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November 7, 2012

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Big illegal steel market still luring investors

A HUGE steel market in suburban Songjiang District, which is reportedly illegal, is still expanding and attracting investors amid claims that it has cheated 60 million yuan (US$9.589 million) from overseas Chinese investors.

Local land planning authorities yesterday professed ignorance about the case but said they would look into it following the media exposure.

According to the Beijing-based Faren Magazine, about 70 overseas Chinese investors were reported to have invested 60 million yuan in the 80,000-square-meter market built by a Shanghai company in 2010 in Xinqiao Town of Songjiang.

They were reported to have signed a contract with the company, Shanghai Bolian Properties Co, to purchase 104 stores in the block of buildings to rent to other investors. But two years later they are still to receive any rent, the investors complained to the magazine. They cannot even get their money back as they found that the market was built illegally without any licenses.

Shanghai Daily found that the place was still operating as a huge steel market. It has in fact been expanded to over 100,000 square meters and is now owned by another company.

An official surnamed Li with the market said they are now seeking investors for a new project to develop the market into a business zone, even though they presently lack certain licenses.

"The business zone will have an area for small stores to do wholesale business in iron steel, and apart from that, it will have a display area, an office building, large factories and warehouses," Li revealed, adding that all these stores and buildings in the market have no property ownership certificates.

"The company that owned the market earlier may have had some problems with the local government so none of the stores here has a certificate," Li said.

But he insisted that investors could still sign contracts with the company as it can offer a "special certificate" issued by the local government to prove their right to use the stores.

"The certificate will serve as a pledge that the government will not take back the land after you've paid the rent."

According to the magazine, the market lacks planning permit and pre-sale permit. The land on which it was built is still listed as "fertile farmland" on the government's land planning chart.

"How can the company build such a huge illegal market without any government planning permit and license?" the magazine quoted one of the investors as asking.

In response, an official with the Songjiang Land Planning Department said yesterday that they would look into the case.

The Xinqiao Town government could not be reached for comments yesterday.


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