Shanghai has set up a fast-track service that should make it easier for foreign investors to acquire local state-owned enterprises.
Rather than wading through layers of government bureaucracy, would-be purchasers can now complete their deals under a joint program established this week by the Shanghai Foreign Investment Development Board and the Shanghai Asset and Equity Exchange.
Liu Jinping, deputy chief of the Foreign Investment Commission, which oversees the board, said the service is targeted to speeding up the acquisition process by at least one third.
More important, encouraging foreign investors to take over the stakes held by the state is an effective way to implement the government's plan to extricate itself from unprofitable and outdated industrial enterprises, noted Zhang Hailong, president of the Shanghai Asset and Equity Exchange.
City government made a policy decision to begin selling these stakes when it set this year's target to bring in US$5 billion in foreign investment.
"Because it's cheaper for foreign firms to acquire an existing manufacturing base than establish a new one, selling state stakes is an easier way to draw foreign investment," said Yan Hailong, office director at Shanghai Industrial Investment Group, a government-backed organization involved in restructuring state-owned companies.
The hot sectors for potential outside investment include electronics, chemicals and machinery, say industry analysts.
Among them, two state-owned information technology firms with lackluster earnings, Shanghai Donghai Computer Co Ltd and Shanghai SVA Computer, are reported to be shopping for suitors.
Though the two agencies involved in the new service declined to disclose the deals they're working on, analysts said the effort signals that Shanghai is taking a leading role among China's cities in facilitating domestic acquisitions by foreign companies.
The main job of the two agencies, semi-independent but receiving financial backing from government, is to provide potential investors with a speedy process for completing feasibility studies and business application procedures.
The Shanghai Foreign Investment Development Board serves as a gateway to the city for overseas investors, and the exchange is a sort of clearing house through which deals can be struck.
Both agencies, in fact, are viewed as matchmakers.
"We are responsible for pulling the strings on behalf of government," said Zong Yuyan, head of the investment board's administrative division.
The board was set up in 1999 to help Shanghai attract foreign investment. All acquisition deals between state-controlled and overseas companies must be conducted under the supervision of the asset exchange.
(Eastday 04/28/2001)
