors. If Changhong's managers bought company shares from the state, the shares would not necessarily be listed immediately. However, any share sale could create fresh fears the government was getting ready to unload. The company, which has listed arms in Shanghai and Hong Kong, has been trying to diversify its production. It has moved into batteries, audio-visual equipment, air conditioners, computer networking equipment, video cameras and satellite receivers for televisions. It has been investing heavily in Guangdong, where it is expecting to start production next year of big-screen televisions. The investment has sparked rumours that Changhong wants to abandon the hinterland headquarters in favour of the more accessible south. 'We will not be moving our headquarters,' said the company official. The firm hopes to produce five million televisions annually in Guangdong starting next year, which will boost its total yearly output to 17 million sets. It has been struggling with profitability, however, due to the sharp downturn in colour television prices. Last year, the listed company reported a profit of 88 million yuan (about HK$82.45 million), down 23 per cent from a year ago. But without extraordinary gains it would have been in the red last year. Analysts said that the Mianyang government probably would be more supportive of the buyout plan than Beijing. 'The local government will probably allow this,' said Mr Qian. 'The company's problems stem from the fact that it is a state-run enterprise. I don't think that the local government will stand in its way.'