NORTHERN China's Heilongjiang province has launched a two-year programme to privatise nearly 3,000 small state-owned industrial enterprises as part of efforts to rejuvenate the ageing industrial base. Yang Weiling, vice-director of the Heilongjiang Commission for Restructuring the Economic System, said the provincial government had decided to carry out major reform. This bold move will result in a change of ownership of 2,942 small industrial enterprises in the province. Heilongjiang has been China's traditional heavy industrial base for decades, but the state-owned sector has become a burden for the northern province in the past decade. Reform in large enterprises has been slow because many are directly controlled by central government ministries. In additional, many large concerns are in sensitive industries, making it difficult for the provincial government to take any initiative to improve performance. As a result, Heilongjiang has opted to first tackle small enterprises run by the the local authorities. Typical small enterprises employ 400 to 500 people and have fixed assets of about seven million yuan (about HK$6.2 million) to eight million yuan. Ms Yang said some small enterprises could be turned into joint stock companies owned by the employees, who would elect senior executives to run the business. Others could be leased to investors with full autonomy to run the enterprises at a profit. In return the investor would hand over a mutually agreed amount of money to the government every year. ''These small enterprises which are leased will also be sold ultimately,'' said Ms Yang. Another method of reforming small enterprises is to sell them directly to interested investors from abroad or other provinces in China. ''By the end of 1995, the government will completely withdraw from its role in small enterprises,'' Ms Yang said. ''We offer very attractive terms to all interested parties. In addition, Heilongjiang is a raw materials supply base, we have plenty of land and labour costs are low,'' she said. ''I believe that after a new management mechanism is established, profitability should be very good. For example, many food products such as biscuits come from the south. But we can source wheat here to produce biscuits for the domestic market,'' she added. Ms Yang said the money raised from privatisation of small enterprises would be used to fund the reform of large enterprises.
