China Huarong Acquires Guangxi Bearing
Resource from: CBCC Likes:3010
Oct 24,2005
State-owned Guangxi Bearing Factory (China) has been acquired by a state-run financial bailout institution, China Huarong Asset Management Corporation (CHAMC, China). The equivalent of a state-sponsored bankruptcy bailout, the move pulls Guangxi Bearing out of deep financial trouble by taking over and paying off its creditors.
CHAMC was set up in 1999 to acquire the most deeply troubled and debt-ridden businesses, keeping them operating and staving off unemployment. The CHAMC also serves to support China’s developing financial sector, rescuing at-risk financial institutions by paying off the troubled business’ nonperforming loans. The companies taken over are then shuffled under the protective state umbrella of the CHAMC. Ultimately, the goal is to prop up the business, give it a clean start, and maintain employment until it can be sold. By paying off business’ nonperforming bank loans, the Chinese government is also protecting its banking industry.
Essentially, CHAMC is a state-sponsored acquirer of last resort and last resort source of funds, equivalent to enforced bankruptcy. While smaller companies are often allowed to close down, companies with large employment rolls and/or that support other state-run entities are prime candidates for being saved by the CHAMC.
China has come under international scrutiny for the CHAMC’s actions, many claiming it interferes with the natural ebb and flow of business, particularly in poorly-run state-owned entities. Many international financial experts argue China should be allowing bad businesses to fail, even if they are state-run, and should allow overly-aggressive banks to suffer for making bad loans.
International banking officials say CHAMC’s bailouts encourage ever-riskier loans by China’s fledgling financial industry by removing the consequences of making bad loans. If a badly-run company is on the verge of closing, and banks have knowingly made easy loans to that company knowing its condition, the experts argue the Chinese government should not step in with bailout packages for everyone concerned. Doing so only encourages more of the same, they contend.
Established in 1966, Guangxi Bearing Factory is located in Yizhou City, northwest Guangxi.
The company currently employs more than 2,500 workers in the sprawling 320,000 square meter facilities (3.4 million square feet). A smaller sister plant is located in Beihai City.
Guangxi Bearing manufactures YS brand bearings; deep groove ball bearings, cylindrical and tapered roller bearings, and clutch release bearings. Guangxi claims production capacity for standard sizes (17mm through 160mm bore) is more than 5 million sets per year.
The company’s employment and production statistics, even for low-cost China, give some insight into the problems it -- and now the CHAMC -- faces, becoming a viable operation: Running at full claimed capacity of 5 million sets per year, the plant’s production would then be only 2,000 bearings per employee per year. Alternatively, manned by an average of 2.5 workers, the company’s claimed 1,000 pieces of production equipment are turning out only 5,000 bearings each per year.
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
2.All news edited and translated by us are specially noted the source"CBCC".
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