Wenzhou Gov't Moves to Quell Protest Over Company Losses
(Wenzhou) – The Wenzhou municipal government stopped a massive protest involving thousands of investors at Center Group, a major manufacturing company, at the company headquarters September 21.
Local officials announced later on the same day that an investigation would be launched into financial misconduct at the company.
On September 21, the chairman of Center Group, Hu Fulin, told senior management in a phone call that the company was on the verge of bankruptcy.
Both investors and the company's management team have been unable to reach Hu since September 20.
The incident sent huge shockwaves among local business communities, many of which say they are weighed down by increasing credit restrictions issued by the central government.
Center Group had long been held as a model company by the local government. Its subsidiary, the glasses manufacturer Center Optical Co. alone contributed nearly 12 million yuan to municipal tax revenues in 2010.
Like many small-and medium-sized enterprises in the city and across the country, Center Group has turned to private lending for capital as banks rein in loans under increasingly stringent monetary policies.
Sources close to matter say the company has 1.3 billion in yuan in outstanding loans. Authorities, on the other hand, have yet to verify the exact amount.
"The government's job right now is to maintain regular operations and prevent a chain reaction," said Xie Jianmin, vice secretary of the Management Committee of Wenzhou's Ouhai Economic Development Zone.
- MOST POPULAR