In January 2006, an employee of the Changchun Information Group (000631.SZ), part of the Clanland Group, sighed to a reporter: “Our company hasn’t paid more than six months.” This statement reflected the deep financial troubles facing the group. According to a senior manager of the Clivia Group, which is now under Clanland’s ownership, only the bumper production unit of Auto Engineering Plastics Co., Ltd. (Changchun Lide) was still operational. Other businesses such as Hua Weiguang Valley and Roland washing machines had ceased operations. In June 2004, Wanxiang Group, a well-known auto parts company listed on the stock market, entered the restructuring of Clivia as a strategic investor. However, nearly two years later, the process remained incomplete, and Clivia was struggling with losses and uncertainty over its future. Clanland Group, once a key pillar of Jilin Province and the Changchun Municipal Government, was established in 1992. It had multiple branches, joint ventures, and overseas companies. Lanbao Information, a listed subsidiary, was the main revenue and profit source for the group. However, due to missteps in the optoelectronics sector, Lanbao suffered a loss of 68.05 million yuan in 2003. Wanxiang signed a framework agreement with Changchun City SASAC and Clanland in June 2004 to restructure Clivia, aiming to become a supplier for FAW. The agreement required completion of asset inventory, evaluation, and property rights transfer by August 2004, with the goal of completely withdrawing state-owned capital and employees. But 19 months later, the restructuring had not been completed. According to Clivia executives, Wanxiang had not fully paid the 186 million yuan for the acquisition, leaving 70 million yuan unpaid to the Changchun municipal government. This money was meant for employee resettlement, but only enough was used to handle laid-off and retired workers. Current employees faced difficulties, and the restructuring stalled. Lanbao Information's performance continued to decline. In 2004, its losses surged by nearly 270 million yuan, with a 280.94% increase compared to the previous year. By mid-2005, it reported a net loss of 497 million yuan, and its net assets per share dropped from 2.58 yuan in 2003 to -0.15 yuan by Q3 2005. Changchun Lide and Changchun Aoqi, key suppliers to FAW-Volkswagen, were crucial for Lanbao’s profits. However, both companies experienced heavy losses in 2004. An official from the Changchun government noted that Wanxiang failed to integrate these companies effectively, leading to weakened relationships with FAW. Behind the decline was a complex series of asset reorganizations after Wanxiang entered. In September 2004, Wanxiang increased its stake in Lanbao by acquiring shares from other entities. In 2005, it began restructuring within Clivia, transferring assets from Aoqi to Lide. These moves led to Lide turning from a loss to a profit in 2005, while Aoqi’s operations became unstable. Despite this, some actions raised questions. In November 2005, Lanbao transferred 75% of its shares in Aoqi back to Clivia for just 1 yuan, despite Aoqi’s negative net assets. Senior officials criticized the move, arguing it did not address fundamental issues and lacked clarity. Wanxiang also faced scrutiny. While the company claimed success in establishing a production base in Changchun, internal conflicts and unresolved financial issues persisted. As of the article’s writing, Wanxiang had not responded to inquiries about its delayed payments or the allegations from local officials. The situation highlighted the challenges of corporate restructuring, where strategic investments often lead to unexpected complications. For Clanland, the path forward remained uncertain, with financial pressures and internal disputes continuing to affect operations.

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