Female Entrepreneur in Hunan Becomes Prisoner After Illegal Demolition: 100 Million Yuan in Assets Seized

Hunan businesswoman Lu Guanghua operated her business for many years before the government illegally demolished it. (New Tang Dynasty TV)

(October 18, 2024 - "I know about Jack Ma, and Sun Dawu, the richest man in Hebei... but I never thought that our small business could also be pushed to the point where we have nowhere to seek justice." Recently, a private entrepreneur from Hunan exposed to the media the tragic end of a lifetime of business management by her and her son.

China has four major textile markets, located in Xiangtan, Hunan; Yingkou, Liaoning; Zhongshan, Guangdong; and Keqiao, Zhejiang. Entrepreneur Wang Bing told Epoch Times reporters that his family has been in the textile business in Xiangtan since 1989, eventually developing into a textile enterprise and establishing Guanghua Dyeing and Printing Company.

"In 1996, it was not long after the reform and opening up period, and things were going well. My mother was a well-known, capable entrepreneur in the local area. She had previously worked as the manager of a collective enterprise run by the district government but later resigned and started this dyeing factory."

In the 1990s, many state-owned enterprises in China went bankrupt, leading to massive layoffs. "Xiangtan’s woolen mill also went bankrupt. Between 1996 and 1998, they signed a house and land sale agreement with my mother and processed the property ownership certificate. However, because the workers from the bankrupt company blocked the gate, the land certificate was never issued to her. My mother had already paid the agreed amount according to the contract. In other words, we legally acquired the property of the bankrupt company. This was all documented in the court’s judgment."

A ruling from the Xiangtan Intermediate Court in Hunan Province shows that the court found that, in December 1996, the former Xiangtan Woolen Mill applied for bankruptcy. The mill’s assets, worth 12 million yuan, were used as registered capital to establish Xiangtan Jiahe Industrial Co., Ltd. (Jiahe Industrial). Between late 1997 and March 1998, Jiahe Industrial and Guanghua Dyeing and Printing Co., Ltd. (Guanghua Company) signed a series of contracts for the sale and transfer of property and land. The total price was 2.698 million yuan, of which Guanghua Company paid 320,000 yuan. In January 1998, Guanghua Company obtained the property ownership certificate.

However, due to opposition from the former woolen mill’s employees, the payment and related procedures were put on hold. In February 1999, a memorandum was signed between the temporary asset management committee of the woolen mill and Guanghua Company, agreeing to temporarily suspend the original purchase contract. Guanghua Company would pay a monthly asset usage fee for the portion of the property that had not yet been paid for and continue to rent part of the woolen mill’s property and land, paying rent on a monthly basis.

In 2007, after an application by the Xiangtan Woolen Mill bankruptcy liquidation team, the court ruled that the contracts between Guanghua Textile and Jiahe Industrial for the sale and transfer of property and land were invalid. The property ownership certificate held by Guanghua Company was also invalidated. Guanghua was ordered to immediately vacate the land, buildings, and associated facilities belonging to the former woolen mill. In October 2013, the Xiangtan Yueyang District Court carried out a forced eviction of the plaintiff.

"A decade later, in 2007, the price of land and property had dramatically increased. The woolen mill declared bankruptcy once again, forming a second bankruptcy liquidation team. The Xiangtan city government was behind this manipulation," Wang Bing said.

In 2008, the Xiangtan Municipal Government planned to requisition land in Yunpan Village for the construction of Banzu Road in Xiangtan City.

Lu Guanghua, the mother of Wang Bing, told The Epoch Times that during the forced demolition, senior officials from the Xiangtan municipal government, including the deputy secretary-general and the directors of the municipal textile office, were present, directing the operation. The government dispatched armed police, judicial officers, ambulances, and fire trucks to the scene.

"They used electric welding to cut through all my equipment, which took them a whole week. They sold the scrap metal, and the rest was looted by the local residents. They made 2.3 million yuan from selling the scrap metal, while my assets, worth 100 million yuan, were completely plundered."

"They even fabricated charges against me, accusing me of illegally raising 5 million yuan in public deposits. Since they refused to issue me a land use certificate, I had no choice but to turn to private loans. All the people who loaned me money have provided documentation—they are my friends, factory workers, and my husband’s comrades-in-arms. It doesn’t constitute a crime. Their real purpose in detaining me was to forcibly remove me from the business."

Ms. Lu further revealed that when she was detained in 2017, she was restrained with three sets of handcuffs. "They handcuffed my hands behind my back, cuffed both my feet, and then used a third handcuff to link my hands and feet. I was like a ball rolling on the ground. I couldn’t even sit up straight and had to rely on others to help me use the bathroom. I was cuffed for five days and four nights, nearly dying..."

"I was an outstanding individual my entire life. When they wanted me, my company ranked 331st among Hunan’s top 500 private enterprises. I was an outstanding private entrepreneur in Hunan Province and a ‘March 8th Red Banner Bearer’ [an honorary title for women]. But this is the outcome I’ve been reduced to. They denied me medical treatment. I collapsed on the ground, vomiting more than half a cup of blood. I had to take Yunnan Baiyao [a Chinese herbal medicine] to stop the bleeding."

"Now they have shifted the company’s debts onto me personally, further persecuting me. I’m already 75 years old, and they’ve frozen my salary card, social security card, and even my WeChat account. They don’t want me to live! Where is the justice?"

Wang questioned another legal case, in which he saw a statement from the Supreme Court that read, in black and white, "If a third party in the bankruptcy process disappears, the court will not accept the case." Yet now, the court declared that the company formed during the previous bankruptcy was an illegal organization and dissolved it. "It’s the same entity, but they used different standards—this is where their shame lies."

"The contract we signed was deemed useless, and the property certificate we held for ten years was unilaterally declared void, with no compensation. It has now become a 'domestic historical document.'"

"Recently, the director of the Hunan Provincial Department of Finance, Liu Wenjie, was thrown from a building; on National Day, the director of the Shaoyang Public Security Bureau was shot dead by special police officers—this was even reported by the official media. If things continue like this, how can tensions between officials and the public not escalate? Never before have these tensions been so severe. Why is this happening?"

Lawyer: Government-Led Demolition Violates Multiple Laws

A mainland lawyer representing the case analyzed the situation for The Epoch Times, stating that, from a legal perspective, the contract is valid because the parties involved are legitimate, and there is no indication of unfairness or invalidity. In 2007, the court declared the contract invalid and instructed the property registration authority to cancel the property certificate, reverting the property to the original Xiangtan Woolen Mill. This decision, according to the lawyer, was clearly illegal, with evident human manipulation involved.

“The process of transferring property rights follows a specific procedure: first, the property certificate is issued, and then the land certificate is updated. According to the contract, the property certificate was issued, but the Jiahe Company (representing the government) did not assist in the land certificate update. They failed to honor the contract, which resulted in me not being able to make subsequent payments.”

“The court's ruling to invalidate the contract and demand the property’s eviction was not acceptable to the affected party. What happened to the confiscated assets? The court has been handling them for 10 years. Upon investigation, you’ll find that most of those assets no longer exist. A billion yuan worth of assets was seized, and the rent from the property amounts to very little. According to legal provisions, this qualifies as excessive enforcement."

“Additionally, at the time of the company’s establishment, it adhered to the relevant provisions of the Company Law, with responsibility limited to its registered capital. The company’s debts should have been borne in the company’s name, not involving shareholders or other legal persons or controllers. This retroactive inclusion is also illegal.”

The representing lawyer believes that the real issue lies in the government’s refusal to agree on compensation for the demolition, prompting them to set up a liquidation team to engage in sham litigation. If it were purely a judicial eviction, would there be a need for government intervention? Would armed police, paramedics, and city enforcement officers need to be present? This clearly indicates that it was a government-led demolition, not a judicial process.

Scholar: CCP’s Laws Are Ineffective

U.S.-based legal scholar Li Yuqing, who has been following the case, told The Epoch Times that the development of Western market economies was based on the principle, first established in modern constitutions, that private property is sacred and inviolable, giving entrepreneurs legal protection. In contrast, the CCP’s so-called public ownership system legitimizes the seizure of others' property under the guise of “public ownership,” continuing the tradition of “redistributing wealth” that began with the CCP’s early land reform campaigns. This system has not changed, and officials use their power to enrich themselves by seizing assets.

She said, "There are many cases involving private enterprises in China, such as Yunnan’s Haiyun Group, where debts are criminalized. In reality, this is just a way to strip private businesses of their property and send the owners to prison. Looking at cases in Hainan, Hunan, and elsewhere, you’ll find that the public security, prosecution, and judicial systems work together to break the law. Moreover, China’s current corporate structure follows a limited liability model, meaning that company assets are separate from personal assets. However, the CCP manipulates this by labeling private entrepreneurs as 'illegal fundraisers' to suppress them, which is quite common."

On October 10, the CCP’s Ministry of Justice announced the "Private Economy Promotion Law" and opened it for public consultation. Li Yuqing believes that the CCP’s laws are fundamentally ineffective, as the judiciary completely follows orders from higher authorities. What’s frightening, she says, is that the CCP does not even follow its own laws. The entire CCP system, from top to bottom, is not bound by legal constraints. While they claim to be promoting the private economy, at the same time, they continue to persecute private entrepreneurs.

Editor: Sun Yun