The local government wants international investors for 24 major State-owned enterprises (SOEs), a radical act to boost the economy in Shenyang, this central industrial city of northeastern China.

The SOEs on the list form the backbone of the city's industry, including the Shenyang Machine Tool Group (SMTL), the Northeast General Pharmaceutical Factory (NEGPF) and the Shenyang City Commercial Bank.

The total assets of these 24 enterprises amounts to 79.23 billion yuan (US$9.58 billion).

"Our aim is to channel in strategic investors and reform State-owned enterprises," said Liu Yongsheng, director of the Shenyang State-owned Assets Supervision and Administration Commission.

International companies are expected to bring a breath of fresh air to SOEs hungry for advanced technology and management. Moreover, they will dilute possible operational risks, according to Liu.

Local government will sell the firms for different prices according to the business.

The local government hopes funds and know-how from abroad can update the rigid management structure and improve on poor profitability.

It is the first time such a large-scale SOE reform has happened in Liaoning and even in China, said Li Xiangping, a researcher from the local Liaoning Social Science Academy.

Most of the SOEs restructured in the past 10 years were small and medium-size enterprises.

Liaoning Province is taking other measures too, to reform ill-performing SOEs. Early last month, the provincial government issued a regulation encouraging all SOEs to cooperate with investors at home and abroad, except big coal mines.

State-owned enterprises make up a large part of the local economy, Liaoning State-owned Assets Supervision and Administration Commission.

Shi Yanling, a senior information officer from the Northeast General Pharmaceutical Factory (NEGPF) said it has formed a team to direct and prepare reforms.

"Even though our income is not so bad in recent years, we still sense the pressure while facing domestic and foreign competitors. We can hardly survive in the future without reform and integration into the international market," said Shi.

Shi was backed by researcher Li Xiangping, who said to get involved with the international market is an unavoidable step for SOEs.

"They can choose to go out and grow into international companies. Or they will be defined in the local market and strangled to death in the end," said Li.

(China Daily July 19, 2005)