(Yicai Global) Jan. 11 -- Japanese liquid crystal display film maker Nitto Denko Corp. is in talks with investors over the sale of a stake in its Suzhou factory in China's eastern Jiangsu province, online media outlet The Paper reported yesterday.

The development follows reports over the last few days that the industrial giant planned to shut down the facility, putting over one thousand jobs at risk.

The firm will disband its polarizing film unit at the plant with compensation plans already agreed for 500 employees.

The other two sections, which make printed circuit board and new energy products, will stay open. Employees of these units are in negotiations with Nitto Denko over issues including protection of workers' rights, due to the company's uncertain outlook.

China's Ministry of Finance and Commerce stated that Nitto Denko's decision was taken due to operating losses and does not reflect a trend of divestment among foreign companies in China, especially those from Japan.

Most foreign-funded enterprises are still quite optimistic about China's investment environment and market potential, and their investment confidence has continued to grow, MOFCOM spokesperson said in a regular press briefing today.

China saw stable utilization of foreign investment last year with good momentum for growth, Gao added, while the investment environment continues to improve. In the first 11 months of 2017, actual utilization of foreign investment in the country rose 5.4 percent annually, with the number of newly established enterprises increasing 26.5 percent, he said. 

Nitto Denko remains in dead-lock with employees taking voluntary redundancy at its plant due to compensation details.

Dismissed employees from the polarizing film department will receive N+1.5 in salary payment, two months of social security reimbursement and a special bonus of CNY15,000 (USD2,300), the report quoted several employees as saying.

The severance package refers to a one-off compensation to laid-off workers based on the length of their employment with the company (N). For every one year of employment, workers will get a compensation worth one-month wages. If the length of employment is less than six months, they will get a compensation equal to half of their monthly wages. If the length of employment is more than six months but less than one year, workers will receive compensation equal to their monthly wages. '+1.5' means an additional compensation equal to 1.5 times their monthly wages.

For workers of other departments taking voluntary redundancy, a severance package of N+1 and a bonus of CNY15,000 (USD2,300), the report said.

The report did not specify the buyer of the stake in the plant.

Founded in 1918, Nitto Denko is a manufacturer of composite materials such as high-performance film products and specializes in adhesive and coating technologies.

The firms Suzhou unit, established in 2001, mainly manufactures high-density flexible printed circuit boards and polarizing films for mobile phones, LCDs and computers.

LCD polarizing film is an important component for electronic screens for handsets, computers and television sets. For years, Nitto Denko has been one of the top three polarizing film makers in the world by market share.