Shanghai trims number of money-losing state firms

Shanghai trims number of money-losing state firms

SHANGHAI (Reuter): Shanghai has slashed by more than one-half the number of money-losing state enterprises in the space of a single year, according to Deputy-Mayor Jiang Yiren.

Only 146 state enterprises are now in trouble, the official Xinhua news agency on Saturday quoted him as saying.

This compares with 332 at the start of last year, which then represented 35.5 percent of all state-run enterprises in China's biggest industrial center, Jiang said. The bulk of those were small-scale operations.

According to Jiang's figures, Shanghai industry has achieved a remarkable turnaround at a time when state enterprises all over China are struggling to survive a credit crunch imposed by Beijing.

Official reports say more than two-thirds of state enterprises suffer losses.

It was not immediately clear why Shanghai should be so much more successful than other cities.

However, Jiang said one way of dealing with weak enterprises was through mergers, which would reduce the number of money- losing companies without necessarily tackling the root problems.

Other methods included dividing deadbeat enterprises into smaller management units, inviting foreign investment, implementing shareholding systems, transferring surplus labor to service industries and bankruptcy.

Fifteen enterprises filed for bankruptcy in 1994, according to Jiang.

One notable success was the Shanghai Camera Factory, which set up four joint ventures last year and developed new product lines to record a 100 million yuan (US$11.8 million) sales jump for the year and put it into the black, Jiang said.

The No. 2 Cotton Textile Factory took advantage of its downtown location and branched into real estate and trading and used profits to upgrade its technology.