THE Zhongshan municipal government is seeking a Hong Kong listing for its flagship enterprise, Weili Washing Machine Factory, through a deal with Guangdong Enterprises. If successful, the arrangement will open a new channel for local government-owned enterprises to circumvent the normal procedure, which is tightly controlled by the country's securities watchdog. Weili Washing Machine makes more than 1.5 million washing machines a year and is the largest producer in China, making a sixth of the country's output, and supplies a quarter of the domestic market, officials say. The factory, owned by Zhongshan Weili Group Corp, was sold to Guangdong Enterprises, a Hong Kong-listed company, in December last year. It is now wholly owned by Guangdong Enterprises through Zhongshan Investment. But when the deal was signed, there was an understanding between the two parties that the Zhongshan municipal government could regain control of the factory when it was listed on the exchange. The plant and equipment was valued at 20 million yuan (about HK$27 million at the official rate) last year and sold to Guangdong Enterprises for 120 million yuan. ''This is like using Guangdong Enterprises as a boat to float the factory, because the stock exchange requires that all new listings must have three years of operation history,'' said a senior Zhongshan official. The official said that, under the understanding, Zhongshan Investment would seek a separate listing in Hong Kong next year, and at the same time the Zhongshan municipal government would buy a controlling stake in Zhongshan Investment. The difference between the price paid by Guangdong Enterprises and the offer price from Zhongshan Investment would be equally shared between the Zhongshan municipal government and Guangdong Enterprises. If the separate listing was successful, Zhongshan Weili Group Corp, the parent of Weili Washing Machine Factory, would inject other profitable businesses into the listed vehicle. Zhongshan Weili Group started making washing machines in 1980. Three production lines produce nearly 6,000 units a day, and inventory was kept at a minimum level of three days' supply, officials said. Most of the machines were sold domestically, with a few being sold to Southeast Asia and the Middle East. Factory deputy general manager Liang Ruqian said commercial establishments throughout the country had registered an initial interest in buying 2.6 million units next year. But the orders were not final and the factory believed 1.6 million units would be sufficient to meet demand. A new production line would become operational next year to produce automatic, large volume machines. Zhongshan Weili Group also has factories specialising in the production of air conditioners and fishing equipment. Mr Liang said all 400,000 air conditioners produced this year had been sold. Group sales are expected to reach 1.2 billion yuan this year and profit after tax about 60 million yuan, based on a 33 per cent corporate tax rate. Zhongshan municipality communist party secretary Xie Miongren said foreign companies were welcome to buy Zhongshan's enterprises. He said a foreign dairy product giant was interested in buying into an ice cream maker, and a French consortium had signed a memorandum of understanding to buy a stake in a printing firm which specialised in packaging products.