ABSTRACT
The Guangdong government faced the harsh reality that the only possible choices for Guangdong Enterprises (GDE) were bankruptcy or restructuring. In 1987 GDE purchased Union Globe Development, a Hong Kong listed company, and renamed it Guangdong Investments Ltd. By far the most important part of GDE’s trading activities was carried out through Guangnan Holdings Ltd. On the same day as the first creditors’ meeting, Guangnan Holdings explained to the Hong Kong stock exchange that its gross debt amounted to US$ 391 million, and that US$ 115 million was due immediately in debt repayment. Well before the onset of the Asian Financial Crisis, GDE’s management had become aware of deep internal problems due to the sprawling and uncontrolled structure of innumerable subsidiaries. On 8 October, the Guangdong provincial government took the decision to save GDE. Well before the restructuring process had been concluded, the Guangdong government introduced major reforms to GDE’s management system.
