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Christine Chan

Mark O'Neill

Beijing has fired the  founder and chairman of one of the mainland's biggest pharmaceutical firms,  in what could be  seen as a warning to state company chiefs  to obey orders  and keep within  budget as the government moves to cool the fast-growing economy.

The Shanghai-based Oriental Morning Post said officials from the Guangdong and Shenzhen governments went to the  headquarters of the state-owned Sanjiu  Group and told staff  that Zhao Xinxian had been fired.

A Sanjiu Enterprises Group   executive yesterday confirmed that Mr Zhao, a former doctor in the People's Liberation Army,   had been removed from the firm he set up. Deputy general manager  Sun Xiaomin   will take over  as the group's party secretary and president.

Mr Zhao started the firm after borrowing five million yuan in 1985 and turned it into a 10 billion yuan conglomerate.

The State-Owned Assets Supervision and Administration Commission  (Sasac) sacked Mr Zhao, the Sanjiu executive said, adding   that, at 64, he was due for  retirement.  The executive  rejected claims that Mr Zhou had been detained  over the group's stockpile of debt and disappointing performance over the  past few years.

'This  is untrue,' the  executive said. 'He  was removed due to his old age.'

However,  mainland media said Mr Zhao was fired because  the group could not pay its debts and the government and state banks had lost patience.

Analysts said Mr Zhao's removal could be seen  as a warning to the bosses of state firms  to obey orders from Beijing to stay within budget and not overspend, as it tries to cool down an overheated economy.

They also  described the government's decision as an example of  'killing the chicken to frighten the monkey', saying the threat of dismissal was the best way to bring chief executives of state companies into line.

Set up 20 years ago, the  firm is more commonly known as 999 Pharmaceutical  on the mainland. Formerly part of the PLA, Sanjiu has lost most of its past lustre  in recent years,  in particular  since 1998 when China ordered  the army to sever all its business links.

Today, Sanjiu  is more associated  with fraud, chaotic management and improper disclosure. The group has been plagued  by high debts,  reaching   almost 10 billion yuan by the end of  last year.

On April 19, the Industrial and Commercial Bank of China and China Minsheng Bank filed writs against Sanjiu in an Intermediate Court in Shenzhen  over debts of 374 million yuan and 80 million yuan,  respectively.

Earlier, the courts  froze 582 million state shares in Sanjiu, accounting for 60 per cent of equity.

Additional reporting by Winston Yau



Sanjiu chairman removed due to 'old age'