Shenyang woos foreigners to manage firms

Stephen E Philion philion at hawaii.edu
Mon Sep 27 16:47:11 PDT 1999


South China Morning Post - China

Monday, September 27, 1999

Shenyang woos foreigners to manage firms

New life: Mayor Mu Suixin

JOSEPHINE MA

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Shenyang is prepared to hand over the management of its state-owned

enterprises to private and foreign investors in order to save the

ailing sector, said Mayor Mu Suixin.

The northeast industrial city, capital of Liaoning province, was also

seeking foreign help to inject new life into its state firms, said Mr

Mu.

A team of British consultants had visited Shenyang to determine ways

of allowing foreign companies to take over management of the city's

state-owned enterprises and turn them around, he said.

A British Department for International Development team had also been

assessing ways to allow foreign enterprises to manage state assets.

"We are also working with a British company on how to transfer our

state assets and their management to investors on the international

market," said Mr Wu.

The mayor said the municipal Government would continue to own 126

large state-owned enterprises in Shenyang but the rest would be handed

over to the market.

He stressed the handover was different to privatisation - a taboo

subject on the mainland - saying the companies were not sold to

private individuals but corporations.

Nevertheless, Mr Mu admitted that past efforts by the Government to

save state sectors had not been successful. A turnaround had to be

built from the ground up, not just by injecting funds into bankrupt

companies.

"Rescuing state enterprises alone cannot revive the state sector," he

said.

"We have tried this before and it did not work out well. We have to

restructure the sector strategically."

Shenyang had already handed over management of dozens of small- and

medium-sized state-owned enterprises last year to private firms, but

Mr Mu would not give a specific figure.

He said the city Government would inject more assets into the Shenyang

Special Environment Protection Equipment Co - which is to be listed on

the New York stock market - and seek the public listing of some of its

high-technology companies in Hong Kong to raise funds.

But even with such moves, Mr Mu said about 20 per cent of Shenyang's

state-owned firms would still be unprofitable by the end of next year,

missing a three-year turnaround deadline set by Premier Zhu Rongji in

1997.

But Mr Mu would not concede failure, insisting that Shenyang had

largely fulfilled the task set by Premier Zhu.

Despite frequent overseas reports of industrial unrest, Mr Mu said

Shenyang, which has a population of 6.9 million, had only about

400,000 unemployed workers. The city was stable, he said.

"There is no instability in the city and there is no protest on the

streets," he said.

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