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Chinese zombie film shows there’s life after corporate death

Documentary makes the case for restructuring of companies on life-support


52 MINUTES AGO by: Lucy Hornby and Emily Feng in Beijing
A film about the near-death experience of a state-owned enterprise in China is being screened in the latest attempt by regulators to build public support for a new round of painful restructuring.


Despite the popularity of films about the undead in China this production is no blockbuster. Instead, a retired civil servant is promoting A Harsh Transition, a sober documentary that makes the case that bankruptcy may not be so bad after all.


“After bankruptcy a company can live again, like a phoenix,” Zhou Fangsheng, the documentary maker, declared to journalists after a screening this week in Beijing. “Look at Donald Trump. He’s said himself he’s declared bankruptcy four times and look at him now. Isn’t he doing well? He’s the US president!”


It is a case that the State-owned Assets Supervision and Regulatory Commission, Mr Zhou’s former employer, is struggling to make. China’s economy is encumbered by thousands of indebted so-called zombie companies that are kept on life support by local governments fearful of job losses and bad debt.


In spite of brave talk of SOE reform, state-engineered rescues are still the norm. Rising debt levels have evoked comparisons to the late 1990s, when China restructured the state-owned sector and recapitalised its banks. Tens of millions of people were thrown out of work when the “iron rice bowl” of job security was shattered.


Enter Mr Zhou and his film, which is being screened to about 10,000 people, mainly SOE workers, government officials, journalists and students. “A lot of people have lived through this experience, so they feel very moved,” Mr Zhou said.


The film documents the travails of CNNC Huayuan Titanium Dioxide, a formerly secret nuclear plant in the desert of northern Gansu province. By 2009 the factory had switched to producing titanium dioxide but could not compete against dozens of private groups. Morale was low, plant equipment was scavenged and unpaid workers had rioted.


Sasac chose the company as a pilot for bankruptcy reform, after two failed attempts to get private businesses to buy in. On their third try, regulators persuaded Li Jianfeng, a private entrepreneur, to revive the business and recruited Mr Zhou to document the process, warts and all. In the end, it was a success, the film concludes, but it was not easy — the plant’s management mistrusted Mr Li, local officials tried to sabotage his efforts and he suffered a physical collapse during one particularly intense confrontation.


Nonetheless, it could have been worse for Mr Li. Around the same period the representative of the private steel conglomerate that was attempting to restructure Tonghua Steel in northeastern China was beaten to death by a crowd of upset workers.


The reception to his film has been positive, Mr Zhou says. But it has also created an unexpected stumbling block to the cause of bankruptcy reform in some quarters: “Some private entrepreneurs see this and think, ‘Wow, it’s going to be that difficult?’ So they back out.”