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A real estate company bought a plant belonging to the bankrupt Guan Sheng Yuan (Nanjing) Co Ltd for 8.12 million yuan (US$979,517) at an auction over the weekend.
Jiangsu huangchao Co Ltd paid 60 percent higher than the floor price of 4.9 million yuan for the food joint venture's plant.
The 8.12-million-yuan purchase included the plant located on Guangzhou Road in Nanjing, Jiangsu Province, and its equipment.
Jiangsu huangchao was not available for comment on what it will do with the plant.
Guan sheng Yuan (Nanjing) Co Ltd is not related to the Shanghai-based Guan Sheng Yuan (Group) Co Ltd.
But the ownership of the 81-year-old brand still belongs to the bankrupt firm's former shareholder Nanjing Guan Sheng Yuan Food Factory, which plans to rebuild its food processing business with the brand later.
The joint venture was established in 1993 by the factory and an American company. In 2001, Guan Sheng Yuan's business was hit after China Central Television exposed that the company made mooncakes with ingredients, such as red beans and lotus paste, that had already expired.
The revelation caused a financial crisis for the firm as consumers refused to buy its products which they didn't trust anymore. In 2002, the company, which used to have annual sales of up to 20 million yuan, applied for bankruptcy.
"Guan Sheng Yuan is a famous brand on the mainland. Its blemished reputation will affect its future business," said an official surnamed Ding with the factory, according to the Xinhua news agency. "The case reminded business people of the importance of honesty and social responsibility."
Ding said the factory was seeking a new location to rebuild its food business with the brand but declined to reveal details.
Nanjing Guan Sheng Yuan Food Factory was also among the bidders and raised 8.10 million yuan to buy the plant.
"The price is unexpectedly high for the bid," said an official surnamed Shan, who was responsible for the auction. "The plant's good location may be one reason."
(Eastday.com February 3, 2004)
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