By Wen Ya

A riot involving thousands of steel factory workers that killed a manger in Jilin Province on Friday evening is still under investigation, while negotiations between workers and the company’s shareholders continue, disclosed a public security insider yesterday.

Chen Guojun, 41, the branch general manger of Tonghua Iron and Steel Group, was found beaten to death after he threatened the workers that he would lay them all off and recruit 5,000 new employees, an unnamed police officer, who refused to disclose his position and name, told the Global Times.

He said Chen had fatal wounds to his head when his body was discovered Friday.

“The workers also rioted and smashed a number of ambulances. They guarded each gate of the factory,” he said.

According to the Xinhua News Agency, the provincial government of Jilin in Northeast China confirmed yesterday that around 1,000 workers at a factory of the State-owned Tonghua Iron and Steel Group, which had been engaging in a merger with the Beijing Jianlong Heavy Industry Group, took part in a riot.

However, Reuters said the number of rioters was up to 30,000.

Angry workers punched, kicked and threw water bottles and stools at Chen, the Beijing News reported.

“The rioters disbanded when officers from the provincial government announced that the Jianlong group would not take over the Tonghua group,” the unnamed police officer told the Global Times.

He said Chen was made a scapegoat in the protracted conflict between the two groups.

His body was sent to his hometown in Tangshan, Hebei Province, for burial, police said.

The workers have returned to work after their violent 11- hour strike, news reports said.

Attempts to contact the Tonghua Group and Tonghua city government were unsuccessful.

The benefits and salary of the workers of Tonghua group shrank greatly between 2005 and 2008, when Jianlong held the majority of shares in the local company.

Chen was paid 3 million yuan ($440,000) a year, however, while Tonghua’s retired workers received a 200 yuan ($30) a month pension.

Supervisors from Jianlong forced the original workers out and employed workers from outside the area.

Initially, the sacked workers started a petition, calling on Jianlong to move out from the Tonghua group.

But the conflict intensified during the economic crisis as the average salary fell to 300 yuan per month.

The incident has been widely reported in the international media.

As China's building boom continued this year and steel prices shot up, Tonghua reported a 43 million yuan profit in June. Jianlong announced that it would bid to become Tonghua's majority shareholder, according to Britain’s Times.

The Chinese government has been trying to restructure and consolidate the steel industry, reported the New York Times.

However, most of the reports cited unidentified information from the Hong Kong based Information Centre for Human Rights and Democracy.

Tonghua group, with assets of 26.8 billion yuan, produces 7 million tons of iron and steel each year. In 2008, it ranked 244 among the top 500 China corporations.

Its counterpart, Beijing Jianlong Heavy Industry Group, founded in 1999, has a total of 31.9 billion yuan assets and is ranked 158 among the top 500 China corporations.

Jianglong employees refused to comment on the incident.

“We will release a public announcement in two days,” a member of the President's Assistant Office in Jianlong told the Global Times.

“The workers tried to protect the State assets, though they over-reacted,” a Tonghua resident told the Global Times.