By staff reporters Ouyang Hongliang, Zhang Boling and Zhu Tao

Related article:  Details of Steel Executive's Death Emerge
                      For Reform's Sake, Give Workers a Voice

(Caijing.com.cn) Beijing-based private steelmaker Jianlong Group has been forced to drop a plan to acquire state-owned Tonghua Iron & Steel Group following the killing of a company executive during a worker protest over potential job losses.

Authorities in Jilin Province said the executive, Tonghua general manager Chen Guojun, 39, was beaten to death after up to 1,000 workers swarmed around him at the steel mill in the city of Changchun.

The incident on the morning of July 23 affected production at Tonghua, although Caijing later learned that mill operations had returned to normal by 10 p.m. July 24.

An investigation into the death is continuing. So far, Caijing has no information about possible arrests, and authorities have declined to discuss the investigation process.

However, a worker-management communications gap may have contributed to the incident. Tonghua employees had been barred from recent talks over the future of the company.

The trouble followed a July 22 announcement by the provincial State-owned Assets Supervision and Administration Commission (SASAC) that Jianlong would take control of Tonghua and participate in a restructuring involving the steelmaker's upper- and mid-level management.

Chen had recently been appointed to oversee Tonghua subsidiary Tonghua Iron & Steel Co. Ltd. when he went to speak with Tonghua employees at a coking plant July 24. He was accompanied by Jianlong Chairman Zhang Zhixiang and board member Li Mingdong. The topic was Jianlong's proposed takeover of company shares.

After arriving at the plant, officials said, workers surrounded Chen and refused to return to work. The deadlock continued even after provincial government officials arrived. The crowd also prevented police and medical workers from reaching Chen.

The incident prompted SASAC to order Jianlong to permanently abandon its Tonghua plan. The decision was repeatedly broadcast by the company's television station. Afterward, the crowd dispersed and police reached Chen, who had been beaten to death.

Closely held Jianlong, launched in 1999, produces more than 18 million tons of steel a year and ranks among China's top 10 steel manufacturers, according to its Web site. In September 2005, the company started participating in the restructuring of Tonghua after buying 36.19 percent of its shares. SASAC remained the largest shareholder.

Tonghua's business hit a bump last year as China's steel industry posted losses, triggering disputes about the company's restructuring plan and increasing labor-management friction.

In March, Jianlong started talking with Jilin authorities about pulling out of Tonghua. But Tonghua soon started making money again. The company, which has an annual capacity of 7 million tons, posted a 42.8 million yuan profit in June after losing money that same month 2008.

The turnaround prompted Jianlong to draft a new agreement that would allow the private steelmaker to raise its Tonghua stake to 66 percent, cutting the provincial government's share to 34 percent. The negotiations were held behind closed doors and did not include Tonghua employees.

SASAC spokesman Wang Xidong told reporters July 27 the Chen attack was sparked by former workers who spread false rumors.

Wang said the planned takeover of Tonghua had been in line with government policies, and that the share transfer would not have involved layoffs.

Full articles in Chinese:
http://www.caijing.com.cn/2009-07-27/110214831.html
http://www.caijing.com.cn/2009-07-27/110215011.html