Yutong's managers bought the group and pushed out its state owner in 2001

Yutong Bus was listed in 1997 by carving it out of Yutong Group, a state-owned enterprise under Zhengzhou. In June 2001 Shanghai Yutong, a company formed by Tang Yuxiang and 21 other Yutong employees, signed a deal with the Zhengzhou finance bureau to take 89.8% of Yutong Group, pending approval by the Ministry of Finance.

The ministry sat on the request for two years, wary of asset-stripping in management buyouts. To break the logjam, Shanghai Yutong sued over the unpaid transfer, got a court order to freeze and auction Zhengzhou's 100% stake in Yutong Group, and in December 2003 paid 148.5 million yuan for 90% while a subsidiary bought the remaining 10%. The group was then re-registered as a private limited company.

Through this path the managers secured the listed Yutong Bus. The manoeuvre was legal and used public auction, but it effectively circumvented an approval that the central state had been reluctant to grant. The deal turned Yutong Group from a municipal SOE into a private company, and Yutong went on to become China's dominant bus maker.

Managers took 89.8% of Yutong Group in 2001, then won 100% at a 2003 auction for 148.5m yuan, making it private.

The state owner was willing but the central ministry refused to wave through an MBO.

A share deal plus a court-supervised auction secured control without central approval.

Management already had cash and a purpose-built holding company ready.

The local state collaborated because it wanted the bus group privatised.

When a central ministry blocks an MBO, a well-run judicial auction can still hand control to management — if the local state wants it to.

Yutong Group became a private company and Yutong Bus grew into the world's largest bus manufacturer by sales. The case became a widely taught example of insider privatisation in China's SOE reform, and was cited in academic work on how local governments and SOE managers can circumvent Ministry of Finance controls. The MBO's legitimacy and pricing continued to be debated for years.