An official from the Sanshui municipal government, in South China's Guangdong Province, said the company is negotiating the sale of its assets with several foreign companies.

The Sanshui-based JianLibao Group, with net assets of 700-800 million yuan (US$84.6-US$96.7 million), has been one of best sellers on the beverage market, along with Coca Cola and Pepsi.

The official, who is close to the deal, declined to name the potential foreign partners, or how much the deal is worth.

But according to Yuegang News Daily, a popular local newspaper, Singapore Tee Yih Jia Food Manufacturing Pte Ltd and French food giant Group DANONE are involved, and foreign companies would take over up to 75 percent of the State-owned company's stake, worth US$400 million.

Earlier reports have said the company is being sold partly because of heavy debts. Reports, which has not yet been confirmed, said foreign partners would also take over the debt worth some 2 billion yuan (US$240 million).

The government official refused to comment on these reports, but said the company would introduce foreign partners to restructure the company, in a bid to revitalize it.

Jianlibao experienced glorious times in the early 1990s when its products had been honoured as Best Products for Consumers for 10 years straight.

But with Coca Cola and Pepsi flooding in, the company's stronghold has been undermined. Sources from the China Beverage Association said the company's products account for less than 5 percent of the country's beverage market share.

Statistics from the Sanshui government show that the net profit of the company has dropped 41.4 percent this year over the same period last year due to the increasing costs of raw materials.

In the first 10 months of this year, the production of the company has shrunk by over 20 percent, but it did not give specific numbers.

The Singapore Tee Yih Jia Food Manufacturing Pte Ltd has long been eying the Chinese beverage market, which is growing by over 10 percent annually.

Group DANONE is also aggressive in the Chinese market with the acquisition of several big-name domestic companies such as Robust and Aquarius in the past two years. Its sales in China account for 7.5 percent of the group's total consolidated sales.

Jianlibao declined to comment any further, but did say that the government is responsible for the deal.

The Singapore company and DANONE were not available for comment.

(China Daily December 4, 2001)