Jean Chretien, on a visit to China: "China Worldbest, an important Chinese textile manufacturer, has committed to plans for a manufacturing facility near Drummondville, Quebec. This project will create more than 350 new skilled jobs, and establish a new beachhead in North America for the Chinese textile industry."

Ottawa hailed it as an international trade success story.

The Vancouver-based Asia Pacific Foundation of Canada called it the largest investment in Canada by China.

What, however, is emerging out of this so-called success story, baited with C$15 million of taxpayer money, cheap land and free infrastructure is another sinister Liberal boondoggle.

China Worldbest, a multi-billion dollar Shanghai conglomerate which received generous government funding for its C$45 million textile mill in Drummondville, Quebec shut its doors recently, a week after its tiny workforce of 75 voted to join a union.

The company said it is downing tools to restructure management after the factory boss was sent back to China.

Labor, political and money analysts said they will be surprised if the mill starts up again, as the company is promising to do within six months.

A Chinese news website has now raised the scenario that the C$45 million operation was nothing more than an elaborate scheme to move a large sum of money out of China "in a hurry"

Guo Tian Zhang, who was in charge of the plant described the situation as "grim".

"The textile sector world wide is going downhill right now?same situation is happening to the textile industry in Drummondville," he was quoted as saying on the website.

He said the operation and management style of the Chinese state-owned enterprise is clearly not in sync with the Canadian legal system.

The website said that the Chinese side, at the time of construction of the plant, indicated that the plant in Quebec would be using the cotton yarn produced by Worldbest's Mexico plant to produce fine quality cotton knit products.

However, the labour costs in Quebec made products produced in Canada unable to compete with similar type products from China.

An expert quoted on the website said he is of the view that such issues would have been considered long before the project was launched.

"At the minimum, private companies would not have done this," he said adding that one reason behind this failure was that "someone was in a hurry to transfer millions in public funds out of China."

Labour leaders fear that the mill in Drummondville funded by Canadian dollars has become nothing more than a union-busting communist operation.

Canadian Press recently reported that the workers at the plant voted 90 per cent for their first contract last month, which gives them a salary boost of 15.7 per cent, or about C$2 an hour, over two years. Their average wage before the contract was C$12 an hour.

Union spokesman Gaetan Desnoyers said the plant, built three years ago by China Worldbest Group of Shanghai with $15 million worth of government subsidies, is unprofitable, and is surviving currently only on cash advances from the Chinese parent company.

Desnoyers said it was tough to organize the plant, one of the few left of the region's once-thriving textile and apparel industry, largely as a result of imports, mainly from Asia.

"They (company officials) told us they were not at all comfortable with us," said Desnoyers according to Canadian Press. "To start with, it's a completely different culture. The directors said they would rather have Chinese immigrants working there, so negotiations started off on the wrong foot."

He said it took a provincially appointed conciliator to help complete the negotiations, which began a year ago when the union was accredited.

Desnoyers said the plant was originally touted to employ over 300, but employment peaked at about 125 and some 50 jobs were cut at the end of 2003 because of difficult markets.

He said the 20 most recent hires were Chinese, who are brought to the plant daily from Montreal, and none attended the union organizing meeting.

"In some cases the foremen have to give their instructions with sign language," said Desnoyers.

The Shanghai Worldbest company, controlled by the Ministry of Textile Industry of China, has 32 enterprise and commercial subsidiaries with more than 50,000 total employees, operating in textiles, machinery, information technology, pharmaceuticals and real estate.

The plant at Drummondville, 100 kilommetres east of Montreal, produced fine knitted cotton.

It is supplied with cotton yarn from a textile plant employing 1,000 that Worldbest built for that purpose in Mexico.

Worldbest said it chose Drummondville for its inexpensive energy, transportation links and quality workforce.

In 2001, when the mill was being touted as a major trade success story, the Canadian Textiles Institute voiced concerns that Ottawa was rushing to provide China Worldbest with support and cash at a time when the market was struggling with over-capacity.

Those concerns fell on deaf Liberal ears.