A worker at a Center Group factory, China's largest manufacturer of spectacles by production. Approximately 600 former employees have returned to work after the company restarted limited production on Thursday with the help of the local government, accounting for about 60 percent of the original staff. The company suspended production after its president absconded because of a localized credit crisis in Wenzhou, Zhejiang province. [Photo/China Daily]

The return of errant chairman and government aid enables restart

SHANGHAI - Zhejiang Center Group, China's largest manufacturer of spectacles by production, resumed limited manufacturing on Thursday.

The company ceased operations after its owner - one of the biggest debtors in a localized credit crisis in Wenzhou, Zhejiang province - absconded.

Hu Fulin, the company's president, fled to the United States on Sept 21, leaving behind debts of up to 2 billion yuan ($313 million), including 1.2 billion yuan in high-interest loans from underground banks. He returned to Wenzhou on Oct 10 to restructure the company with the help of the local government.

"We've tried to help the restructuring and reopening of Center Group in the ten days since Hu's return, providing financial support and negotiating with suppliers," said Zhou Leguang, an officer of the media department of Ouhai district of Wenzhou, where the company is situated.

Managerial staff spent five days registering returning employees and recruiting new workers. Approximately 600 former employees have returned to work, about 60 percent of the original work force.

A temporary information desk was set up at the factory gates early on Thursday morning, with managers continuing the registration and recruitment work with a crowd of applicants.

"One of the six production lines has been operating normally since this morning and the other five will be ready for work tomorrow, with all the management returning to their positions," said the manager of the materials department, surnamed Hu.

He said that he had always been confident about the company's future, and had insisted on waiting for the return of the chairman, along with other staff members.

"The reopening of the factory means a lot to us and we believe that we can overcome this tough period with help from the local government," said Wu Haonan, the manager of the packing department.

Meanwhile, the factory has enough orders to provide work until April 2012 and the chairman is living at the factory to work on a strategy to ensure a stable future for the company.

"I think the reopening of the Center Group will serve as an example to other struggling companies to help them regain confidence and recover from their troubles with local government help," said Zhou Dewen, chairman of the Wenzhou Small and Medium-sized Enterprises (SME) Development Association.

In response to the city's credit crisis, the local government has released a draft plan for financial reform, according to reports from the Xinhua News Agency.

An eight-part plan was formulated to regulate the private financing system and build the city into a financial development region.

Under the provisions of the plan, the number of small lending companies will rise to 50 from the current 30 by the end of this year, offering loans worth 12 billion yuan. The number of lending companies will reach 100 by the end of 2012.

To encourage the SMEs with regular loans, the plan will also ensure that five more authorized lending agencies are launched this year to offer private loans to SMEs.

In addition, the first round of a 200 million yuan private equity fund for Wenzhou enterprises, will be distributed by the end of the year, prior to the launch of a private equity investment association.

More detailed plans are still under discussion and will be unveiled by the local government in due course.