On January 12, 2006, an employee of the Changchun Information Group (000631.SZ), part of the larger Changchun Clan Group, expressed frustration to a reporter, saying, “Our company hasn’t paid more than six months.” This statement highlighted the deepening financial crisis that had gripped the group. According to a senior manager of the Clivia Group, which is now under the Clanland Group, only one business—Changchun Lide, a manufacturer of auto engineering plastics—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 global auto parts company, entered the scene as a strategic investor in Clivia, aiming to restructure the company. However, nearly two years later, the situation remained unstable, with the restructuring still incomplete and the company facing mounting losses. Clivia was once a key player supported by the Jilin Provincial Government and the Changchun Municipal Government, established in 1992. It had a wide network of factories, joint ventures, and overseas partnerships. Lanbao Information, a listed subsidiary, was a major source of revenue and profit. But due to missteps in the optoelectronics sector, Lanbao suffered a massive loss of 68.05 million yuan in 2003. In June 2004, Wanxiang signed a framework agreement with the Changchun SASAC and Clanland Group, aiming to become a supplier for FAW. The agreement stipulated that the transfer of assets and property rights should be completed by August 2004, with the goal of removing state ownership entirely. However, 19 months later, the restructuring had not been finalized. According to a Clivia executive, the reason for the delay was that Wanxiang had not fully paid the 186 million yuan required for the acquisition. Only 70 million had been transferred, leaving the remaining amount uncollected. The city government needed this money to support the resettlement of employees, but the funds provided were insufficient. As a result, ongoing restructuring efforts stalled, and many employees faced uncertainty. Despite Wanxiang’s involvement, the performance of Lanbao Information continued to decline. In 2004, its losses increased by nearly 270 million yuan, and by the first half of 2005, it reported a net loss of 497 million yuan. Its net assets per share dropped from 2.58 yuan in 2003 to -0.15 yuan by the third quarter of 2005. Changchun Lide and Changchun Aoqi, both subsidiaries of Lanbao, had previously been key suppliers to FAW-Volkswagen. However, their performance deteriorated significantly after Wanxiang's entry. While they were once profitable, in 2004, Changchun Lide lost 85.85 million yuan, and Changchun Aoqi reported a loss of 320 million yuan. A local government official criticized Wanxiang for poor integration, stating that the relationship between the companies and FAW had weakened. “They didn’t integrate well,” the official said. Behind the turmoil was a complex series of asset restructurings initiated by Wanxiang. In September 2004, it increased its stake in Lanbao Information and became a major shareholder. By 2005, it began transferring assets from Changchun Aoqi to Changchun Lide, consolidating control over key production facilities. These moves led to a turnaround for Changchun Lide, which turned a profit in the first half of 2005. Wanxiang claimed these actions helped it establish a foothold in China’s automotive industry. However, some internal decisions raised questions. In November 2005, Lanbao transferred its 75% stake in Changchun Aoqi back to Clivia at a symbolic price of 1 yuan, despite the company’s negative net assets. This move drew criticism from executives who argued it did not address the root causes of the losses. The controversy extended to the funding gap. Despite repeated inquiries, Wanxiang did not respond to questions about the delayed payments or the allegations made by local officials. A source close to the company suggested that some high-level executives were considering leaving due to the challenges. Ultimately, the restructuring of Clivia remained a tangled process, with unclear outcomes and lingering doubts about the long-term viability of the group.

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