ABSTRACT
Because of the public nature of listed companies and their prevalent ‘guarantee chains’, their risks and ensuing crises have wide-ranging and farreaching impacts on the regional economic and financial environment and on social and political stability. Correctly handling the crises of the problem listed companies and ensuring economic and social stability have become important responsibilities of regional governments. Pijiuhua Co. Ltd (subsequently referred to as Pijiuhua) is a leading enter-
prise in Xinjiang’s agricultural industrialization. Founded in 1993, it was listed on the Shanghai Stock Exchange in 1997. The company specializes in the production of hops, beer, barley and carrot juice, and enjoys resource, industrial and technological advantages. In particular, it produces and sells 6,000 tons of hops annually, or over 60 per cent of the national total. It is the largest raw materials supplier for beer breweries in China. In 2001, the company acquired the Xinjiang Beer (Group) Company and had a market share of over 50 per cent in Xinjiang. But on 30 October 2003, Ai Ke La Mu· Ai Sha You Fu, chairman of the company, left the company suddenly and without notice. As a result, many problems that had long been hidden began to surface. Investigations indicate that, by December 2003, Pijiuhua had 1.08 billion yuan in assets and 1.94 billion yuan in liabilities. In particular, its external guarantees totalled 1.44 billion yuan, of which 800 million yuan was not disclosed. The company was seriously insolvent. The creditors who were eager to claim their dues descended on the company, and immediately had Pijiuhua’s accounts, stock rights, land, plant buildings, equipment and other assets frozen, sealed off and preserved. The company’s employees became highly agitated and its production was paralysed.
