Shanghai police have detained a 62-year-old man suspected of killing six people on Saturday night in Baoshan district.

The arrest came after authorities received reports that the boss and three employees of Shanghai Guangyu Fine Chemical had been killed.

The suspect, identified only as Fan, is a Shanghai native who is also accused of fatally shooting the driver of an unlicensed taxi and a sentry at a naval barracks.

On Sunday, the entrance to the factory where four bodies were found was still closed off by crime scene tape.

Police said Fan is the office director of the enterprise.

"He lives in Zhoupu in the Pudong New Area," said a manager at a nearby grocery store who gave his name as Liang. "He used to be in the army."

Police did not confirm whether Fan had served in the military.

"The plant went bankrupt more than a month ago," Liang said. "Fan complained about the uneven distribution of money. He had a fierce fight with his boss several days ago."

Police said Fan first beat a colleague named Zhang to death with a blunt instrument in the factory at about 5 pm after a dispute over transferring the possession of factory equipment.

Fan then collected a shotgun stored in the factory dorm and took an unlicensed cab to Zhoupu.

He shot the driver, named Bian, in Zhoupu and drove back to Baoshan, authorities said. He used the shotgun to kill the sentry at a naval base near the factory, then drove back to the plant, where he killed three more people, including the factory boss, named Li, at about 11 pm.

Police officers were already at the factory when the last three victims were killed. Fan was detained shortly after and his weapons were seized.

A security guard at the factory who did not want to be identified said on Sunday that police arrived at the plant after the first victim, Zhang, was discovered dead.

Witnesses said they saw vehicles from a funeral home in front of the factory at midnight and saw bodies being carried away. Other people were also injured, they said.

Shanghai Changhai Hospital, where police said the wounded were taken, would not comment on Sunday.

However, a source at the hospital told China Daily that five people had been admitted and were receiving treatment. The source was unable to disclose their conditions, but added that the naval base sentry had died at the scene.

Authorities said they are continuing to investigate the killings.

The Guangyu Fine Chemical factory was established in 2001, according to registration information from the market watchdog.

Li, the manager, and his family owned at least four businesses in Shanghai and Jiangsu province. They were involved in several lawsuits involving loan disputes last year.

In March 2012, a Shanghai court ordered Li's family to return a 1.7 million yuan ($277,220) loan and interest of nearly 20,000 yuan to Standard Chartered after the bank launched legal action.

In September, a court in Hangzhou, Zhejiang province, ordered the family to pay 1.62 million yuan, including capital, interest and attorney fees, after a private lending dispute.

Xu Yuyue contributed to this story.