Sixteen private enterprises in Wenzhou have banded together to create two large investment firms In an attempt to break the constraints of family-managed businesses, 16 big private companies in Wenzhou have established two large investment conglomerates that plan to invest billions of yuan in domestic and foreign markets. The two conglomerates could break the management mould of family-run businesses in Wenzhou, a city in Zhejiang province and the unofficial capital of private enterprise in China. Wenzhou family firms often control vast assets but break down when the scale of operations expands beyond their founders' ability to manage them. The bigger of the two new conglomerates is Zhong Rui Group, set up with registered capital of 55.8 million yuan by nine family firms. Each company holds one-ninth of Zhong Rui's capital and the chairman of each sits on its board. It will have about 10 billion yuan to invest in finance, industry, trade and property. The second conglomerate is Zhong Chi Group, with shareholding from seven private companies. Zhong Rui chief executive Yang Xinquan, formerly a senior manager with a Wuhan power company, was hired after a nationwide recruitment drive that attracted 40,000 applicants. The position pays an annual salary of 500,000 yuan plus bonuses and includes a Mercedes. The new company will invest in commerce, industry and eventually banks and financial instruments as the capital markets open to private enterprise. Zhong Rui will source its funds from its own investors, outside private capital and choose projects initially within China and later overseas. Its first two investment projects are expected to be a new power station in Wenzhou and an expansion of the city's airport. The nine founding investors are private firms specialising in property, shoes, garments, spectacles, electronics, leather, pharmaceuticals, precision machinery and police equipment. 'Such a joint company is a way to concentrate capital and enable our companies to enter capital-intensive sectors,' said Ma Jinlong, director of the Wenzhou Economists Association. But sceptics wonder about the effectiveness of a group owned by nine independent-minded individuals accustomed to running their businesses like a private empire. One aim of the two groups is to make better use of Wenzhou's estimated 20 billion yuan in private capital. Some of that has gone into buying real estate in cities all over China, in property tours organised by the city's newspapers. The newspapers have this year cancelled the property tours because of the government's attempt to cool the overheated economy and criticism from citizens of the targeted cities who complain that they have inflated property prices and made it harder for local people to buy.