An executive was beaten to death on Friday as 3,000 steel workers threatened with job cuts protested following the takeover of their company in Tonghua, Jilin province.
Jianlong Steel Holding Company representative Chen Guojun was killed at a facility run by Tonghua Iron and Steel Group, in northeast China's old industrial heartland.
The brawl broke out after Tonghua workers were told to expect job losses during a meeting with a delegation from Jianlong Steel, a privately owned firm based in Beijing.
It was the second time Jianlong had launched a takeover bid for the State giant and many feared the company planned to drain State assets before following up with cost-cutting measures, including redundancies.
"Employees (many of whom are shareholders) are close to enjoying financial gains as the price of steel continues to rise," said a police officer that identified herself only as Wang.
"Then, Chen disillusioned workers and provoked them by saying most of them would be laid off in three days.
"Chen, saying that a total number of 30,000 employees would be cut to 5,000, infuriated the crowd."
The angry steel workers beat Chen and then blocked ambulances, police and government officers from reaching him. He is believed to have died in the midst of the steel workers at 8 pm Friday.
"Chen, the manager, did not deserve to be killed. Unfortunately, he was targeted after unleashing the anger of the furious crowd," said Wang.
The demonstration led to a halt in production at all of the seven blast furnaces belonging to the steel manufacturer, which has a yearly throughput of about seven million tons.
Jianlong held 49 percent of shares in Tonghua between 2005 and the start of 2009, and restructured the company.
Last year, the joint venture experienced significant economic losses due to the global financial crisis, leading to a drop in production and cuts in salaries, causing discontent among workers.
One netizen said the murder at the end of last year of Song Kai, the head of a Tonghua-affiliated steel mill, allegedly at the hands of a 28-year-old worker, was another example of the friction between management and workers in the joint venture.
Jianlong left the partnership in March and workers reportedly celebrated with fireworks.
This month, Tonghua State-owned Assets Supervision and Administration Commission reported that the company, which "went through some very tough challenges in past 10 years", had made a profit of 42.7 million yuan ($6.2 million) in June.
But on July 22, workers learned that Jianlong had secured more than 50 percent of the company's shares, giving it full control.
Local government representatives announced on Friday night that the deal would now be shelved permanently and the crowd dispersed.
Jianlong and Tonghua are respectively ranked 158th and 244th in the top 500 Chinese companies. -China Daily/ANN