Toy materials maker unveils growth plans

SHANGHAI Haixin, one of China's largest manufacturers of plush and flannel for exported soft toys, intends to enhance its competitiveness and generate a better profit margin with the establishment of a joint venture and the building of a spinning mill.

Yuan Yonglin, the company's general manager, said the plans includde the establishment of a joint venture with a Japanese party to produce quality carpet and a proposal to set up a spinning mill to manufacture textile raw material for its finished products.

Investments for these projects would amount to US$12 million and $2 million respectively with Shanghai Haixin taking a 40 per cent interest in the carpet manufacturing plant and a 50 per cent stake in the spinning operation.

The company expects to cut production costs by 30 per cent after establishing the operations.

Shanghai Haixin, which issued 35 million B shares through Sun Hung Kai Securities at the end of last year, is mainly engaged in the production and sale of plush and flannel for a customer base largely comprising manufacturers of stuffed and soft toys.

About 90 per cent of its raw materials are bought from Japan, chiefly acrylic and polyester fibre.

Despite largely depending on Japanese raw materials, Mr Yuan was not concerned the escalating yen would raise production costs, and said the Japanese would have to cut their profit margins instead.

''Our imports from Japan are priced in [United States] dollars,'' said Mr Yuan.

He also said Shanghai Haixin was not being asked to pay more by its suppliers.

Recently, the company reported a 78 per cent rise in interim profit to 44.65 million yuan (about HK$40.18 million) on a turnover of 133.4 million yuan.

About 70 per cent of sales are derived from the US market, with the balance from European countries and Southeast Asia.

Mr Yuan said the company has been enlarging its presence in Europe, Japan, Southeast Asia and the Middle East.

This opened up international markets for the company and increased its competitiveness, also reducing its dependence on US markets, he said.

But he was optimistic about the US market in the long term because of the gradual recovery of its economy.

Mr Yuan also unveiled the company's plan to develop a 26-storey retail and office building in Fuzhou Road in Shanghai, costing 400 million yuan.

The development has a gross floor area of 40,000 square metres and will be jointly developed by Shanghai Haixin, Jinling Shareholding Co and Huang Pu Investment.

Shanghai Haixin will invest 160 million yuan, or 40 per cent, in the development, which will be completed by the end of 1996.

Earlier, the company said it would set up headquarters in Pudong.

However, the plan lapsed because the site will be used by the government to build a tunnel across the Huang-pu River to link the districts of Puxi and Pudong.